Defining a net neutrality violation & how that created a Comcastic opportunity for mischief

FCC tries to define net rule breach [Politico]

I’ve spent plenty of time on this blog discussing the FCC’s journey toward a net neutrality ruling. There has been detailed coverage of the various FCC agendas and hearings, as well as the various parties who have expressed their support or opposition to the policy.

One thing that hasn’t been determined through all of this back-and-forth is what truly constitutes a violation of the FCC’s net neutrality rules.

The FCC’s goals are pretty clear. They want to prevent ISPs from behavior that could hinder competition and innovation. What that behavior looks like, however, is not so clear. Why?  Because no one really knows how to define all the theoretical bad things ISP's could do.  Instead, the Commission wisely decided to provide ISP's with a rough idea of what they can and can't do and then to review behavior on an individual event basis.

Indeed, the first claim of violating net neutrality has already been filed against MetroPCS for allegedly unfairly capping usage of some applications in some of the provider’s pricing plans. MetroPCS then fired back by challenging the net neutrality regulations themselves in court.

But much more interesting was when a net neutrality claim was made against Comcast (though it never rose to the level of a formal complaint by Level3), one of Comcast's backbone providers. What happened was that Level3 altered its relationship with Netflix, resulting in a huge increase in traffic into Comcast's network.  Level3 claimed that Comcast sought to unfairly improve its economic relationship with Level3 when the traffic flow changed. 

Here's the real scoop.  Most ISP/backbone agreements anticipate approximate relationships between inbound and outbound traffic.  It has always been the industry standard to review those assumptions on a fairly regular basis and adjust the payments from one to the other accordingly.  When Level3 and Netflix altered their distribution agreement, the balance between sending and receiving data between the Comcast network and the Level3 backbone was so dramatically changed that Comcast simply sought, in the normal course of business, to reset their fee structure with Level3.  

Despite all the wild accusations, this was never about Comcast trying to block Netflix from Comcast's network; it was simply an attempt to have their existing economic relationship updated to reflect a significant change in usage patterns.  And it's simply a fact that their acquisition of NBC couldn't have come at a better time giving a group of opportunists a great chance to try to take advantage.

Comments

[James Waldrop - HostMyCalls Hosted PBX Service]

It appears that Michael is merely relating the facts. The facts of the Level3-Comcast dispute almost don't seem to apply. After Netflix moved over to Level3, Level3 asked Comcast for an additional 30 10Gbps connections to their network. Level3 wanted Comcast to pay for it as well. The debate on who pays for the Level3/Comcast connections is a different issue than what is happening in the Net Neutrality debate. I have read that in a typical evening, Netflix traffic can account for as much as 25% of the traffic on the Internet. Those that are using Netflix have slowed down content for others. Most are paying the same rate and one must question whether that is fair.

[Nate Hiatt]

Maybe it's hard to see the whole picture when you're a character in it Mike, but from a consumer standpoint I see you (The ISPs) in the very same way I see the networks when it comes to the re-transmission fee nonsense. You feel you are unfairly being raked over the coals by the networks, as they demand higher rates that ultimately get passed on to the consumer. You are now demanding the higher rates that will eventually be passed on to us. "It has always been the industry standard to review those assumptions on a fairly regular basis and adjust the payments from one to the other accordingly." What is fairly regular? Would you like it if Fox wanted to adjust their rates on some loosely defined time frame? "Level3 claimed that Comcast sought to unfairly improve its economic relationship with Level3 when the traffic flow changed." Should ESPN be able to re-negotiate new rates on the eve of the BCS games debuting on their network? That was a cataclysmic change for ESPN's ratings. How is that any different than Level3 getting more Netflix biz? I don't know if it's you trying to "get the back" of an industry counter-part, but I surely hope you're not naive enough to think as it grows Comcast will not see Netflix as a direct competitor to Xfinity/NBC's Hulu.