Interconnection or Internet Freedom? War of Words Escalates

March 21, 2014
By: Gary Kim

Netflix CEO Reed Hastings believes in a "stronger" form of network neutrality, an unsurprising view for an application provider providing streaming video that is highly asymmetrical.

“Strong net neutrality additionally prevents ISPs from charging a toll for interconnection to services like Netflix, YouTube, or Skype, or intermediaries such as Cogent, Akamai (News - Alert) or Level 3, to deliver the services and data requested by ISP residential subscribers,” says Hastings. “Instead, they must provide sufficient access to their network without charge.”

The key phrases there are “interconnection” and  “without charge.” As always, there is a direct financial implication for big and small Internet domains, when interconnecting. As always, the issue is whether such interconnection is between domains sending and receiving roughly equivalent amounts of traffic, when settlement-free peering is the norm, or between domains of unequal size or traffic slows, when transit payments are the norm.

Not surprisingly, Netflix prefers settlement-free interconnection, even though Netflix, by design, sends traffic and receives very little. Normally, that means Netflix would pay transit fees, as it primarily imposes costs on the receiving networks.

Some might say that couching the issue in terms of consumer access to lawful applications, without blocking, is a framing exercise. The use of “network neutrality” language might be considered inappropriate, because network neutrality is not the issue: carrier and Internet domain interconnection is the issue.

“Network neutrality” in this instance is simply an attempt to frame the issue in ways that favor outcomes app providers and smaller networks desire.

That is not to say that larger ISPs and transport providers do not have direct financial interests in the matter, only to note that what some might rightly say the legitimate issue of “lawful application blocking” has been conflated with separate “network management and quality of service” issues.

Now some want to stretch the language of network neutrality to cover separate interconnection agreements between Internet domains, when those agreements have nothing to do with the blocking of lawful content, but everything to do with the shifting of domain costs from one network to another, without compensation.

Granted, that is part of the clash between separate common carrier and developing Internet regulation, which was to be expected. Also to be expected: attempts to pick and choose elements of each regulatory framework to advance stakeholder interests, all using the rubrics of “consumer benefit” or “consumer protection.”

The issue is that what Hastings wants Internet domain interconnection to be covered by some form of mandatory interconnection rules, as does Level 3.

At the same time, Cogent has asked for common carrier regulation to consumer Internet service providers.

Driving both sets of positions is a discontinuity in Internet domain and network traffic flows, namely a clash between the traditional common carrier “obligation” to interconnect and the voluntary interconnection of Internet domains when traffic flows and capital investment requirements are asymmetrical.

It is logical that a domain that mostly terminates traffic on other networks would prefer settlement-free interconnection. It also is logical that a network terminating highly-disproportionate amounts of traffic would want to be compensated.

Blocking of lawful apps is not the issue. Nor are unfair business practices the issue. Network interconnection, and the business practices governing exchange of unequal amounts of traffic, is the issue.




Edited by Cassandra Tucker