Level 3 Communications

Michael Mooney

Heads ISPs Win, Tails You Lose (And a way to fix it)

Our prior posts (here and here ) discuss the game of “chicken” some ISPs are playing with the Internet—refusing to alleviate Internet congestion unless Internet access tolls are paid. Like “heads I win, tails you lose,” it is a game these ISPs win every time. Either arbitrary tolls are paid, driving up their rivals’ costs, or they are not, and the congestion they allow significantly degrades their rivals’ service quality. The rules being considered in the FCC Open Internet proceeding would perpetuate this – even if fast lanes are not allowed in the last mile of the Internet, if they are allowed where the Internet connects into these same last mile networks, then the ISPs can continue to anti-competitively interfere with Internet content delivery. We are glad to see that the FCC has recently said it would look into this continuing interconnection problem.

What should consumers think about this? And what solutions would Level 3 propose to address the issues?  

When you buy Internet access, you expect access to the whole Internet. You also make your ISP the only way any of that Internet content can reach you. Here is a high level diagram of the Internet:


As we have said in our prior posts, some big ISPs use this monopoly over the only connection to you to degrade the quality of Internet content providers unless they agree to pay the ISP arbitrary access tolls. These ISPs apparently want the Internet of tomorrow to look a lot different than it looks today. Today’s Internet is so rich and robust because it evolved in a free and open environment – where nimble start-ups innovated and the best models won (Google, Facebook, Twitter etc.). But the future of the Internet is not so rosy if some of the biggest ISPs get their way. While many ISPs work hard to offer good service to their customers, some of the largest rely instead on anti-competitive practices and artificial scarcity to maximize their own profits at their customer’s expense. Where will that leave consumers in the Internet of tomorrow?

  • If ISPs can prioritize their own content (like affiliated video services), impose arbitrary tolls and/or slow the Internet for anyone who refuses to pay them, ISPs can effectively dictate the content and applications you receive. But ISPs should not decide what content you get – you should.
  • The remarkable growth of the Internet has shown that an open market and level playing field reward the best content and applications, resulting in a much better experience for consumers than ISPs would offer if we let them stack the cards in favor of their own service offerings. A world where a small number of large ISPs control Internet content would significantly reduce the innovation and growth we have enjoyed so far. We can’t think of many content web sites or services launched by network operators that have gained any significant consumer adoption. Nor have they built and successfully launched many successful online video services, educational services, gaming services, news services, email services, social media services . . . and the list goes on and on.

But if they choose, ISPs can grab more money and control of the Internet, as they face no real competition.

  • For many Americans, even in urban areas, there’s little competition for the kind of robust broadband service that can stream video without hitting a data cap pretty quickly. In fact, consumers can count themselves lucky if they even have a choice between two real options for high-speed broadband: the local cable company and the telephone company. And, unfortunately, even where two choices exist, if both of them congest your Internet access (this has happened), you have no congestion-free option.
  • And as we have told the FCC, some ISPs demand tolls from us (simply to access the consumers on their limited last mile networks) that exceed the fees we charge some customers to reach every destination on the Internet worldwide. Plus, ISPs’ profits are rising even though their user satisfaction is poor. All clear signs of limited or no competition or consumer choice.

The truth is, if you favor a free and open Internet, want all the content you want to see, and want the Internet to be even better going forward, then you also should favor limited regulations that keep these last mile bottleneck ISPs in check. So what simple, reasonable rules would do that?

As guiding principles, the Internet should remain free and open, and subscribers should be able to access the content they want and have paid for without unreasonable interference from their ISP. That means:

  • ISPs can’t discriminate in their networks between different sources and types of content, including favoring their own content, whether that discrimination is by charging fees, prioritizing some content over other content or imposing data caps that don’t apply to the ISP’s own offerings.
  • ISPs must maintain interconnections with the rest of the Internet that are resilient, uncongested and secure. If ISPs can’t discriminate among traffic once it’s on their network, they also can’t erect a toll booth for traffic as it arrives.
  • No one should get a “free ride” from the ISP. ISPs must interconnect with content companies and backbone providers without charging them a fee, but those companies must also do their fair share of the work to deliver content to the ISP.

How can these principles be implemented? The FCC is part of the way there, with proposed “Open Internet” rules focused on the last-mile. But to fully protect the free and open Internet, the FCC should also adopt simple, straightforward interconnection rules:

  1. If Internet content is delivered locally – in the ISP’s local market closest to the location of the ISP’s customer requesting the content – the ISP must accept the traffic and deliver it to its customer without charging a fee. The ISP could require the aggregation of some minimum amount of traffic to avoid an obligation to interconnect with “everybody”.
  2. The local interconnection locations can be selected by the ISP, but they must be reasonable. At a minimum, for example, each location must allow content delivered there to reach a stated minimum number of the ISP’s customers, and the location must be served by several different (and therefore competing) metro transport service providers.
  3. If interconnection capacity is congested at any interconnection location, it must be promptly augmented.

These rules are not complicated, and they work. We know this because Level 3 already has similar arrangements with several ISPs. And the solution is good for everyone:

  • Consumers get reliable, uncongested Internet access to the content of their choosing.
  • The ISPs eliminate costs by not having to carry traffic from region to region, just on their local networks, which are presumably adequate to accommodate the speeds they have promised to their paying subscribers.
  • Content providers can buy services from multiple, competitive providers who can deliver content to the ISPs’ network over uncongested links. The ISPs remain free to compete for this business as well, they just must do so on a level playing field.
  • Internet backbone providers continue to compete with one another (and the ISPs) for connectivity around the Internet and to the ISPs, but without the barriers created by artificially congested interconnection links into the Internet’s last mile.

Finally, the above rules should be a backstop only, and parties should be free to work out alternative, commercial arrangements. One such option is “bit-mile” interconnection, discussed in our IP Traffic Exchange Policy and which we have also implemented commercially with several companies.

We remain open to alternative regulatory backstops (as well as modifications to the rules we propose here), provided they allow for fair, reasonable, uncongested, resilient and secure interconnections with bottleneck ISPs. Unless and until interconnection is resolved, the Open Internet rules will not effectively solve the problems they seek to address, and interconnection points congested by some ISPs will continue to be the weak link in the Internet.