Published September 30, 2014
In early May, my Internet Middleman post described how a tiny number of very large broadband network operators, mostly in the United States, are using their market power to try to extract arbitrary access charges, and in so doing, are degrading the service they sold to their paying broadband customers. They achieve this degradation by refusing to add bandwidth at the interconnect points between their networks and other very large global networks, like Level 3’s. Despite this, some of them claim that they are unconditionally committed to Net Neutrality. They can do this because, the old Net Neutrality rules had a gaping hole in them: since these rules did not explicitly include Internet interconnection in their scope, they allowed broadband providers to discriminate against third-party Internet traffic by causing bottlenecks at Internet interconnection points – and hurting consumers in the process.
But it is now late September. So what has changed? Well, let us look at three large Local Exchange Carriers (LECs) in the United States. These LECs are telephone companies that built broadband networks on the back of monopoly-funded telephone infrastructure. Over the past six months, the utilization of each interconnection location between their networks and Level 3’s has changed as shown in the following diagram.
Each number shows utilization at one of the interconnection locations in various cities throughout the United States between Level 3 and the LECs. Utilization above 85% indicates the LEC is causing congestion in that city by refusing to add interconnection capacity
This shows a dramatic improvement for LEC1 and LEC3, but a continued degradation for LEC2. You might say that it’s good news overall. But if you value an open Internet underpinned by a dynamic competitive environment, you may have a different opinion.
And that’s because the reason the interconnect utilization between Level 3 and LEC1 and LEC3 improved is that these LECs forced Netflix to pay them to interconnect directly with them. And as Netflix CEO Reed Hastings has pointed out several times, Netflix didn’t do that because they were taking advantage of a highly competitive Internet marketplace. They did it because they had no choice: all third-party content that LEC broadband users want to see eventually has to go through LEC interconnection points. When the LEC tries to turn these interconnection points into Internet tollbooths there is no alternate path for the content to take to reach the consumers.
How long will it be before LEC2 degrades the quality of service to their end customers to the point that Netflix is forced to pay them too? And how can LEC2 promise a new 1Gbps broadband service even though it is refusing to allow content that its consumers have requested into its network? In fact, some of their launch cities are also where the interconnect locations are severely congested with 97% utilization. Locations where LEC2 seems happy to simply discard Internet content that their customers have requested, for hours and hours every day. Locations where download speeds for such third-party content cannot possibly get close to 1Gbps – or other “high-speed” services they have sold to their customers.
Level 3 and other Internet content providers are not afraid of competition. The Internet needs Net Neutrality and fair and equitable interconnection to continue to grow and thrive. But what broadband providers are offering instead is “Not” Neutrality: a competitive distortion made possible by the monopoly control they have over access to their customers. These broadband providers are willing to degrade the performance of the service they sell to their customers to extract arbitrary access charges, discriminate against third-party Internet content and harm competition.
We have made concrete proposals to ensure LECs and other broadband providers actually make available the Internet access bandwidth they have already sold to their consumers at interconnection points without congestion and without arbitrary access charges. Consumers should expect no less from their broadband providers.