Level 3 Communications Issues Statement Concerning Comcast's Actions

Tue Nov 30 07:59:01 UTC 2010

  On 29/11/10 3:45 PM, Aaron Wendel wrote:
> I don't think it's unreasonable to expect customers to bear the cost of
> their provider doing business.

You don't think it's unreasonable (and I don't think it's unreasonable), 
but most US consumers *do* think it's unreasonable.  They would like to 
get their internet service for free, or for as close to free as 
possible.  They are happy to watch ads in order to get content for free, 
and they would love to see an ad-supported (or subscription supported 
for special content) service with free or nominal "ISP charges".  If one 
of the big "eyeball" networks can push their network costs onto a major 
content provider it will nudge things towards this business model.

It has been my opinion for many years that eventually we would find 
market forces lowering the price consumers pay and raising the price 
content providers pay until the consumer cost *is* free, or very close 
to it.  This could be the first step...

And it's a push back from the ESPN360/ESPN3 model where the content 
provider was forcing the ISPs to pay extra to get the content on their 
network... Does anyone have data on how well that's working for the ESPN 
360 / ESPN3 system?

What is happening now between L3 and Comcast also reminds me of the 
dial-tone settlement deals in the 1990s.  The big telcos thought they 
could push small telcos out by making it more expensive to place calls 
(paying a fee to the telco that "terminates" the call) and less 
expensive to receive calls (receiving the termination fee).  They 
mistakenly thought the startup telcos would go after consumers (who 
typically place more calls than they receive) and they didn't think 
about startup telcos going after ISP dial-up services (which receive 
more calls than they place) and then being forced to pay those startups 
settlement fees for all the calls their consumer customers made into the 
startup telco's ISP customer's modem banks.

We don't have an interstate telephone settlement system or PUC to 
"decide" what the rules will be for settlements between content 
providers and eyeball providers.  I believe that in the end it will come 
down to market forces and which group can better marshal customer angst 
to their side when packets don't flow freely between these two types of 
networks.

jc