Level 3 Communications Issues Statement Concerning Comcast's Actions

Tue Nov 30 13:56:10 UTC 2010

I've read through the entire thread thus far, and there are several very
interesting points.  I'd like to know more about the Australian experiment?

But there were a couple of disparate comments that seem highly related, so
I'll reply to them jointly here:

On 11/30/10 2:59 AM, JC Dill wrote:
> 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.
>
But I remember what happened next.  BellSouth refused to pay their settlements.
The CLECs sued and went bankrupt.  BellSouth had deeper pockets and more lawyers.

> 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.
>
Maybe.  But I'm hoping the consumer angst gives us a better FCC.  The "market"
hasn't worked before, and isn't working in this case.  So, maybe there isn't a
"market" after all....

On 11/30/10 2:47 AM, Kevin Blackham wrote:
 > I'm not convinced. Either I'm calculating something wrong, or greed is at work.

Greed.

Reminder: Comcast drastically raised their rates a few years back, saying to
local cable commissions that they needed to "invest" in digital infrastructure.
Instead, they took the massive profits and invested in NBC/Universal.

When a cable "node" is an entire neighborhood of 500+ homes, because Comcast
never bothered to split the nodes down to a reasonable networking size (as
opposed to CATV-sized), then it's a Comcast greed problem....

A half year ago or so, talking with a Google manager about a certain fiber
project, we ended up arguing about the size of cable nodes.  He seemed to
think everywhere was like Mountain View.  I was trying not to embarrass him;
just let it stand at -- as you drive, you don't look overhead at the cable
infrastructure much, do you?  (He admitted he doesn't.)

On 11/29/10 11:27 PM, Jared Mauch wrote:
 > The issue here is cost of infrastructure.  The last mile generally is more valuable than the long-distance part.  Everyone can build a nationwide network for a nominal amount of money.  All the carriers can provide circuits at the same IXPs where you 
can public/private peer.  The question does become, who is in those smaller and mid-markets.  Not everyone is going to build fiber in Akron, Eugene, nor Madison.  It gets even more interesting if you look at what happened with Fairpoint in the northeast 
IMHO.  Verizon realized they would not make money there and sold it off.  The promises and costs consumed them and forced bankruptcy.
 >
 > I'm not saying that will happen to Comcast, but it may cause them to divest the unprofitable parts as well, leaving some parts of the country worse-off than we would be today.
 >
Or in this case, invest in something else more profitable, NBC/Universal; and
then try to leverage their customer base to gouge their CDN competitors.

I'd like to see Level 3 pull a Disney/ABC or a Murdock/Fox, and publicly
announce that they expect Comcast to share *their* revenue.  And be willing to
pull the plug!

(Admittedly, I thought Disney/ABC and Murdock/Fox are evil, too.  That model
was only reasonable as the CATV channels had no advertising.  All we have
left now is Turner Classic Movies.  A pox on *all* their houses!)

It's really time for some anti-trust legislation/regulation.  The last mile
market has failed.