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L3: Comcast now has a 'toll booth' fee for online video [U]

updated 06:55 pm EST, Mon November 29, 2010

Level 3 claims Comcast extorting fees for video

(Update: Comcast response) Level 3 today raised alarms with claims that Comcast was engaging in anti-competitive behavior with a new charge for online video. The Internet backbone provider said that Comcast had suddenly started charging extra for video to its customers and threatened to block video traffic from Level 3, which supplies streams for Netflix and other major providers. It agreed to pay the fee to avoid a disruption but accused Comcast of setting up a "toll booth" deliberately designed to prevent competition with both cable TV and its own Internet features.

The fee lets Comcast "unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content," Level 3 said. "This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation's largest cable provider."

It further argued that Comcast would likely run into trouble with the FCC, since the video-specific fee directly violated proposed net neutrality rules and contradicted Comcast's assertions that it valued an open Internet. The approach showed the risks of a closed Internet often sought after by carriers, Level 3 said, since it would effectively let a provider like Comcast dictate what customers would be allowed to see.

Comcast had been caught secretly blocking BitTorrent traffic in 2008 and was pressured by the FCC into using a more neutral approach. It has long argued that it had the 'right' to manage its network but had honored the FCC's warnings until today.

Level 3 called for "quick action" from politicians to legally prevent such terms and prevent monopolies like those it suggested Comcast might have.

Comcast hasn't formally responded to the complaint but is likely to deny any wrongdoing.

The move is an extremely risky one for Comcast as it comes just as the company has been pushing the FCC to approve a merger with NBC. Internet video has been a core subject of the FCC's worries about the deal; Comcast had just recently argued that it should be allowed to withhold NBC video from those it considers competitors. Plans to charge Level 3 and others extra would fuel FCC doubts about the deal and could ultimately lead the FCC to legally force not just offering NBC content to providers like Netflix and iTunes but to prevent it from unfairly charging extra or otherwise discriminating against rivals.

Update: Comcast senior VP Joe Waz responded by accusing Level 3 of being "duplicitous" and claimed that a previous deal between itself and Level 3 had skewed in favor of Level 3. It argued that it was unfair to push the cost of a major increase in Internet video on to the Internet provider without extra compensation.

"When one provider exploits this type of relationship by pushing the burden of massive traffic growth onto the other provider and its customers, we believe this is not fair," Waz said.

Internet providers have increasingly tried to persuade politicians that deregulation and the freedom to throttle traffic at will has been due to the "exaflood," or an exponentially increasing amount of Internet data that networks couldn't handle without throttling, metering or other limits. Netflix may account for a fifth of peak US traffic. The view has been controversial, as critics have noted both that the growth has often been less than claimed and that those supporting the exaflood concept have usually been paid by carriers.


By Electronista Staff


  1. Iritscen

    Fresh-Faced Recruit

    Joined: Jun 2009


    What is the deal with Comcast?

    I hardly ever hear complaints about the other U.S. ISPs. It seems that Comcast likes to be the lead innovator in the field of morally questionable business moves. Is it just me?

  1. bjojade

    Fresh-Faced Recruit

    Joined: Jun 2007


    Comcast leads

    Others follow. They are willing to test the waters to squeeze every last dime out of their customers. Seeing that they are a near monopoly in many of their markets, they certainly can get away with it.

    It would be nice if someone could set up an ISP that offered quality service at a fair price and could be honest about their business practices. Too bad it doesn't exist.

  1. jgraessley

    Fresh-Faced Recruit

    Joined: Jul 2009


    It's like Comcast Charging ABC/NBC/CBS/Fox

    How can Comcast even justify their position? Customers pay Comcast for internet access. Why? To get to stuff on the Internet. Stuff like Netflix streaming. If anything, Comcast should be paying Level 3 and Netflix for giving Comcast customers a reason to pay for Internet access.

    Comcast charging Level 3 or anyone else more to provide content to their customers is like Comcast charging ABC to provide content to their customers.

    Comcast even pays money to ESPN360 so their customers get access to that content.

    If only there was another IPS that offered fast speeds around here...AT&T's DSL is a joke.

  1. carlmuck

    Fresh-Faced Recruit

    Joined: Feb 2006


    Can't tell the real story

    Is L-3 complaining that it has to pay for more bandwidth? That's what it sounds like. I'm not a fan of Comcast, but if they are using more bandwidth than their contract, then they should pay.

    L-3 is a pretty stingy company so I don't doubt that they are trying to "get something for nothing" here.

    Between Comcast and L-3 I can't find a side that really warrants a lot of sympathy. If Comcast wrote a contract with L-3 that didn't have bandwidth or SLA limits, then shame on them. If they did and now L-3 wants to claim that they shouldn't pay for more bandwidth "because its NetFlix", well boo, *&^#ing, hoo.

  1. B9bot

    Fresh-Faced Recruit

    Joined: Dec 2008


    Comcast Sucks!!!

    Greedy control freaks that don't want to supply through put of internet traffic like they are supposed to do! Then when you use your data they slow down your network, WTF!!!

  1. testudo

    Forum Regular

    Joined: Aug 2001


    Re: It's like Comcast Charging ABC/NBC/CBS/Fox

    How can Comcast even justify their position? Customers pay Comcast for internet access. Why? To get to stuff on the Internet. Stuff like Netflix streaming. If anything, Comcast should be paying Level 3 and Netflix for giving Comcast customers a reason to pay for Internet access.

    Actually, many providers already have deals with ESPN to transmit ESPN 360 content (now called ESPN 3). You can't just get that from any internet location. They do this to mitigate the costs of broadcasting all that content (which, for ESPN, is a lot heftier than it is for many other services, like Netflix, for they actually need to have crews work the games that otherwise wouldn't be aired or done at all) and streaming it. Plus, I believe, they offload the streams to the ISPs (so ESPN just streams to, say, Comcast and Verizon servers, then they turn around and stream to their respective customers). This way, ESPN doesn't have to deal with a million stream connections a second, rather they just need to stream a thousand or so.

    The problem with Level 3 or Netflix is that they don't provide a desirable service enough to warrant Comcast or the others to want to pay to deal with (why should Comcast care? They want you to use their OnDemand service, they don't make anything off of Netflix). It will only become 'something', in which Comcast would pay, if the demand for Netflix increases to the point that not supporting it would cause Comcast financial harm (I would add 'public image harm' to that, but I'm not sure Comcast has a public image that could be even more harmed).

  1. sbeckstead

    Fresh-Faced Recruit

    Joined: Jun 2007


    Comcast and Public Image

    Yeah I'm pretty sure Comcast can't hurt themselves any more with this. The fact that they are buying a huge chunk of the content provider pool and they already control a huge chunk anyway may have nothing to do with this. Just sayin'

  1. jlp

    Fresh-Faced Recruit

    Joined: Nov 2010


    L3 Isn't a Comcast Customer

    @carlmuck, it's not about L3 complaining about having to pay for more bandwidth. L3 isn't even a Comcast customer. It's about Comcast saying to L3 "gee, lots of our customers are downloading streamed video content from you, so you're going to have to pay us a premium, over and above what you're already paying your own network provider, if you want our customers to be able to receive the services you're providing."

    This is, in my opinion, no different from the networks saying that you can't receive their video if you're using a Google TV box to do it, but if you're using some other box (or if you tweak your Google TV box to say it's some other kind of box), then it's okay.

    I'm a Comcast customer and I do a lot of Netflix streaming. Maybe it's time to let Comcast know that I don't appreciate their heavy-handed tactics by voting with my feet. Clear is now available in my area... maybe I'll give them a look.

  1. testudo

    Forum Regular

    Joined: Aug 2001


    Re: L3 Isn't a Comcast Customer

    It's about Comcast saying to L3 "gee, lots of our customers are downloading streamed video content from you, so you're going to have to pay us a premium, over and above what you're already paying your own network provider, if you want our customers to be able to receive the services you're providing."

    However, Level3 is a tier 1 network. Usually they make symbiotic deals with other tier 1's to pass their traffic back and forth at no charge. However, that's on a network by network basis. If one network decides they get too much traffic from another (too much traffic going in one direction vs. the other), they can decide they want to have some sort of monetary payment to cover their additional expenses. Or they might cut off the network altogether (I seem to recall one of the networks cutting off PSINet due to traffic inadequacies, thus causing part of the internet to not be able to access another part of the internet).

    These deals, however, are usually done at the tier 1 level. Comcast ain't there yet (although I'm sure they want to be). Since Comcast gets their internet connectivity through someone else's Tier 1, theoretically the tier 1 should be the one doing the complaining.

    Now, if Level 3 had worked a deal to talk directly to Comcast (thus skipping over Comcast's tier 1 in order to gain a faster connection/hookup), then it's up to them to work out whatever deal they need to work out.

    But the key thing to remember is that the only reason you can access the entire internet from your home is that the tier 1 up the chain of command allows you to talk to any of the other Tier 1s. But there's no law that says that has to be. And nothing that says one can't force another to pay. It's just that, at this point, the traffic balances out enough that it isn't worth the effort. In fact, nothing says Comcast must allow access to the 'internet'. They could sell a data service that allows access to parts of the internet. Even with net neutrality, if they don't call it internet service, they don't have to abide by it (think AOL in the mid 90s).

  1. BigSR707

    Fresh-Faced Recruit

    Joined: Dec 2010


    L3 trying to get something for free

    Lets get it out there! Level 3 and Comcast use each others lines. In the past this has been free as like with a lot of other carriers. It is done so with a written agreement that no company will send more then 3:1 times the amount of information then the other company. Level 3 has been sending 2:1 the amount of information across Comcast's network. Recently Level 3 signed a back door agreement with Netflix to transfer there data at a cut rate cost of there competitors. Hours after that agreement they had a meeting with Comcast and demanded 27 to 30 more fiber ports. At this time they did not mention they had just signed a agreement with Netflix. Comcast said they would offer 6 ports at no cost and the additional ports would not be free, due to the balance of data transfer being at a 6:1 ratio. There are many other company's that have to pay to lease fiber, including Comcast and Level 3's competitors. There is no road block. It is the same as any ISP charging more for multiple connections.

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