For content providers, the real net neutrality fight is just beginning

Net Neutrality The House Communications and Technology Subcommittee hauled all five commissioners of the FCC up to the Hill Wednesday to explain the agency’s recent net neutrality rulemaking, marking the opening gambit it would could be a long and messy fight between the commission’s Democratic majority and the new Republican majority in the House over the agency’s legal authority to enforce the new rules.

Uncharacteristically for such oversight hearings, Wednesday’s event drew nearly the full complement of subcommittee members, as well as cameo appearances from the chairman and ranking member of the full House Energy and Commerce Committee, and ran for more than three hours, signalling net neutrality’s surprising emergence as a major political issue heading into the 2012 election cycle, especially (if somewhat inexplicably) among Tea Party types in the GOP.

For content providers and over-the-top video distributors, however, the highlight of the hearing came in a fleeting exchange at about the 90-minute mark, when FCC chairman Julius Genachowski was asked whether the new rules applied to peering agreements between Internet backbone providers.

The agency’s net neutrality order, Genachowski said, “doesn’t change anything to existing peering arrangements.”

The question came up in relation to the ongoing dispute between Level 3 Communications and Comcast over the amount of traffic Level 3 is now pumping into Comcast’s last-mile broadband network as a result of Level 3’s landing of Netflix’s CDN business. As I’ve noted before (see here and here), the really important network-management issue facing content providers is not whether last-mile broadband providers will interfere with competing video traffic (a matter that could probably be dealt with through existing anti-trust law in any case) but whether and at what cost content providers will be able to ensure end-to-end quality of service for data streams that, of necessity, must traverse multiple networks.

While the rules, as issued, did not appear address backbone peering, Level 3 insisted its relationship with Comcast, at least as far as Netflix traffic goes, is really a last-mile access agreement, not a peering arrangement, and should therefore be governed by the new net neutrality rules (never mind the irony that Level 3 tried to leverage its pre-Netflix settlement-free peering agreement with Comcast to win the Netflix business). In January, it filed a complaint with the FCC asking the agency to investigate Comcast’s actions.

While Genachowski’s comments on Wednesday might appear to put an end to the matter, I’m not sure it’s going to be as clean as all that. After all, Level 3 contends its dispute with Comcast is not, in fact, a peering dispute. So from that perspective, the chairman’s comments clarified nothing.

Moreover, the issue of unequal traffic loads between network operators, driven largely by the increase in video traffic over the Internet, may just be heating up. On the eve of Wednesday’s hearing, AT&T and the NCTA sent a letter to the FCC asking the agency to “swiftly, clearly and publicly affirm that arrangements for Internet peering and other Internet backbone services are not subject to the net neutrality rules, and that the agency will decline efforts to become involved in these commercial disputes.”

Such a statement is necessary, the letter claims, because Level 3’s complaint “has emboldened others – including backbone operators like Global Crossing, Internet hosting companies like, and interest groups like Public Knowledge – to raise claims similar to those of Level 3.”

As I heard it, Genachowski’s comments to the committee fell short of what AT&T and the  NCTA were hoping for. Though he described the dispute between Level 3 and Comcast as a “private business matter” that he hopes the parties “settle and resolve” themselves, he stopped short of saying the commission will always “decline efforts to become in involved” in such disputes, or that the FCC lacks the authority to regulate peering agreement should it choose to.

As video traffic surges on the Internet, the point of contact between wholesale data haulers like CDNs and last-mile access providers will be where the over-the-top business rubber hits the road. The potential for mischief is high, and the FCC may not be able to stay out of it forever.

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