The accusations are coming from the communications company Level 3 which helps connect larger ISPs like AT&T Inc. (NYSE:T), Vodafone Group Plc (NASDAQ:VOD) (LON:VOD), and Comcast Corporation (NASDAQ:CMCSA) to the Internet. The company is claiming that these as yet unnamed companies are degrading the speed by which users receive their bandwidth on the Level 3 network. The company is suggesting that the ISPs are trying to get Level 3 to pony up a substantial fee for traffic from streaming sites like Netflix, Inc. (NASDAQ:NFLX), a business model referred to as paid peering.
“They are deliberately harming the service they deliver to their paying customers,” writes Level 3’s Mark Taylor. “They are not allowing us to fulfill the requests their customers make for content.” He added, “They are not allowing us to fulfill the requests their customers make for content.”
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Who are they?
Presumably to avoid angering these ISPs and facing wrath or repercussions, Taylor has yet to refer to the culprits by name but does describe them as “large broadband consumer networks with a dominant or exclusive market share in their local market.” He then goes on to say, “in countries or markets where consumers have multiple broadband choices (like the UK) there are no congested peers.”
He then stated in no uncertain terms that Level 3 has no intention of paying this paid peering fee saying, “Our policy is to refuse to pay arbitrary charges to add interconnection capacity.”
Netflix’s reluctant response
This is not the first time that large ISPs have been accused of this practice. Netflix, Inc. (NASDAQ:NFLX) has repeatedly claimed that Comcast is reining in its services through intermediaries like Cogent as well as Level 3. As a result of this throttling, Netflix, Inc. (NASDAQ:NFLX) has been “forced” to sign direct traffic deals with both Comcast and Verizon and will likely continue this practice with others. At peak hours, Netflix streaming can rise to nearly one third of worldwide Internet traffic so it’s difficult to call Comcast Corporation (NASDAQ:CMCSA) and Verizon Communications Inc. (NYSE:VZ) bullies. That doesn’t make Netflix any happier however.
“While in the short term Netflix, Inc. (NASDAQ:NFLX) will in cases reluctantly pay large ISPs to ensure a high quality member experience,” CEO Reed Hastings said back in March, “we will continue to fight for the internet the world needs and deserves.”