Cogent, Level 3 threaten to file net neutrality complaints over unfair telco, cable interconnection practices

Cogent and Level 3 Communications could be kicking off the initial disputes to the FCC's new net neutrality rules with a focus on how incumbent telcos and cable operators like Verizon (NYSE: VZ) and Comcast (NASDAQ: CMCSA) are degrading Internet traffic that goes to consumers' homes.

While the net neutrality rules have mandated that Internet service providers should not block or degrade traffic once it's on their networks, the complaints that Cogent and Level 3 could file would focus on how last mile providers load traffic onto their networks.

Dave Schaeffer, CEO of Cogent, told the National Journal in an interview that if incumbent service providers won't provide their consumers "with access to the entire Internet on an unfettered basis… we would have no choice but to file a complaint with the FCC under the Open Internet Order."

Similarly, the general counsel for Level 3 Communications, Mike Mooney, said it is "currently evaluating our options."

"Level 3 is still experiencing interconnection point congestion as some large consumer ISPs continue to attempt to leverage control over access to their users to extract arbitrary tolls," Mooney said in an emailed statement to the National Journal.

Both service providers will be able to file their disputes with the FCC after the rules go into effect, which will happen 60 days after being published in the Federal Register.

Perhaps not surprisingly, Comcast, Time Warner Cable, (NYSE: TWC), AT&T (NYSE: T), Verizon, and CenturyLink (NYSE: CTL) would not comment on any legal threats against their companies. The FCC would not talk about the issue either.

Cogent and Level 3 have long held the role of transporting data from company websites like Netflix to ISPs, which then provide broadband pipe and carry the content to each consumer's home. Until now, most service providers have signed interconnection agreements that did not involve either party to pay a fee for carrying traffic.

One of the issues that's made the interconnection process a bit more complex is the explosion of the online version of Netflix, which according to Sandvine makes up about 35 percent of all U.S. Internet traffic during peak usage hours. As a result, ISPs have been asking providers like Cogent and Level 3 and content providers like Netflix to pay a fee to get a fast lane to deliver traffic.

Netflix resolved some of this problem by developing its own content delivery network (CDN) that bypasses the Internet backbone to deliver traffic to broadband providers, but these same operators want Netflix to pay to get those direct connections. While the online video provider eventually struck deals with AT&T and Verizon to give its customers a better video streaming experience, it said that their requirements felt like it had to pay a "ransom."

For more:
- National Journal has this article

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