Level 3 Communications (NYSE:LVLT, news, filings) says it has signed a multi-year agreement with Time Warner Cable (NYSE:TWC, news), expanding its relationship with the giant cable MSO. They will be helping to expand Time Warner Cable’s network as well as to deliver additional core infrastructure services.
The deal certainly can’t hurt Level 3’s quest for sustainable higher growth rates, but of course they’ve been powering the backbone networks for most of the large cable operators for years. Details of the new arrangement were fairly sparse, however, so if anyone has additional color I’d love to hear it.
Of more general importance, however, was the announcement that two “also have agreed on terms and conditions under which they will exchange IP traffic between their respective backbone networks.” In other words they have upgraded their peering/transit relationship.
As you may recall, Level 3 has been in a long-running dispute with Comcast over the extra ports needed to support the Netflix traffic they began to carry some time back. Comcast didn’t want to pay to support the growth of a competing video service, while Level 3 felt that Comcast was unfairly using its last mile bottleneck to gain an unfair competitive advantage. Level 3 offered to carry traffic deeper in to the Comcast network to ensure a fair relationship while Comcast dug in its heels on older metrics like traffic ratios and such, and while it hasn’t been noisy the disagreement hasn’t been resolved to my knowledge.
The dispute may have been more public with Comcast, but the issue of traffic exchange between backbones, CDNs, and last mile providers was generally a bit up for grabs. Looks like Level 3 has now come to terms with a similar Cable MSO in the context of a larger relationship, which may presage other similar agreements. Again, though, details on how exactly their peering/transit relationship will change are sparse.