Is This the End of the Tier 1 Backbone?

November 30th, 2010 by · 11 Comments

Yesterday's news may reflect a real shift in the internet weather.  A Tier-1 backbone provider has backed down to a last mile provider and agreed to pay for traffic, albeit under protest.  Not just any Tier-1 backbone, but Level 3 which regularly sits at or near the top of the Renesys rankings amongst others when it comes to total raw traffic and connectedness.  Level 3 is somewhat different in that it also operates a CDN and is expected to power half or so of Netflix's streaming offering, but even still there is a chill to the wind blowing today amongst the independent fiber backbones.

I say that because even without operating a CDN, the traffic on all major internet backbones has quickly become dominated by video.  If Comcast gets its way, then every single provider will have to regularly ask itself 'Am I delivering too much video over my network?  Can I be de-peered or forced to pay more because of it by a provider that can't be bypassed?'  After all, IP transit isn't exactly a high margin business (haha).  Since the bulk of all bandwidth on internet backbones in the mid term will almost certainly be video, it follows that so called traffic ratios at the point of interconnection with eyeball networks can only rise steadily, CDN or no CDN.

The Tier-1 club has always been an exclusive one, where members are those who do not buy transit to deliver their bits.  Each peers with its fellows and sells transit and paid peering to whomever else it can.  For young upstart carriers, to become Tier 1 was a major goal that really meant something.  Those who made it had weight they could throw around at those who hadn't.  But if things have changed such that last mile can make them pay whenever traffic ratios shift too much, then the Tier-1 moniker will mean 'those who do not buy transit and promise not to deliver too much video to last mile providers.'  A tad less impressive ... subservient even.

Despite the stasis, there really are no rules to this game.  Transit and peering relationships are a form of organized anarchy.  As long as everyone benefits from peace, life is stable.  But that may not be true any longer.  Perhaps only internet backbones attached to last mile consumer networks can be Tier-1 in a video-centric internet.  If so, they won't need a toll booth, they'll just peer with each other and raise transit/paid-peering pricing on content providers.  Uh oh, that actually sounded like a plan...

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Categories: Cable · Internet Traffic

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11 Comments So Far


  • toddforthree says:

    rob i think there will be an advantage to being a fiber network who sold the cable company their fiber. how they work that out is going to be interesting. i see this as not as good a deal for other cdn’s

  • Eric Titus says:

    Level 3’s chickens are coming to roost–they have a history of claiming that net neutrality oversight is unneccessary. I am most familiar with Cogent, but various industry participants/visionaries argue that one potential future for the internet is the merging of content and network providers, which could break down the internet if not regulated properly. Comcast, with this latest news and the NBC merger, is positioning itself for this sort of future. Virgin in the UK is a similar case.

    • upinefficientmkt says:

      sounds like you are making the comcast/VZ/T argument without naming the vendor… need to think through the economics of their proposal as it relates to consumer choice… it’s not really an argument – just the desire of the content provider to lockout and/or price higher competing content.

      • carlk says:

        Ah yes, the unnamed “vendor.” Another one of those “expert networks” being investigated by the Feds along with their use of “wire taps,” eh?

  • carlk says:

    Actually, (3)’s history is very clear with respect to “regulation.” Crowe is a firm proponent of “regulating lightly,” as a cook might use garlic, at the same time “measuring costs” for determining the values in “fair trade” agreements.

  • ES says:

    Rob,

    The most peculiar thing to me is the Comcast timing. If you are Comcast, why do this now with the NBCU merger potentially closing by year end?

    I can only think of 3 reasons but I am sure there are others:
    (A) The traffic size Level 3 is sending has gapped up.
    (B) The competitive threat from NFLX is very real to them.
    (C) As has been said, some low level Comcast crony, had no idea what he was doing and mgmt was asleep at the switch when it escalated.

    My bias is the 3rd option but I wouldn’t rule out there being a substantial component of the 2nd and some of the first. If there is any truth to the first, how does this marry with Level 3 saying that the NFLX revenue won’t come until next year – a few weeks of free rent to get the tenant?

  • carlk says:

    ”The fundamental issue is not whether Comcast sends more traffic to Level 3 or whether Level 3 sends more traffic to Comcast. Both Level 3 and Comcast are responding to the requests of Comcast’s subscribers, who want to be free to see and use the full suite of content and applications that are available on the Internet today and in the future. Level 3 wants to assure that freedom is preserved.

    ”Instead, the fundamental issue is whether Comcast, as the largest cable company in the country with absolute control over access to its cable TV and broadband access subscribers, has the right to unilaterally set a ‘price’ for that access that effectively discriminates against competitors of Comcast’s cable and Xfinity content.

    ”Our interest is in preserving and protecting openness and innovation within the Internet, which is threatened if those who control access to subscribers can charge a toll set at their discretion for delivery of independent content and applications.

    http://www.level3.com/index.cfm?pageID=491&PR=963

  • Anonymous says:

    In the end, would you rather own the pipe or the content?

    If either or, then it seems in everyone’s best interest to cooperate. If pipe owners can own content, then they should be ready to be regulated, because I doubt they will operate with consumer’s best interest in mind.

  • Anon says:

    why does level3 (or anyone) have a right to terminate traffic on to a network that doesnt like the economics of that termination?? comcast has spent billions bringing cables into homes…. they peer with some, charge others and sell to many. level3 needs to get real…. why can they refuse to peer with a tier2 carrier in city x, de peer or enforce ratios with cogent, et al, but somehow have a magical right to terminate their unbalanced traffic for free?? this whole thing is going to blow up in their face — they have more to lose with conflated peering=neutrailty confusion than they are likely to gain. can i call the FCC and get L3 to “peer” with me on terms i favor, but which terms they don’t favor??

  • Anonymous says:

    IP becomes voice

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