Level 3 Communications (NYSE:LVLT, news, filings) has taken its dispute with Comcast (NASDAQ:CMCSA, news, filings) over interconnection fees to the next level. They have directly asked both the FCC and DOJ to attach conditions to the cable giant's proposed acquisition of NBC Universal. Those conditions would require Comcast to interconnect with internet backbone providers via "non-discriminatory, fair and reasonable terms," and prevent them from utilizing their "dominant control over access to its subscribers in order to unfairly charge internet backbone carriers for interconnection to its network." I'm sure Comcast will respond in the morning in some form.
While the dispute has generated quite a bit of news and opinion pieces from bloggers (including yours truly), there has apparently been no change in the current standoff, with Level 3 saying that it is clear that 'no resolution is possible'. That is no surprise of course, Comcast is getting paid and unless a regulator says otherwise then they have no reason to shift their position. Appealing directly to regulators and making trouble for Comcast/NBCU deal is therefore Level 3's one viable path forward. Other than giving in of course. So far though, it remains unclear whether Level 3 has found a sympathetic ear in DC.
I continue to believe that this dispute has much deeper implications than most in the sector seem to believe, it is about far more than simply Level 3's status as a Tier 1 backbone against its operation of a CDN. The entire system of interconnection from transit to paid peering to settlement free peering that underlies the internet stands to change dramatically. A Comcast victory will shift the power to shape that system to last mile providers, and will reverberate throughout the bandwidth food chain - including for pure CDNs. Perhaps such a realignment is inevitable, but we had best understand the implications earlier rather than later.
That being said, the FCC seems toothless right now. I can't imagine them trying to regulate transit and peering without years of calls for comments and other bureaucratic steps. The DOJ, on the other hand... I suppose they could actually see an anti-trust issue buried in here - if they bother to look deep enough.
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