As the Comcast-Time Warner Cable merger process gets going, expect more talk about peering

Tom Wheeler Core Capital

Early next week Comcast file an application with the FCC for a formal review of the proposed Time Warner Cable transaction. And once that happens, the Federal Communications Commission will have an excellent opportunity to get some of the data it will need to decide if it should regulate interconnection agreements between last-mile ISPs such as Comcast and other companies selling bandwidth or content over IP.

This isn’t about content, it’s about access

This issue has become more prominent in recent months as users have complained about their Netflix or online video streams buffering or cutting out during prime time. The problem appears to be congestion between online video providers like Netflix and bandwidth providers like Comcast that causes packets to drop and the end user experience to degrade.

Are last-mile ISPs letting this degradation happen as a way of hobbling online video competition from vendors like Netflix or Amazon or as a way to make extra money by charging companies to get access to the end consumer over their networks? Or are they simply overwhelmed by the traffic and neither side can agree on a fair way to pay for interconnections?

Basically, are last-mile ISPs acting as rent-seeking opportunists because they can or is this a legitimate business fight over who pays for the interconnections between networks? To decide the FCC will need data on both the actual congestion at these interconnection points and on the pricing that ISPs are charging.

Level 3 data that illustrates port congestion.

Level 3 data that illustrates port congestion.

And the sense in Washington, as articulated by Public Knowledge SVP Harold Feld, is that the Comcast acquisition of Time Warner Cable is the right venue to force access to this data and start this debate.

So even as Netflix and Level 3 confuse the issue, equating it with paying for better access, the FCC is going to stand its ground and look at peering as an interconnection issue. That is part of FCC Chairman Tom Wheeler’s beloved network compact that is governing how he’s thinking about moving from the analog to the IP age in communications. And the logical place to start this review will be as part of the Comcast-Time Warner merger review.

I hope the transition team associated with the merger compels information on performance at the interconnection points, but also the prices paid for direct peering with Comcast. And as someone whose broadband slows to a trickle about two-thirds of the time when I’m trying to watch TV from a Netflix or Amazon during prime time, I really hope the agency’s scrutiny or eventual action causing things to improve.

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