When All Else Fails

What The Comcast/Level 3 Fracas Is Really About: Money

by John Biggs, TechCrunch

The headlines are pretty rough: Comcast hates Netflix! Net neutrality is dying! Communist forces from Russia and Cuba are attack a small town in Colorado and a ragtag band of high school students band together to fight them (although, arguably, this may have nothing to do with Comcast/Level 3)! But what’s really going on here?

First, let’s understand how data gets from the cloud to you. Back in the old days, when you wanted serve something on the web you rented a T1 line, set up a machine, and hoped someone would arrive to view your wares. This server, in turn, connected to a backbone and then ISPs – which used to be small mom and pop shops offering dial-up and are now faceless corporations – gave that data to you. It’s like a series of tubes, you know? That was before sites like Slashdot and Digg created a massive surging effect on popular content and the general public thought it would be nice to watch movies on their television via the Internet. As a result, digital traffic rose to alarming rates and everyone involved – from the dude with the T1 line to the T1 line providers to the person at home using a cable modem – had to upgrade. And upgrade. And upgrade. To put this in perspective, we only really had this problem for the past decade or so and the technology has improved so quickly it’s almost like the carriers are sprinting – and they are. In turn, it makes the 30 year move from Public Switch Telephone Networks (which were partially mechanical) to digital switching of telephone calls look like a leisurely walk from New York to Antarctica.

So this stuff costs a lot of money and carriers didn’t do it out of the kindness of their hearts. They want to be paid for their data centers. That’s where Level 3 comes in. Level 3 acts as both a backbone – meaning a massive, nationwide carrier of data – and a Content Delivery Network. Back in the old days, the backbone would be the only thing on the net. But once it became clear that hosting all your data on one server was a bad idea, CDNs grew up and allowed content providers to cache their data in different physical locations. You’d hit one CDN in California and I’d hit one in New York. Things worked faster that way.

CDNs also became massive sources of traffic but they didn’t have many network resources so they tried to pay less to deliver their traffic as a “service” rather than an “insurance policy.” Now in a perfect world my bits are worth as much as Netflix’s bits. And, for the most part, that’s true. But when Comcast sees Level 3 as a CDN, things change.

Read the rest at this link.