Verizon responded to that post.
http://publicpolicy.verizon.com/blog/entry/level-3s-selectiv...
http://publicpolicy.verizon.com/blog/entry/level-3s-selectiv...
Basically there are 4 different situations:
1) ContentProvider<->Level3<->Cogent<->ISP<->User
2) ContentProvider<->Cogent<->Level3<->ISP<->User
3) ContentProvider<->Level3->ISP<->User
4) ContentProvider<->Cogent->ISP<->User
In all cases the first network gets a payment by the content provider and the last network a payment by the user. In cases 1 and 2 the middle network is not getting a payment because neither side is their direct client. So the Cogent/Level3 dispute is about there being the same number of 1 and 2 cases so that it all evens out and no compensating payment is necessary. Cases 3 and 4 require no additional payments no matter the upload/download ratio because both network links have been paid for, one by the user the other by the content provider.
This whole thing is about the ISPs noticing that the content providers are making money offering content over the internet (shocking I know) and trying to reach across the network and grab some of that revenue, even though everyone has already been compensated for the actual transfer of bits.
Netflix is one of the first ContentProviders to be pumping so much traffic that they will imbalance the peering traffic ratios of any almost any Tier 1 they buy transit/CDN from, except for probably Google, which ended up doing what Netflix is doing now: paid peering.
That's only relevant if the transit/CDN is actually peering with another Tier 1 provider to deliver the Netflix traffic (cases 1/2). What's been in the news has been cases 3/4 where there's a single transit provider in the picture and there's no reason for the ISP not to accept the content with no compensation for the asymmetry as it has a client paying him for that service.
> except for probably Google, which ended up doing what Netflix is doing now: paid peering.
Do you mean Google is also paying ISPs for access to users like Netflix has had to? Because if you mean Google is having to do paid peering with transit providers because their traffic is asymmetric that would just be normal payment for transit, as if Level3/Cogent/etc where providing transit to them.
The issue is really that the idea of transit providers in general are becoming obsolete. So much fiber was laid, with DWDM and further subdivision abilities, it costs comparatively nothing to get a nationwide network these days. That was Cogent's entire business model, buy cheap fiber, sell transit for almost nothing to content providers, practically (in some cases, actually) give away transit to ISPs/businesses to keep their traffic ratios as balanced as possible.
Now, we're in a situation where it's not technically or financially hard to have a presence in every regional peering point. The major content providers don't need transit providers (or in the case of Level3's CDN, are already provider) except out of convenience and their access to settlement free peering. The major ISPs have no need for transit providers(or are already providers), as all the content providers wants to peer with them, and most of them have nationwide networks to do so. (see comcast: http://business.comcast.com/images/default-source/about-us/t... )
Unregulated peering has lead to the cost of transit plummeting to almost nothing. ( http://drpeering.net/white-papers/Internet-Transit-Pricing-H... ) We've just hit an interesting point where 2 contentproviders (Netflix and Youtube) are half of all internet traffic, and the eyeball networks are all basically tier 1 transit providers. There's basically unlimited choice for transit providers for ContentProviders, but each eyeball only has 1-3 ISPs to choose from.
My thoughts are rather than attempting to regulate transit/peering, regulate that last mile network and let people choose their own transit provider. Back in the DSL days, I used a local ISP that provided cheaper/better service than our telco. If I could pay a flat $x/mo for 1gb connection to a transit provider of my choice, I'm sure Google or Level3 would offer cheap uncongested access.
Are you sure?
http://en.m.wikipedia.org/wiki/Tier_1_network#List_of_tier_1...
Is there a relevant difference between that and what Netflix wanted?
Yes if they are willing to interconnect with that ISP at every exchange point. In practice that's expensive and what transit providers are for. Here's my proposal for a simple set of rules that would solve all these disputes:
https://news.ycombinator.com/item?id=7644339
>Why can't I host my website for free, just paying an upfront cost for a server, and get it hosted in an ISP's facility?
You should be able to do something similar to that to provide service for only that ISP's users. In fact Netflix does exactly that with some ISPs:
https://openconnect.itp.netflix.com/
This doesn't allow you to host your website for free because it only adds connectivity to the users of that specific ISP, not the whole internet. For that you have to buy transit.
How many times would they need to interconnect with a particular ISP? Once?
It's right there in the link. You'd have to interconnect with Verizon/Comcast at every one of their regional interchange points. It would become very expensive very fast for a single small website, but it would be reasonable for a transit provider or a very large content provider that already has servers everywhere (like Google). There would be no free riding, everyone would need to pay for their own way, either by directly physically connecting to the interchange points or by paying a transit provider that already does.