Recently the DOJ has asked Level 3 for more information about its proposed purchase of Global Crossing, and XO has filed objections claiming the deal would create a ‘global colossus’ that would dominate the Tier 1 backbone market and damage the competitive environment. It seems odd to me that a sector that has suffered from some of the toughest pricing pressures in the industry for a decade would be so delicately balanced that it would swing the other way with one deal, but then the Tier 1 backbone peering/transit system has always been an odd place that nobody really understands. What do you think?
Will the LVLT/GLBC deal damage the IP transit marketplace?
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Categories: Internet Backbones · Mergers and Acquisitions · Polls
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How about another option: NO, it may even require a revamping of the system’s archaic pricing schemes with more favorable terms which properly adapt to factual costs to deliver essential IP communications services around the globe.
Let’s hope that our govt. agencies are finding the moral conviction along with an objective, third party engineering task force to advise them properly through this pivotal problem ensuring that a best of breed internet experience will be sustained into perpetuity.
I abstain from voting for this reason.
From the voting on this issue it is obvious that the readers of the article do not realize that a Level 3 and Global Crossing merger will allow the new company to dictate to all other peers what connectivity will cost. Any ISP who gets the slightest bit out of balance on the peering interfaces can be charged a per meg rate set by the new company and this could range anywhere from $1 to $9 per meg based on what the new company thinks is appropriate. Anything charged at all on the peering interface then allows the new company to have an advantage for service per meg pricing where they are not paying anyone for peering transit.
As the new company would own 54% of the world’s connectivity, their position would be one of enormous strength and they could dictate pricing terms for connectivity that would eventually put smaller ISPs out of business and do damage to larger ISPs who get out of balance on their peering interfaces. And the content providers would start to migrate all of their content to the big new network as the per meg costs rise for the other ISPs on their peering transit to the big network.
Not a great idea in the world of the Internet which was conceived by intelligent people who had a goal of sharing knowledge and connectivity down to the smallest user, and now we will have one very big company with the clout to control who gets what and when they can get it and they will be able to dictate what one pays for it as well. Anyone remember the monopoly called Ma Bell?
Isn’t that the point of building, buying and marketing your asset? Won’t another entity step in if they are controlling pricing and putting everyone out of business?
Couldn’t it also be opportunity to anyone else providing “connectivity”?
Just asking….
Keep in mind that the Monopoly Ma Bell enjoyed was regulated and managed due to the fact nobody else could provide you phone service. Anybody today can provide phone and internet service even if its just 2 cans and a string. It is up to the customers to decide what they want to pay for and how they want to get it and if the market warrants it just like oil companies do they will drill more even if its for fiber.
Is it not about time that AT&T plus VZ enjoy the benefits of existing in the new internet world where they just may have a little more competition than they never had before..
the monoply called MaBell is back to a similar level with 2 major companies rather than the former 1 company.
And, let’s not forget that most of the competition of this new LVLT/GLBC Venture only recently came out of the BK scenario which also includes GLBC
It’s a dangerous world we live in and hopefully LVLT remains with their desire to survive profitablly…..
Look for Verizon and AT&T to chime in on XO’s side before long. They won’t miss a chance to look small and harmless!