If we expected Level 3 to go quiet while it gets its integration of Global Crossing rolling, the opposite appears to be the case. Three more moves on three completely different fronts – two early integration milestones and a key contract:
A week after the completion of the merger, they have already moved to combine Level 3’s Vyvx and Global Crossing’s Genesis Solutions. This was of course not unexpected, as the combined entity will have greater global coverage, reaching 450 markets in 45 countries, as well as a wider portfolio of broadcast backhaul and managed video solutions. Of course, while the entities have been merged, there surely remains integration work before Vyvx and Genesis work together as one.
They have also issued a unified peering policy for the combined Global Crossing and Level 3 networks. This was actually put forth originally in an FCC filing over the summer in response to XO’s DOJ challenge (which was later withdrawn). It really has two purposes, to allay the fears that they might use their size in the transit marketplace to de-peer rivals to their advantage, and also to take a bit of high ground against Comcast and other last mile providers in the shifting interconnection power game.
And last, but most important if one likes actual revenue, the Texas Department of Information Resources has signed a 5 year agreement for a range of services from Level 3 including dedicated internet access, IPVPN, and Ethernet private line. They will use them to underly the services they provide to 700 agencies, schools, and enterprises state-wide. A nice contract, but can they make Rick Perry look good at a debate? Oh never mind…
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Categories: Internet Backbones · Internet Traffic · Mergers and Acquisitions
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Yes, i think it’s possible for LVLT to make Perry look good– they could arrange for his state sponsored prayer for rain over drout stricken areas of Texas to be answered. Not sure how that would be done though.
Don’t look now, but it’s raining in TX
The state official who made the decision, Ms. Robinson, seems to be influential with her state’s governors over a long period.
http://www.spartnerships.com/newsletter/tgi%205-21-10/tgi.html
On a different note, I recall Candidate Perry referring to treason at the central banking level, so maybe Level 3’s Network can help him get the message out as we head towards The Nuremberg Trials. For what is treason without hangings, right Enron?
volume times price. looks like the cost of bandwidth is going to change some here. if they make this stick its going to cause lvlt to make some money in IP that was not expected
Settlement-Free Peering Agreement
If Level 3 has determined to pursue settlement-free peering with a party that has requested it, the parties will negotiate the terms of a settlement-free peering agreement. Those terms will require parties to assure that, at all times during the term of the agreement, the “bit miles” for Internet traffic exchanged over the interconnection points and carried by one party will not be materially greater than the bit miles carried over the interconnection point for the other party. “Bit miles” would mean the product of (a) the number of air miles a party’s Internet network carries Internet traffic from the source or destination to the interconnection point where that traffic is handed to the other party (expressed as a traffic-weighted average, and including international miles), and (b) the number of gigabits carried by the party in the applicable Internet traffic. For example, if a party’s network carried 10 gigabits of content 1,500 air miles over the course of a day, the party’s bit miles for that day would be 15,000 gigabit-miles. The settlement-free peering agreement would include provisions requiring a party to remedy material discrepancies in bit mileage by using changes to routing, changes to interconnection locations, or purchase of services from the other party or from third parties.
In order to allow the other party to achieve approximate bit mileage equality, both parties must allow the other party to alter the location of interconnection points in a manner that will permit the other party to remedy material discrepancies in bit mileage (such as placing interconnection points closer to the origin/destination locations on the other party’s network, provided that such ports are utilized at appropriate levels). The interconnection locations would be mutually agreed such that the space and power used by each party would be roughly balanced, so that neither party charges the other for space and power for interconnection locations within their own facilities. Additionally, the interconnection locations must be locations which are on-net to both parties or, if not on-net to one party, either (a) open and accessible to be placed on-net by that party (i.e., the entity controlling access to the location will allow the other party to access the location via fiber or other connectivity without imposing charges for physical access to the facility), or (b) served on-net by at least three competitive providers of communications service.
The agreement would include provisions requiring joint capacity and forecasting reviews on a periodic basis. The agreement would require that each 10 Gbps interconnection point (whether initially-deployed, relocated to correct a bit mileage discrepancy, or augmented based on increased volume) would have to have an agreed minimum utilization. The agreement will also include provisions obligating both parties to augment interconnection point capacity on a timely basis when and as traffic meets specified thresholds. Other standard terms will be included in the settlement-free peering agreement negotiated between the parties.
maybe a better way to say that is distance and volume will matter
For example, if a party’s network carried 10 gigabits of content 1,500 air miles over the course of a day, the party’s bit miles for that day would be 15,000 gigabit-miles. The settlement-free peering agreement would include provisions requiring a party to remedy material discrepancies in bit mileage by using changes to routing, changes to interconnection locations, or purchase of services from the other party or from third parties.
Their policy will appeal to the regulators for its transparency and non-discriminatory character, but at the same, coming from a behemoth the size of a a combined LVLT/GBLX, this is pretty much a part-peering/part transit agreement. On a global level it means that LVLT will be able to use its global and US coverage to engage in peering with PTTs in every country, creating a truly international IP network with few transit payments. At some point that is going to create some real power. The interesting regulatory wrinkle is that regulators don’t want to go near peering: it’s too complex and too much of it is outside their control, being extra-territorial. Their only tool is merer control provisions, but once you are through that gate, it’s not as easy to control you if you put the screws on as it is in other markets. All those low margin IP transit sales to build scale and market share are not starting to remind me of the Chinese manufacturing industry.
So, back in the U.S.A., how does Comcast field this? The FCC can’t be too far behind in weighing in on the dispute whereby Comcast unilaterally and arbitrarily created a “toll bridge” in order to discriminate against incoming content being requested by their “subscribers.”
BROOMFIELD, Colo., Oct. 12, 2011 /PRNewswire/ — Level 3 Communications, Inc., (NASDAQ: LVLT) today announced that it has posted a revised peering policy for Internet Protocol traffic exchanged within the United States to accommodate a rapidly changing Internet. The new policy, which can be found on Level 3’s website at http://www.level3.com/Legal/IP-Traffic-Exchange-Policy, was created by Level 3 to address questions raised by the Department of Justice during its review of Level 3’s acquisition of Global Crossing Limited.