Peering/Interconnection on the Internet as a Telecom Carrier
I apologize for the long list of recipients. I'm certain many of you will join in related discussion within your respective forums. I am attempting to get largely the same statements/thoughts out to wide variety of interested parties, many of which have been asking for a statement from me or have put related material online in an effort to receive comments. For those of you on the nanog list, this material is not strictly operational in nature, but I feel it is sufficiently related to the operations of the Internet to merit posting. The information contained herein is not proprietary information and can be assembled through a variety of public sources. Nothing contained herein is to my knowledge covered under any non-disclosure or proprietary information agreements to which I am currently or have been previously bound. What follows are some of my thoughts on the matter of Peering/Interconnection on the Internet as a Telecommunications Carrier/Internet Service Provider (hereafter ISP). For the last year I have been actively working to forge a future as a Utility/Telecommunications Carrier for the ISP business that I started nearly four years ago. Throughout this process I have had the privilege of working with Mr. David Simpson of Young, Vogl, Harlick, Wilson and Simpson LLP of San Francisco. Much of what I will discuss about peering has been shaped by what I've learned from Mr. Simpson. Unlike Mr. Simpson, I have no license to practice law and thus legal questions that arise from this discussion are best forwarded to him. (His address is: das@yvhws.com). Beyond my work with Mr. Simpson in this area, as a daily matter I have been directly involved in all aspects related to the engineering, maintenance, operations, purchasing and contract negotiations necessary to produce Internet connectivity over multiple Internet Exchange Points (often called NAPs or MAEs but hereafter referred to as "IXPs") for the last two years. Universal reachability is a fundamental tenet in public networks. It is assumed that if you the customer pay for a connection to a public network all points within that public network are reachable by you the customer. This is true of both the Internet and the more traditional Public Switched Telephone Network (hereafter referred to as the "PSTN"). As most of us know, these networks are not single entities but are comprised of many networks that connect together and cooperate to produce universal reachability. To do this they must interconnect and exchange their respective traffic. The notion of "free peering" is directly analogous to a "bill & keep" interconnection relationship between traditional telephone companies, pursuant to which Carrier A agrees to accept and terminate - at no charge - all of the traffic originating on Carrier B's network which is destined to Carrier A's customers in return for Carrier B accepting and terminating - at no charge - all of the traffic originating on Carrier A's network which is destined for customers of Carrier B. The other method of interconnection between Common Carriers is called "reciprocal billing". It works the same as the relationship above except replace the phrase -for a negotiated sum- for the phrase -at no charge- . In the Internet we would call "reciprocal billing" "settlements". In this age of telecommunications deregulation, it is very common for there to be significant differences in the size of networks during the phase when one carrier is the incumbent and other carriers are entering the market. It has been argued for years (often by these new networks) that the public is better served by a competitive marketplace and that given the impact of the incumbency of some networks certain inequities between the new networks and the incumbents will need to be accepted for a period of time, in order for that competitive marketplace to emerge in a meaningful way. As a practical/business matter, it is logical "free peering"/"bill & keep" interconnection relationships are formed when there are not substantial differences in the associated costs for Carrier A and Carrier B. However it is common that there are substantial differences in these costs for some period of time and they are either negotiated with money or time until parity can be achieved or new negotiations take place. Most importantly, as with other Utility interconnection issues, there exists an established non-discriminatory framework for these negotiations and the resulting interconnection agreements with time limits for specific phases, procedures for arbitration, required public disclosure and regulatory approval for the outcome. In the context of peering, many mid sized ISPs have currently or have been willing to build out their networks to exchange traffic with the largest networks in multiple geographically diverse points only to find that these larger networks will neither exchange traffic once these competitive networks have arrived at these points, nor will these large network operators even disclose under what criteria they would exchange traffic over these geographically diverse points. This refusal even to make public their criteria for interconnection is at the heart of a very serious threat to the continued growth and openly competitive nature of the Internet. It is also, as discussed below, illegal. Under the Communications Act of 1934 As amended by the Telecommunications Act of 1996 ("Act"), "telecommunications carriers" are under obligation to interconnect "with the facilities and equipment of other telecommunications carriers..." (Act, Sec. 251 (a) (1). A companion obligation under Section 251 (a) of the act is to "refrain from installing network features or functions that violate the guidelines and standards of Section 256 of the Act". Section 256 mandates "non-discriminatory accessibility by the broadest number of users and venders of communications products and services to public telecommunications networks used to provide telecommunications service." In Section 3 (43) In The term "telecommunications", as used in the Act means "the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received". On a State level, the California Public Utilities Commission (hereafter "CPUC) has made clear on numerous occasions that public telecommunications utilities must provide reasonable, non-discriminatory interconnection to other telecommunications carriers. (See, e.g. Decision No. 95-12-056 at page 16 issued in the CPUC's local competition proceeding, R. 95-04-043/I.95-04- 044 "We will review proposed interconnection contracts for unfair discriminatory terms and will deny approval or direct parties to renegotiate any unfairly discriminatory or otherwise unreasonable terms where necessary". The conduct of certain telecommunications carriers with regard to these current peering/interconnection issues also raise broader legal questions of Anti-Trust. This is true, especially given that the most anti-competitive of these Carriers are the very same telecommunications Carriers that own and operate the IXPs in which most of the public and private interconnection/peering takes place. This is a situation directly analogous to the control of and manipulation of costs and flows in railway switching yards during an earlier "industrial" revolution. The behavior of the owners and operators of these yards were an integral part of the reasoning behind the creation of Anti-Trust Law in the first place. There too economic justifications were made for the discriminatory and anti- competitive behavior of large business combinations. The key to non-discrimination and open competition is disclosure. By definition, the non-disclosure of peering/interconnection requirements and agreements, especially the non-disclosure and fair application of criteria for establishing or maintaining peering between networks is the engine of this discriminatory and anti-competitive behavior. Many of us in this industry have heard for years from the largest networks in our business that they will not establish/maintain peering with our networks nor will they disclose their criteria for establishing or continuing peering. It is largely for this reason that I confess, I am a proponent of some level of regulation in the Internet as soon as possible. I think this minimal level of regulation is critical to the Internets open and unrestricted development. As an entrepreneur and a professional in this industry, I urge some minimal level of immediate regulation such that the application of accepted telecommunications law and practices are upheld. If they are not, I fear we will suffer the consequences of the accumulation of all the economic power over the Internet in to a very small number of hands. To me this is a very big problem, perhaps one even worth losing your job over. As these issues unfold there are several arguments that will be used by those that resist what I am suggesting and I'd like to address them forthwith. As with all good arguments there is some truth in what is said by those that see this issue differently. I submit that the facts are being manipulated to mislead the public, obscure the anti-competitive motives and cover-up the refusal to abide by the law which calls for non-discriminatory interconnection. By way of example. 1) It has been said that some ISPs are "looking for a free ride". This may be true of a few, though I know of none. The more relevant fact is that there are scores of mid-sized ISPs that are willing to pay or are currently paying all the costs required for interconnection at current or future traffic levels between them and those that claim that they are "looking for the free ride". 2) As ridiculous as it sounds I have heard it said that "Internet Traffic is not telecommunications, it is rather an "Enhanced Service". This is particularly absurd in the light of the Telecom Acts definition of "telecommunications", which, as quoted above, by its own broad terms, easily covers Internet traffic. 3) I have heard that in order to negotiate these interconnection/peering agreements it is necessary to enter into highly restrictive long term non-disclosure arrangements. The history behind the negotiation of interconnection does not support this view. To the contrary, this practice of enforcing "secrecy" will only result in discriminatory results. 4) It is argued by the largest ISPs that they are not Telecommunications Carriers and therefore under no obligation to interconnect with other ISPs, who likewise are not Carriers under the Telecom Act. This argument lacks merit for two reasons. First the large ISPs making this argument are themselves wholly owned subsidiaries of self-acknowledged, FCC-licensed carriers. These ISPs are fully-integrated technically, financially, personnel-wise and infrastructure-wise, into their Telecom corporate parent. No regulatory agency in the country would accept the fiction that the ISP "business" of the carrier is somehow separate and distinct from the telecommunications business of that same carrier. And, of course, from a marketing perspective, all these carriers are billing their Internet services as merely one element of their bundled, integrated service offerings. Second, the "you're not a carrier" argument can't apply to Whole Earth, because it is a licensed carrier - it has a Certificate of Public Convenience and Necessity (just like Pacific Bell/TCG, etc.) to provide facilities-based local and long-distance telecommunications services. Even if we didn't have this particular status it seems clear that the definition of Carrier within the Telecom Act (above) would include all ISPs. On a personal note, as some of you are aware there has been some turmoil over these issues for me and for Whole Earth Networks LLC. Words alone are not sufficient to express the appreciation I have for the support I have received from the employees, customers, friends and other industry professionals over these tumultuous days. Recently the ownership too has been more supportive. I am beholden to all of you and simply can't express how deeply appreciative I am. These extraordinary circumstances have produced such unqualified support and admiration of my efforts in this area that I have been moved to tears on more than one occasion. I am thankful to the employees of Whole Earth for their commitment to stay at work and produce the services that we are all proud of. I remain convinced that Whole Earth Networks LLC is a Company with a bright future and I endeavor to ensure that future. David S. Holub
At 11:21 AM 05-05-97 -0700, David Holub wrote:
2) As ridiculous as it sounds I have heard it said that "Internet Traffic is not telecommunications, it is rather an "Enhanced Service". This is particularly absurd in the light of the Telecom Acts definition of "telecommunications", which, as quoted above, by its own broad terms, easily covers Internet traffic.
My reading of the 96 Act (together with the brilliant lawyer who explains all the legal telephony jargon to me) does not show any re-definition of a telecommunications carrier. There is almost no mention of Internet services, beyond a passing mention of access for schools and libraries. The 96 Act does nothing to change or amend the definitions and regulations of telephony carriers or Internet Service Providers. The Internet was scarcely thought of in the bruising battles over control of telephony turf. The interpretations of the incumbent local exchange carriers certainly consider Internet services as non-tariffed service, as almost all have set up separate non-tariffed subsidiaries for Internet service. However, many ILECs consider that their Internet services are subject to some regulation from the Modified Final Judgement on the breakup of the Bell System, such as inter-LATA transport of customer traffic. Hence these clumsy, LDIP (long distance Internet Provider) arrangements between ILEC Internet subsidiaries and wholesale backbone providers.
4) It is argued by the largest ISPs that they are not Telecommunications Carriers and therefore under no obligation to interconnect with other ISPs, who likewise are not Carriers under the Telecom Act. This argument lacks merit for two reasons. First the large ISPs making this argument are themselves wholly owned subsidiaries of self-acknowledged, FCC-licensed carriers. These ISPs are fully-integrated technically, financially, personnel-wise and infrastructure-wise, into their Telecom corporate parent. No regulatory agency in the country would accept the fiction that the ISP "business" of the carrier is somehow separate and distinct from the telecommunications business of that same carrier.
The PUCs of several states have accepted the argument that Internet services may be offered by unregulated subsidiaries of the regulated incumbent LECs. The issue of whether these unregulated subsidiaries are subject to the MFJ provisions has not been tested and probably never will be tested by the Federal courts of jurisdiction. The subsidiary status is solely to prevent unlawful transfer of regulated carrier goods and services to the unregulated subsidiary, whether Internet service, voicemail or dry-cleaning services. (Yeah, I made that last one up.) It is quite clear to me that Internet services are treated like any other unregulated business (such as dry cleaning) that the regulated ILECs choose to enter. There are very few areas that they are strictly prohibited from entering by the Federal MFJ. There are no business activities that I know of that are prohibited by the PUCs of the several states.
And, of course, from a marketing perspective, all these carriers are billing their Internet services as merely one element of their bundled, integrated service offerings. Second, the "you're not a carrier" argument can't apply to Whole Earth, because it is a licensed carrier - it has a Certificate of Public Convenience and Necessity (just like Pacific Bell/TCG, etc.) to provide facilities-based local and long-distance telecommunications services. Even if we didn't have this particular status it seems clear that the definition of Carrier within the Telecom Act (above) would include all ISPs.
There is no definition or redefinition of "carrier" in the 96 Act. The MFJ is still in force, barring ILECs from inter-LATA transport of telephony and whatever-else. The definition of "carrier" dates back to 1934 and doesn't shed any light on Internet services since such services were not well understood in 1934. The Federal government and Federal courts have done nothing to define a legal or regulatory status for Internet service providers. From what is writ in law and precedent we know nothing about what an Internet service might be. We must wait for the FCC to clarify the status of Enhanced Service Providers and their responsibility for access charges in their upcoming rule making to glean a hint of what an ISP might be. We may wait, if we choose, for some future Congress to clarify the status of Internet service providers, but I expect the point to be moot by the time Congress is able to articulate the obvious. I make these rebuttals with the understanding that they have little to do with the issue of UUNET and I mean no disrespect to you and your stand regarding those issues. My respects and good wishes go out to you in your continuing struggle, but I thought it a good idea to say a thing or two about the state of law and regulation with respect to the Internet. Thank you, David, and good luck to you, but don't expect the Feds to help much in the struggle of ISPs for world domination. My best wish is that those who are to be subsumed in the upcoming struggle will be enriched by stock swaps and buyouts, as the BBN and UUNET stockholders have been. --Kent
On Wed, 7 May 1997, Kent W. England wrote:
My reading of the 96 Act (together with the brilliant lawyer who explains all the legal telephony jargon to me) does not show any re-definition of a telecommunications carrier. There is almost no mention of Internet services, beyond a passing mention of access for schools and libraries. The 96 Act does nothing to change or amend the definitions and regulations of telephony carriers or Internet Service Providers. The Internet was scarcely thought of in the bruising battles over control of telephony turf.
The fact that the 1996 Act draws no distinction which is illustrative of my point. It appears, that the legislative intent was not to distinguish between these services, clearly they contemplated them all.
The interpretations of the incumbent local exchange carriers certainly consider Internet services as non-tariffed service, as almost all have set up separate non-tariffed subsidiaries for Internet service. However, many
Among other reasons, that I allude to, like exemption from rights to interconnection.
ILECs consider that their Internet services are subject to some regulation from the Modified Final Judgement on the breakup of the Bell System, such as inter-LATA transport of customer traffic. Hence these clumsy, LDIP (long distance Internet Provider) arrangements between ILEC Internet subsidiaries and wholesale backbone providers.
That's regulatory bullet dodging. As you know they are prohibited from being in the LD business until they have made a case for allowing local competition.
The PUCs of several states have accepted the argument that Internet services may be offered by unregulated subsidiaries of the regulated incumbent LECs. The issue of whether these unregulated subsidiaries are subject to the MFJ provisions has not been tested and probably never will be tested by the Federal courts of jurisdiction.
I don't know about other states but from what I can tell here in California the CPUC hasn't really looked at it. From the meetings I've been to, the ISP business arm hasn't helped PacBell with their new ISP tariff argument either. As I've point out at the CPUC, because of how PacBell has organized their service offering, that unregulated subsidiary is a prime offender in the 'congestion problem' that they have taken to the FCC and in that argument they make no mention of their own subsidiary and how it nails up line side trunks and switch ports.
The subsidiary status is solely to prevent unlawful transfer of regulated carrier goods and services to the unregulated subsidiary, whether Internet service, voicemail or dry-cleaning services. (Yeah, I made that last one up.) It is quite clear to me that Internet services are treated like any other unregulated business (such as dry cleaning) that the regulated ILECs choose to enter. There are very few areas that they are strictly prohibited from entering by the Federal MFJ. There are no business activities that I know of that are prohibited by the PUCs of the several states.
I'm not suggesting that the regulatory authorities step in and control the Internet with huge brush strokes. The regime that we live under for switched/circuit services has taken many years to develop. So too will the regulatory regime for Internet services. What I am suggesting is that there are some minimal non-discriminatory rules that need to be enforced. Even the threat of this, in the sense that the regulators notice bad behavior on the part of companies engaged in other regulatory matters before these bodies and that awareness translates into less than favorable results in their other battles we should see some modification in what will otherwise be unacceptable behavior. It is fair and reasonable to accept nothing less from our regulators.
There is no definition or redefinition of "carrier" in the 96 Act. The MFJ is still in force, barring ILECs from inter-LATA transport of telephony and whatever-else. The definition of "carrier" dates back to 1934 and doesn't shed any light on Internet services since such services were not well understood in 1934.
I disagree see above.
The Federal government and Federal courts have done nothing to define a legal or regulatory status for Internet service providers. From what is writ in law and precedent we know nothing about what an Internet service might be. We must wait for the FCC to clarify the status of Enhanced Service Providers and their responsibility for access charges in their upcoming rule making to glean a hint of what an ISP might be. We may wait, if we choose, for some future Congress to clarify the status of Internet service providers, but I expect the point to be moot by the time Congress is able to articulate the obvious.
I'm slightly more hopeful. This access charge exemption fear is getting old. If we accept that there are a wide variety of rights (ie reciprocal billings, collocation and interconnection) and obligations (paying into all the funds) associated with being a Carrier, this industry that we have created may get much of the respect that it deserves.
I make these rebuttals with the understanding that they have little to do with the issue of UUNET and I mean no disrespect to you and your stand regarding those issues. My respects and good wishes go out to you in your continuing struggle, but I thought it a good idea to say a thing or two about the state of law and regulation with respect to the Internet. Thank you, David, and good luck to you, but don't expect the Feds to help much in the struggle of ISPs for world domination.
I appreciate that but I'm not on a crusade I'm just pointing out some of the most offensive anti-competitive behavior by some but not all of the biggest providers. Look for some results on this disclosure issue. These folks don't have a legal leg to stand on there and its bound to show in the near future as they get grilled in the press. They all have ongoing issues in front of these regulators and hypocrisy is costly in those circles. --david
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David Holub -
Kent W. England