December 6, 2010
Volume XXXIII, Issue 3
Don't Miss CONTENT IN THE CLOUD at CES
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As the Consumer Electronics Association (CEA) exclaims, "Explore this cutting-edge technology that promises to revolutionize entertainment delivery! If the cloud touches your business, you won't want to miss these eight keynotes and three panel discussions focused on cloud-managed content and its impact on consumers, the media, telecom industries, and consumer electronics (CE) manufacturers."
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Keynotes include Geng Lin, Chief Technology Officer, IBM - Cisco Systems Alliance; David Rips, President, Verizon Digital Media Services; Rob Shambro, Chairman & CEO, GenosTV; Jim Burger, Member, Dow Lohnes; Barry Tishgart, VP, Internet Services, Comcast; Claude Tolbert, VP, Business Development, BitTorrent; Charles Perkins, Founder & Chief Scientist, Virtual Rendezvous; and Mark Teitell, Executive Director, Digital Entertainment Content Ecosystem (DECE).
Panelists discussing the Impact on Consumers of Implementing Cloud Computing for Media Storage include Todd Weaver, CEO, ivi TV; Mike Lewis, Founder, Kapost; Jason Herskowitz, VP of Product, LimeWire; Christopher Allen, General Manager, Napster; Guillermo Chialvo, Gerente de Tecnologia, Radio Mitre; Ian Donahue, Co-Founder, RedThorne Media; Jim Rondinelli, VP of Strategic Development, Slacker; and Louisa Shipnuck, Director, Marketing & Strategy, Verizon Digital Media Services.
Panelists discussing he Impact of Cloud Computing on the Entertainment and Telecommunications Industries include Stephen Condon, Director of Market Development, AT&T; Alex Limberis, VP Business Development, Next Issue Media; Doug Heise, VP of Marketing & Strategy, Panvidea; Guy de Beer, CEO, Playcast; Mark Friedlander, National Director, New Media, Screen Actors Guild (SAG); Mark Vrieling, CEO, ScreenPlay; Kurt Smith, VP, Sales, Verizon Digital Media Services; and Anne-Carole Nourisson, VP Licensing, Vivendi Mobile Entertainment.
And panelists discussing the Impact on Consumer Electronics Manufacturers of Cloud Computing Deployment include Mick Bass, VP, Strategic Alliances, Ascent Media; Sean Barger, CEO, Equilibrium; Les Ottolenghi, CEO & Founder, Fuzebox; Alexander Marquez, Director, Intel Capital; Mark Taylor, SVP, Content & Media, Level 3 Communications; Michael Papish, Product Development Director, Rovi Corporation; AJ McGowan, CTO, Unicorn Media; and Stuart Elby, CTO, Verizon Digital Media Services.
Microsoft Eyes Leap Back into TV
Excerpted from Reuters Report by Yinka Adegoke
Microsoft is about to jump back into the TV game. Only this time, it may aim at cable, satellite, and phone companies.
The software powerhouse has held talks with TV networks to create a new subscription-based TV service on its Xbox gaming console that would rival efforts by Google, Apple, and Netflix, sources told Reuters.
Microsoft's latest explorations after investments in MSNBC and WebTV come as efforts to redefine living room entertainment have accelerated in the past year, with technology companies seeking to offer lower cost alternatives to pricey pay-TV subscriptions.
One scenario under consideration by Microsoft is to create a new TV service on its Xbox gaming console that would establish a "virtual cable operator." The service would charge a monthly fee for access through the Xbox to networks such as ABC, NBC, Fox, CBS, ESPN or CNN, according to two sources familiar with the plans.
Other options include allowing cable subscribers to use the Xbox to watch shows with more interactive functions. Viewers could, for instance, message with friends over the console while viewing their favorite shows.
Microsoft is also exploring the possibility of creating programming packages for customers, setting up a bundle of sports or children shows, for example, these people said.
In addition, it could sell more individual channels, such as an HBO or Showtime, directly to subscribers. It already has Disney's ESPN on the Xbox Live online service.
These people said a service may not arrive for another 12 months, but early discussions have been productive.
Microsoft declined to comment. The people involved in the talks asked not to be identified as the discussions were confidential.
News of Microsoft's plans come as the pay-television industry are moving to allay investor concerns that consumers are fleeing expensive subscription packages for cheaper online services operated by companies such as Netflix and Hulu, which both charge $7.99 per month for streamed shows and movies. The phenomenon is called "cord-cutting."
The worry is that so-called over-the-top services could undermine the lucrative cable TV industry, whose dual-revenue stream model has made pay-TV one of the most resilient sectors during the economic recession.
Cable networks such as ESPN are paid carriage fees by pay TV operators and also earn revenue from advertisers.
But programmers have said they would welcome new types of competition to the cable and satellite companies.
Speaking at the Reuters Global Media Summit on Monday, News Corp Chief Operating Officer Chase Carey said the arrival of alternative TV services gives cable and broadcast networks yet another way to reach fragmented audiences. News Corp is parent of Fox Broadcasting.
"The emergence of platforms like that - from people like Microsoft which is really more a theory at this point, or Netflix - increases the value of content and brands and those who create the content and channels that actually the business and drives consumer demand," Carey said.
Microsoft has long held ambitions to be a major player in the TV business and has previously invested in MSNBC and interactive television initiatives including Web TV and MSN TV set-top box software. Its latest plans include offering interactive features to engage viewers through social media, interactive advertising and "gesture" technology that lets viewers change channels and fast forward through shows by waving their arms or speaking instructions, say people who have seen early demonstrations.
The Redmond, WA company is mulling feedback it has received from programmers including the expense of such a plan, said one person.
Microsoft faces an increasingly crowded field. Google has already launched Google TV, an enhanced web-TV service with partners including Sony televisions and Logitech set-top boxes.
Apple has also held talks with programmers, but faced resistance industry-wide over its plans to offer a lower-cost subscription TV plan, people familiar with the talks have said. Apple has begun to offer 99-cent TV show rentals for a limited number shows through Fox and Disney.
Report from CEO Marty Lafferty
 On Wednesday, Federal Communications Commission (FCC) Chairman Julius Genachowski called for the Commission to vote December 21st on a network neutrality compromise echoing an interim proposal made earlier this year by Congressman Henry Waxman (D-CA), outgoing Chairman of the House Energy & Commerce Committee, but without its sunset provision.
Genachowski's newest proposal would prohibit wireline Internet service providers (ISPs) from blocking traffic or from unreasonable discrimination, while also requiring them to inform consumers about traffic management practices; while still allowing mobile broadband providers leeway to create multiple levels of specialized services.
The Chairman abandoned the most controversial aspect of his original plan - to reclassify broadband access as a Title II telecommunications service under now outdated rules for single-carrier voice telephony from decades ago - but this raises the question as to the agency's fundamental authority to enforce the latest proposed order from its Chairman.
And indeed, leading House Republicans, now running to chair the House Committee that oversees the FCC, raised that issue, with Congressmen Joe Barton (R-TX) and Cliff Stearns (R-FL) questioning "the FCC's statutory authority to adopt these rules under Title I. The DC Circuit ruled in April that the FCC had failed to demonstrate authority under Title I to regulate Internet network management."
"We therefore write to request your analysis of the FCC's authority under Title I to issue the proposed rule. In the absence of clear authority, the FCC should defer to Congress in this matter." They are asking for a response from Genachowski by December 10th.
Congressman Fred Upton (R-MI), who also seeks to chair the Committee, was even more critical, saying, "We have all grown sick and tired of the Chicago-style politics to ram through job-killing measures at any cost, regardless of the consequences or damage to our economy. Rather than put a gun to the heads of our largest economic engines, now is the time for the FCC to cease and desist."
"The FCC does not have authority to regulate the Internet, and pursuing net neutrality through Title I or reclassification is wholly unacceptable. Our new majority will use rigorous oversight, hearings, and legislation to fight the FCC's overt power grab," he said.
Senator Kay Bailey Hutchison (R-TX) also voiced opposition to Chairman Genachowski's proposed rulemaking: "I have not seen any evidence to date that would justify this regulatory overreach," she said.
"In fact, the Internet has developed and thrived precisely because it has not been weighed down with burdensome government regulations."
"I am especially troubled that this action would occur without Congressional input and before the new members of Congress have been sworn in," she said.
"The American people clearly repudiated this type of government expansion on November 2nd. FCC Chairman Genachowski needs to stand down from his plans to impose onerous net neutrality restrictions." "If he decides to move forward, I will explore all options available to keep the FCC from implementing regulations that will threaten the innovation and job creation opportunities associated with the Internet."
The Commission itself is divided on its Chairman's proposal. Senior Republican FCC Commissioner Robert McDowell "strongly opposes" it as an "ill-advised maneuver. Such rules would upend three decades of bipartisan and international consensus that the Internet is best able to thrive in the absence of regulation."
"Pushing a small group of hand-picked industry players toward a 'choice' between a bad option (Title I Internet regulation) or a worse option (regulating the Internet like a monopoly phone company under Title II) smacks more of coercion than consensus or compromise," he said.
"This 'agreement' has been extracted in defiance of not only the courts, but a large, bipartisan majority of Congress as well. Both have admonished the FCC not to reach beyond its statutory powers to regulate Internet access. By choosing this highly interventionist course, the Commission is ignoring the will of the elected representatives of the American people."
And Republican Commissioner Meredith Attwell Baker added that the FCC does "not have authority to act." Meanwhile, Democrat Commissioner Michael Copps still wants the FCC to revert to the antiquated Title II regime.
The DCIA is less critical of this latest attempt by the FCC Chairman to strike a practical balance between protecting the openness of the Internet while also encouraging continued investment and innovation in Internet-based services. We applaud the removal of the specter of the possibility of reclassifying broadband under Title II, as well as the open and inclusive process that Commission has taken in drawing up this more workable compromise.
Clarity as to the legality of network management practices, in an area that is as rapidly evolving from a technology standpoint as broadband, poses enormous challenges to all concerned, and this proposal is more reasonable than prior ones from this Commission; but we still question discriminating between wireless and wired access, failing to obtain Congressional approval before seeking to codify such an order, and especially, therefore, not including a sunset provision.
Major Internet service provider (ISP) Verizon, for example, has already publicly embraced non-discrimination obligations for both its wireline and wireless broadband Internet access services. The carrier says, "We are walking the talk. We are doing so because we believe this is good for our customers and good for our business."
"The only issue is the extent to which the FCC should regulate in this area. In this fast-moving marketplace, inappropriate regulation can be very harmful to consumers, companies, and the ability of this industry to create jobs, provide new services, and be an engine for economic growth. That is why it is so important that policymakers get this right," noted the leading broadband provider.
"In tackling this issue, the FCC is hamstrung by an antiquated communications statute. That's why this issue should be addressed by Congress. Verizon has consistently called on Congress to update and reform the statute and adopt public policies that will encourage an open Internet, as well as promote investment and innovation across the Internet marketplace."
"If the FCC decides to act on the net neutrality issue, we urge the Commissioners to recognize the limitations of the current statute and the rapidly changing conditions in the marketplace and make any rules it adopts interim, rather than permanent."
"Specifically, the Commission should consider the framework of the Waxman proposal, including its sunset provision. The FCC's authority to act in this area is uncertain, and Congress has indicated a strong interest in addressing this issue; interim rules would encourage Congressional action, while showing appropriate deference to Congress."
The DCIA continues to believe that, absent a compelling marketplace need driving near-term adoption of the FCC Chairman's proposed order, a comprehensive review and very careful redrafting of the Communications Act for the digital age by Congress would be a more prudent approach. Share wisely, and take care.
Octoshape Leverages P2P Streaming for Major League Gaming
Abacast previously deployed large-scale, high quality-of-service (QoS) live P2P streaming commercially with Seoul Broadcasting System (SBS) over public networks for the Olympic Summer Games. This successfully validated this approach and demonstrated its enormous potential to revolution content delivery network (CDN) services.
The approach has also been chosen to efficiently deliver video over private enterprise and TV networks, as exemplified by Bank of America's deployment of Abacast's technology.
Now Octoshape has also used innovative P2P streaming technology effectively in "best-effort" public networks to accomplish multicast delivery while still managing high QoS.
While the networking and telecommunications industries have long been challenged to take multicast outside the domain of private networks and over the public Internet, Octoshape, like Abacast before it, has again demonstrated how this is possible. Octoshape used its P2P-based technology to deliver live video to viewers in over 100 countries this week for a Major League Gaming event.
AT&T CTO John Donovan said, "At the event, AT&T and Octoshape, a next-gen streaming technology provider, delivered an 'instant-on' high quality viewing experience to a wide range of connected devices and operating systems. Bringing this capability to the open Internet could fundamentally change the rules that govern online distribution today."
By delivering the highest-quality video to this milestone event, Octoshape has reconfirmed that P2P multicast over public networks can be a reality. The pioneer's entire suite of P2P technologies support such features as adaptive bit rate, resilient throughput optimization, digital video recording (DVR), and instant channel change.
Multicast delivery is integrated with the standard Octoshape P2P streaming technology for consumers that don't have access to multicast.
"This disruptive innovation paints a picture of economic and architecturally sustainable Internet audiences of a television broadcast scale in high-definition (HD) quality," explained Scott Brown, General Manager of the US for Octoshape.
"This comes without the server and network-based constraints that content delivery networks (CDNs) are burdened with today. Octoshape is giving rise to a new generation of media delivery, one that fundamentally changes the architecture and economics for the entire ecosystem, while providing unprecedented quality for the consumer."
MLG chose Octoshape's enabling P2P technology to power its landmark video event. "We aggressively sought a new-era content delivery approach to extend video to our far-flung, worldwide audience," said MLG CEO and Co-Founder Sundance DiGiovanni.
"Octoshape's multicast-over-public-networks strategy enabled us to deliver the highest-quality live video experience to them using far less infrastructure and bandwidth than would have been required with a traditional CDN offering."
DISH Network Streams Video to iPads
DISH Network this week announced that DISH Remote Access, the free application that gives DISH Network customers the ability to watch their live and recorded TV on compatible smart-phones, tablets, and laptops, is now available for the iPad.
To enjoy live and recorded TV viewing on the iPad, DISH Network customers must have a broadband-connected, Sling-enabled device such as the Sling Adapter - a small place-shifting device that pairs with DISH Network's ViP 722 or 722k HD DVRs.
"DISH Network is the only pay-TV provider to offer a true 'TV everywhere' solution, and now we've extended that experience to the iPad," said DISH Network Chief Marketing Officer Ira Bahr.
"Unlike mobile viewing from cable and telcos that limit access to select programs, our TV Everywhere services give consumers 24x7 access to all of their live and recorded content included with their DISH Network programming subscription."
In addition to TV viewing, the DISH Remote Access app also gives DISH Network customers with compatible DVRs the ability to browse and search up to nine days of programming, schedule DVR recordings, manage conflicts, delete shows on multiple receivers, and transform the iPad into a fully-functioning remote control.
The DISH Remote Access app for the iPad can be downloaded for free from the iTunes App Store. For more information about DISH Remote Access, please click here..
DISH Network provides more than 14.2 million satellite TV customers with the highest quality programming and technology at the best value, including HD Free for Life. Subscribers enjoy industry-leading customer satisfaction, the largest high-definition (HD) line-up with more than 200 national HD channels, the most international channels, and award-winning HD and DVR technology. DISH Network Corporation is included in the Nasdaq-100 Index and is a Fortune 200 company.
Few Viewers Will Cut the Cord
Excerpted from TV Predictions Report by Phillip Swann
A new Frank N. Magid study says most Americans have no intention of dropping their cable or satellite subscriptions in favor of alternative video services such as Netflix, Hulu, or instant streaming.
In fact, the Magid study found that the consumers who most use alternative video services spend the most money on traditional pay TV services.
The findings contradict a growing sentiment among tech officials and some tech journalists that millions of Americans will soon 'cut the cord' - drop their expensive cable and satellite subscriptions and sign up for less expensive video services such as Netflix or Hulu.
"This finding appears to undermine the view that the use of alternative video viewing platforms will compel consumers to become "cord cutters," en masse, by canceling their television subscriptions.
In fact, the study shows that alternative video viewing platforms should be considered additive to traditional subscription television," the Magid study states. The study also found that: 40% of consumers are watching TV shows and movies online using a laptop or computer at least occasionally -- and another 10% are interested in doing so; the numbers rise when respondents were told they could watch the Net-enabled video on their TVs; some new devices such as Roku and Apple TV will stream movies and TV shows directly to television.
Only 1% of consumers have canceled their pay TV subscriptions in favor of accessing content on the Net and only 2.5% use Net content exclusively; only 3% of consumers say they are even considering canceling their pay TV subscriptions without replacing them with a competing pay TV provider; the purchase of DVDs are most at risk from alternative video services.
8% of consumers are 'very likely' to purchase a 3D TV in the next 12 months. If that holds up, Magid says roughly 5% of households will have a 3D TV by the fall of 2011.
Comcast and Level 3 Highlight Interconnection Issue
Excerpted from Ars Technica Report by Nate Anderson
Wharton Business School professor Kevin Werbach dubs Comcast's actions this week a "turning point in US Internet policy." Law professor Susan Crawford calls Comcast a terrifying, hat-wearing hydra - and she's looking for a Hercules to cut it down to size. Harold Feld of Public Knowledge says that Comcast has set up a new "toll booth" on the Net and is now operating like Ed "use my pipes free" Whitacre. And broadband analyst Dave Burstein says Comcast has just deployed "the nuclear option."
Just what is going on here, why does it matter, and why is Comcast calling backbone operator Level 3 Communications a big fat liar for starting the whole debate?
Comcast found itself in the middle of a renewed argument over its "evilness" this week as an interconnection dispute blew up into public view. Level 3, which runs a major Internet backbone along with a newer content delivery network (CDN), fired off a scathing press release accusing Comcast of (once again) threatening the "open Internet."
On November 11th, Level 3 inked a deal with Netflix to serve as the streaming media company's new CDN starting January 1st. In that capacity, Level 3 will cache and serve Netflix streaming video from sites across the country to avoid possible backbone congestion and to deploy streams from servers that are closer to end users.
Due to the size of the deal, Level 3 announced that it was doubling its own storage capacity and adding 2.9 terabits per second (Tbps) of CDN capacity, alongside the 1.65Tbps that it rolled out late this year. The entire Netflix streaming library, which consists of more than 20,000 titles, will be moved directly to Level 3 servers during November and December in preparation for the January roll-out.
The deal also means, of course, that a huge new amount of traffic will soon be sent from Level 3 to various ISPs, and not all of them are happy at the prospect. A week after Level 3 announced the Netflix deal, Comcast told the company that it would "demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast customers who request such content," in the words of yesterday's Level 3 press release.
Comcast says that this is standard practice (and that it's not singling out any particular kind of content). While it previously had a settlement-free (read: no charge) traffic peering agreement with Level 3, such agreements are typically made only between network operators who are roughly comparable in size and therefore exchange similar volumes of traffic with one another. According to Comcast, the Netflix deal means that Level 3 will soon more than double the amount of traffic it sends onto Comcast's network and that this will result in a 5:1 traffic ratio - at which point the relationship will be unbalanced, and fees will be required.
"We are happy to maintain a balance, no-cost traffic exchange with Level 3," said Comcast Senior Vice President Joe Waz. "However, when one provider exploits this type of relationship by pushing the burden of massive traffic growth onto the other provider and its customers, we believe this is not fair."
Level 3 thought it was entirely fair - in part because this is not traffic that is transiting through Comcast's network, but traffic that is headed for Comcast subscribers and was requested by them. Under this view, Comcast is trying to charge a content provider for the very access to content that it is selling to its own customers. And, of course, there's the issue that such fees could raise costs for Netflix and other Internet video providers, but won't affect Comcast's own video services such as cable TV.
"By taking this action," said Level 3 Chief Legal Officer Thomas Stortz, "Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. This action by Comcast threatens the open Internet and is a clear abuse of the dominant control Comcast exerts in broadband access markets as the nation's largest cable provider."
And if that wasn't enough of an attack, Level 3 said that it was "approaching regulators and policymakers and asking them to take quick action to ensure that a fair, open and innovative Internet does not become a closed network controlled by few institutions with dominant market power."
While such sentiments tap into a fertile seedbed of hate that many people have for cable companies in general (routinely one of the most reviled industries in the US by consumers) and for Comcast in particular (thanks to its BitTorrent blocking/throttling and subsequent litigation), Level 3 is hardly a disinterested paladin working for Great Justice; the company wants to maintain its free peering arrangements with Comcast even as it grows into a large CDN operator.
This appears to be Comcast's view of the situation - it's a private peering dispute taken public in a bid for leverage. And Level 3, seeing no choice if it hoped to avoid a service interruption, has already agreed "under protest" to the new fees.
So is there something new here?
The details of peering and transit are notoriously tricky to unearth (though our comprehensive guide to the subject helps), since most are locked up behind private deals and nondisclosure agreements, but several people we spoke with believe this to be an unusual stance taken by Comcast.
"As far as I know, no primary backbone provider like Level 3 has ever been required to pay to deliver traffic to another major carrier," says industry expert Dave Burstein. "Comcast's explanation why they should collect from Level 3 would also apply to every other backbone carrier and hence to essentially every bit carried over the Internet. Downstream traffic is about four times as high as user upstream, so even a company with a lot of users receiving packets from Comcast users would be asymmetrical."
Major last-mile ISPs, including AT&T and Verizon, also have these imbalances when connecting to major backbone providers, since (despite "Web 2.0" tech) users still download far more content than they upload. Indeed, Comcast's own statement makes clear that Level 3 has long been sending much more traffic to Comcast than the other way round.
To Burstein, Comcast's move is about shifting to a world where every bit is paid for. The problem, as he sees it, is that there's not enough competition and so the big last-mile ISPs would be in a perfect position to set unreasonably high rates, improving their own profits and blocking out competitors like online video. Why bother to block traffic, which would raise an outcry, when you can simply tax it to death in private?
"Flow through to consumer benefits would be plausible with strong competition," Burstein tells Ars, "but with weak competition I follow almost all the money straight to carrier bottom lines."
Rob Frieden, a Penn State telecoms prof and recent author of the book Winning the Silicon Sweepstakes, has studied such issues for years. He says that Comcast's argument about this being a mere peering traffic imbalance is plausible, but he notes that the company could do plenty to adjust its own routing strategies to send more off-network traffic through the Level 3 backbone in order to make the ratios more even. But Comcast might well have an incentive not to do this, "deliberately reducing the volume of 'return' traffic it hands off" in order to make the imbalance even larger.
The end goal, of course, would be getting Level 3 to pay up and move away from free peering.
"It strikes me as a little too easy and expedient for Comcast to resort to the Level 3 surcharge model," says Frieden. "Bear in mind also that when Comcast charges $50+ for broadband - and recently raised its rates - a company has to expect that its subscribers expect payment to include access to Netflix and other sources of full-motion video. Why would it be okay to download hundreds of gigabytes per month, provided the upstream peer is not Level 3? This does not fully pass the smell test in light of Comcast's ulterior motive to raise the cost of a competitor, Netflix, and its preferred carrier."
Due to the general secrecy around these kinds of deals, no one we spoke with could say exactly what was at stake in this case, but suspicion of Comcast is certainly widespread.
Susan Crawford, previously with the Obama administration and now back to teaching law at Cardozo Law School, says the entire battle shows Comcast's "existing overwhelming market power." In her view, there's simply not enough competition to create a functioning market for peering and transit. It's time for the FCC to act, she says, "as the looming cable monopoly stops looming and starts muscling levers into place."
The DC group Public Knowledge blasted Comcast's stance as a net neutrality violation. Many others, even those who oppose the move, would not paint it quite in those terms, since Comcast is not actually discriminating against certain kinds of bits. As Wharton professor Kevin Werbach tweeted, "The peering issue isn't net neutrality; it's whether market forces are failing for interconnection." Werbach characterized the Comcast move instead as a "classic terminating access monopoly case."
"Terminating access monopoly doesn't necessarily mean the action is harmful - it means this is a situation where Comcast has effective market power regardless of whether there is broadband competition. So the action should be scrutinized, but that's not the same as attacking it. We need all the facts to make that determination."
In other words, Comcast is holding its users' eyeballs hostage, demanding payment for those who want to reach them because there's no other way to get data to those customers.
Though he's increasingly comfortable with Comcast's position here, Werbach remains "troubled by the direction this could take the whole backbone market. Which is why it's appropriate for public policy concern. "Most of the time everything will still work itself out best through private negotiation, but it's unrealistic to believe that will always be the case in the current situation of consolidation and integration across markets."
Several Ars staffers have experience in maintaining peering and transit connections both in the US and Europe, and each agreed that the situation here is unusual. That's because most "transit" deals, the ones where money was exchanged, historically focused on data that was simply traversing one network on its way someplace else. Why should one network operator bear the costs of building and maintaining a network just so that some other network operator could route all of his traffic over it for free? Peering, or direct network interconnection, generally took place when each network sent similar amounts of traffic to the other and it wasn't worth the expense or hassle of trying to account for every bit.
But the CDN traffic from Level 3 isn't in "transit" anywhere; it's going to the Comcast customers who want to watch Netflix movies. Level 3 is, in one sense, doing Comcast a favor by making a key Internet service better; it's not simply taking advantage of Comcast's network to get its own traffic somewhere else. That's what Werbach means when he talks about a "terminating access monopoly"; Comcast has a lock on its customers and can try to extract rents from anyone trying to send them data, even if it's data they requested.
I spoke with Public Knowledge legal director Harold Feld, who makes the same points about peering and transit. "To the best of my knowledge," he says, "this is the first time ever a last-mile network has demanded compensation from another ISP for delivering traffic requested by a subscriber on the 'terminating' ISP's network."
Peering disputes have been around for years, and have sometimes resulted in slow Internet connections as one provider yanks its direct connection to another network, but Feld says that past disputes have "involved hand off of traffic through the middle-mile to transport it from one last-mile network to another."
In the Level 3 case, "if a last-mile ISP can charge for 'peering' with an end-user subscriber that requests the data, how is that different from charging Netflix directly to deliver its traffic?"
Bottom line: this isn't a simple "peering" dispute. It is instead a "demand to a content provider's ISP to pay a new fee to deliver content requested by a Comcast subscriber." In short, it is Ed Whitacre's dream Internet.
In its defense, Comcast says that it has similar deals in place with other CDNs - apparently Limelight and Akamai - and that they have signed on to "mutually acceptable commercial agreements. in delivering the same types of traffic to our customers." This is known as "paid peering," in which direct, nonsymmetrical interconnections are allowed for a fee. Dr. Peering has a nice overview of the practice.
In fact, Level 3's choice to cry havoc and let slip the dogs of war is "simply duplicitous," Comcast says. "When another network provider tried to pass traffic onto Level 3 this way, Level 3 said this is not the way settlement-free peering works in the Internet world. When traffic is way out of balance, Level 3 said, it will assist on a commercially negotiated solution."
This is in reference to Level 3's own dispute over peering with Cogent, in which Level 3 eventually discontinued peering with Cogent's network after reviewing the relationship and concluding that too much traffic was coming from Cogent.
"Cogent was sending far more traffic to the Level 3 network than Level 3 was sending to Cogent's network," said Level 3 at the time. "It is important to keep in mind that traffic received by Level 3 in a peering relationship must be moved across Level 3's network at considerable expense. Simply put, this means that, without paying, Cogent was using far more of Level 3's network, far more of the time, than the reverse. Following our review, we decided that it was unfair for us to be subsidizing Cogent's business."
But note that this was traffic in transit, not traffic that was requested by Level 3 subscribers.
The issue comes at a delicate time for Comcast, something that Level 3 was no doubt aware of. Comcast is currently trying to wrap up its merger with television network NBC and hopes to avoid a host of onerous conditions on the deal. Charges of being an Internet bully won't go over well at the FCC, where Comcast has few friends after single-handedly gutting the agency's network neutrality authority by winning a major court case early this year.
Public Knowledge wants the FCC to exert oversight over these types of interconnection agreements, perhaps by setting up some ground rules and offering mediation where the negotiations go bad. Werbach envisions something similar, with more transparency to these negotiations and "perhaps an arbitration process" that would work much as TV retransmission disputes do now.
But if the Comcast/Level 3 dispute really is a turning point in US Internet policy, it's not yet clear that the government intends to do anything in response. The FCC has one open meeting left in December before the new Congress convenes in January, and if the agency decides to take on network neutrality, this would be the meeting at which it does so. We should know within the next few days if the FCC hopes to act, though it will take much longer to figure out if such hypothetical action would even address the Comcast/Level 3 situation or would focus instead only on traffic "discrimination."
Asked if the FCC was examining Level 3's dispute, Chairman Julius Genachowski would only say the agency was "looking into it."
Global Crossing Requests Peering Working Group
Excerpted from Communications Technology Report
Paul Kouroupas, Vice President and Senior Counsel of Global Crossing, made the following statement in regard to the Comcast/Level 3 Dispute over Netflix traffic:
"As consumers demand ever-increasing content-rich services and applications that require more bandwidth, the assertions by Level 3 against Comcast raise issues that will determine whether we will all be able to realize the full potential of the Internet. Global Crossing recognizes that traffic-sharing, or peering relationships, play a fundamental role in the economics of the Internet. Unilaterally erecting tollbooths on the last mile of the Internet is not consistent with historical industry peering arrangements and will no doubt impact the delivery of content to consumers."
"Global Crossing therefore urges the Federal Communications Commission to sponsor a working group to formalize the principles involved in peering. The charge of this group should be to establish guiding principles for future peering relationships and to bring greater transparency to this marketplace."
Amazon Denies Cloud Computing Services to WikiLeaks
Excerpted from Datacenter Dynamics Report by Yevgeniy Sverdlik
Amazon Web Services has discontinued providing its cloud computing services to WikiLeaks, the organization that has published hundreds of thousands of classified diplomatic communications of the US government on its website, according to a statement from Senator Joe Lieberman's (D-CT) office.
"This morning Amazon informed my staff that it has ceased to host the WikiLeaks website," Lieberman said.
"I wish that Amazon had taken this action earlier based on WikiLeaks' previous publication of classified material."
AWS provides infrastructure-as-a-service (IaaS) through its Elastic Compute Cloud and other cloud-based IT services. It is one of the world's biggest public-cloud providers.
In a twitter post, a WikiLeaks representative wrote that the organization's servers were "ousted" from Amazon.
"Free speech, the land of the free - fine, our dollars are now spent to employ people in Europe," the tweet read.
"If Amazon is so uncomfortable with the first amendment, they should get out of the business of selling books," read another WikiLeaks tweet.
AWS representatives did not respond to a request for comment in time for publication.
Late last week, WikiLeaks said the servers it was using came under a distributed denial of service (DDoS) attack , causing the site to shut down. News of the attack came after the organization released the first portion of a series of diplomatic cables exchanged between the US State Department and embassies from around the world.
The cables, total of about 250,000, date from 1966 to February of 2010 and originate from 274 embassies, according to WikiLeaks. The organization's plan is to release the entire group of documents, entitled "Cablegate," in phases over the next several months.
The first group of documents was released on November 28th and was followed by the DDoS attack, according to the organization.
In September, DatacenterDynamics reported that WikiLeaks had moved some of its servers to a data center located in an underground bunker in Sweden and operated by Banhof. WikiLeaks has also hosted its servers with PRQ and the Pirate Party, a Swedish political party that advocates reform of copyright and patent laws.
OnSmash: Is the Right Hand Talking to the Left?
Excerpted from Digital Music News Report
Dozens of pirate and counterfeit sites were yanked down over the Thanksgiving holiday by the US Government, and most were asking for trouble. But serious questions now surround a number of hip-hop sites caught in the mix, particularly OnSmash.
According to several sources to Digital Music News, those inside the rap industry hardly regarded OnSmash as a pirate. Instead, OnSmash was treated as a critical promotional and tastemaker vehicle. In fact, prior to the shutdown, a large number of rap labels and divisions were prioritizing OnSmash for leaks, premieres, mixtapes, and other buzz-generators. "They have founder Kevin Hofman's number on speed dial," one major label executive relayed.
"OnSmash was in marketing meetings, marketing plans - it's not considered a dark or rogue site at all."
This is part of how hip-hop marketing works. Pre-release, free tracks are always leaked to the 'street,' and the most successful rappers - starting at the top with heavyweights like Rick Ross and T.I. - understand that gratis is a critical part of the success equation.
"The label guy is there to break artist careers - and the way you do that is by giving music away for free," another source described.
So why the yankdown? This is painfully reminiscent of a misguided RIAA-directed raid on DJ Drama's offices in early 2007, and the result of what appears to be a disturbing lack of intra-industry communication.
"The RIAA and the majors see anything free as illegal, while the rap community knows that you have to give stuff away to develop an artist," another executive relayed.
Exactly how OnSmash got on the s-list remains unclear, though Hofman was apparently cooperative when anyone asked for content removal.
Furthermore, these requests were typically direct calls, not DMCA notices, often coming from the same person that asked for placement in the first place.
So what next? At best, the shutdown has created marketing headaches for a number of labels, though Hofman may find it incredibly difficult to stage a recovery. And a federally-shuttered site is hardly the best starting point for a negotiation.
Coming Events of Interest
LA Mobile Entertainment Summit - December 7th-8th in Los Angeles, CA. This event is brought to you by the producers of the widely acclaimed 3D Entertainment Summit, this high level strategy and networking event will explore all facets of the mobile entertainment industry.
International CES - January 6th-9th in Las Vegas, NV. With more than four decades of success, the International CES reaches across global markets, connects the industry, and enables consumer electronics (CE) innovations to grow and thrive. The International CES is the world's largest consumer technology tradeshow featuring 2,700 exhibitors.
CONTENT IN THE CLOUD - January 7th in Las Vegas, NV. The DCIA's Conference within CES explores this cutting-edge technology that promises to revolutionize entertainment delivery. Six keynotes and three panel discussions focus on cloud-delivered content and its impact on consumers, the media, telecom industries, and consumer electronics (CE) manufacturers.
Gamification Summit 2011 - January 20th-21st in San Francisco, CA. The Gamification Summit brings together top thought leaders in game mechanics and engagement science for the first time. Hear what works and what doesn't in this dynamic and fast-moving field through case studies, workshops, keynotes and panels delivered by experts such as Gabe Zichermann, Amy Jo Kim, and Jane McGonigal.
Global Services Conference 2011 - January 27th in New York, NY. Cloud computing has implications not only for IT services but also for business processing; cloud-based delivery models present a discontinuous and disruptive shift that will redefine how IT and BPO services are delivered. The conference will present actionable propositions to leverage cloud-based models.
Cloud Connect Conference - March 8th-10th in Santa Clara. CA. Learn about all the latest cloud computing innovations in the Cloud Connect Conference -- designed to serve the needs of cloud customers and operators - where you will see the latest cloud technologies and platforms and identify opportunities in the cloud.
Media Summit New York- March 9th-10th in New York, NY. This event is the premier international conference on media, broadband, advertising, television, publishing, cable, mobile, radio, magazines, news & print media, and marketing.
1st International Conference on Cloud Computing - May 7th-9th in Noordwijkerhout, Netherlands. This first-ever event focuses on the emerging area of cloud computing, inspired by some latest advances that concern the infrastructure, operations, and available services through the global network.
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