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Cogent CEO: FCC Should Reclassify Broadband as Telecommunications Service

25 Feb, 2014 By: Erik Gruenwedel

Categorizing Internet access as a telco service could open door to greater regulation and taxation

Dave Schaeffer, CEO of Cogent Communications, welcomes the idea that the Federal Communications Commission should reclassify Internet Service Providers as telecommunication services (Title II of the Telecommunications Act), a move that would include heightened regulation.

Cogent recently saw its profile raised when it was disclosed that one of its CDN clients — Netflix — used the service as a means of circumventing Comcast’s more direct, but fee-based broadband network.

Content delivery networks, or CDNs, act as middlemen on the Internet between content services (such as Netflix) and ISP providers (such as Comcast). CDNs, through servers, strategically place (cache) video content so it can be more quickly delivered to subscribers without clogging (spinning wheels) broadband pipes.

As Netflix streaming speeds via Comcast (and Verizon FiOS) slowed as much as 30% since October (resulting in increased buffering and spinning wheels), the SVOD pioneer Feb. 23 agreed to pay Comcast for more direct access to its broadband network.

This move negates the need for Netflix to subcontract Cogent, Level 3, Akamai or other CDNs to reach Comcast subscribers, according to Dan Rayburn, principal analyst with Frost & Sullivan. 

“Netflix still has to use its own CDN and third-party CDNs, as the deal with Comcast only helps them for the traffic that goes to Comcast subs,” Rayburn wrote in an email. “If they also do deals with Verizon and AT&T, then much of the traffic to Level 3 and Limelight would go away.”

Possibly anticipating such a scenario, Schaeffer, during Cogent’s Feb. 20 fiscal call, called on the FCC to reaffirm its commitment to an open Internet. The CEO said companies that sell service — notably video — to consumers have an obligation to ensure that those services can actually be delivered. And part of that obligation, Schaeffer said, is that ISPs must ensure there is adequate connectivity between other networks.

Providing that safeguard: the FCC.

“I believe, ultimately, [the FCC] will be forced into focusing on Title II of their code, which gives them clearer jurisdiction over the Internet. They’ve been reluctant to do that,” Schaeffer said.

To some, Netflix’s decision to pay Comcast for direct broadband access to its subscribers is simply a financial decision. To others, the deal underscores ongoing efforts by the SVOD company to purposely degrade its video resolution in order to reduce broadband traffic.

“From what I can gather from the controversies, Netflix is putting themselves in a position to throttle their own network to try to gain sympathy in various operators, and it's an interesting approach,” Thomas Rutledge, CEO of Charter Communications, said during its Feb. 21 fiscal call.

Cogent’s Schaeffer said a SVOD subscriber seeking to stream video in HD, or standard-definition, could end up receiving video resembling VHS quality.

“A big part of that reduction in traffic growth has been a result of the requirement for the streamers to reduce pixel count and stream quality as a result of access networks manipulating traffic volumes going to their customers,” Schaeffer said.


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