It's worth asking why Comcast did not accept Level3's suggestion that
they use MED as a face-saving maneuver, which would have allowed both
sides to declare victory.
A) Comcast may already have the contractual right to use MED but
chooses not to. I agree with you that this is unlikely, not for pure
reasons of economics, but because Comcast has some of the same set of
motives not to send MED to their transit provider as every other
network: prefix aggregation, quality control, and ego. I'll discount
geography, marketing, and inability to calculate useful MED values.
For argument's sake, let's say they currently can start sending MEDs
to Level3 whenever they want. This being the case, Level3's "offer"
would have amounted to Level3 telling Comcast upper management that
Comcast's engineering people are leaving a huge amount of money on the
table, that Level3 is far more cost-effective at running its long-haul
network than Comcast, and that they should leave the big networking to
the big boys. Comcast management could either react badly to this, or
go back to their network folks and ask why they can't be as
cost-effective as Level3.
B) Comcast may not be able to use MED today. In this case, management
may be asking themselves why. An essentially similar scenario can
play out; they can either react badly to Level3, or ask their own
staff why they are wasting money.
C) Comcast doesn't care about MED or the actual cost of doing
business. They are boldly moving towards a future that is opposite
the one "net neutrality" folks advocate, one that looks like my
"Comcast Motive #3."
D) Comcast does not think that beginning to use MED (whether currently
enabled or not) is enough to satisfy the federal regulators and
legislators who are now taking interest in this game of
interconnection brinkmanship, involving 17 million households, between
a major IP carrier delivering traffic from everyone including a
household name like Netflix, and a major cable company that is waiting
for government approval to purchase NBC. They feel they must demand
something very concrete to demonstrate that they are looking out for
consumers' best interest, which means they must make Level3 and/or
Netflix look like the bad guy.
E) Comcast thinks that a system of accounting for the cost of bearing
traffic and dividing it among the involved parties will actually be
good for their business, because they can over-build their
infrastructure as much as they like, perhaps even improving quality
for end-users, and only have to pay for about half of it. The cost of
being inefficient, stupid, or committing purchasing or forecasting
errors drops by half. This looks very much like my "Comcast Motive
#1."
E1) Comcast may also know a thing or two about Hollywood Accounting.
If you do not understand this reference, simply look it up on
Wikipedia. It suffices to say that cost/revenue sharing agreements of
this nature can be manipulated in gross ways to the advantage of the
party doing the bulk of the book-keeping.
F) Management has the same case of ego-driven decision-making that
their technical staff have demonstrated. I find this unlikely but
still possible. We all know this has been the case at the CEO level
in some major interconnection disputes of the past.
I believe this outlines the reasonable scenarios for Comcast avoiding
a face-saving maneuver with Level3.
