Cogent and Level 3 have agreed to a new longer term peering agreement after their recent de-peering spat.
"As part of today's joint announcement, Level 3 and Cogent underscored their common view that the implementation of their modified peering agreement, effective immediately, serves the best interests of both companies' customers. As a result of the agreement, Level 3 will not proceed with disconnection on November 9, as previously announced."
Bloggers had their letters ready to send and were (still are) forecasting gloom in respect to the competitiveness of the backbone market. The same arguments were made circa the MCI-Worldcom merger but failed to materialise. Indeed, a look at transit prices and financial performance shows backbones have not proven to be the bottlenecks in a way they could exercise pricing power in the USA. Statements such as these from SBC's Ed Whitacre may give more cause for concern but it is the telco's contol over local access, and not the merger with AT&T's Internet backbone, that is their source of leverage. On the other hand, just as the customers of Cogent and Level3 screamed when a small fraction of the net was not visible, just try telling customers they can't access Google or Skype! And I doubt that the customers of SBC would see their payment to SBC to access the Internet as giving Google or Vonage a free ride. Here is the Whitacre quote:
"How concerned are you about Internet upstarts like Google, MSN, Vonage, and others?
How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?
The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts! "
