By Drew FitzGerald
Verizon Communications Inc. reached a network traffic deal with
a longtime antagonist, avoiding a possible conflict in an area
regulators are now eyeing more closely.
The multiyear interconnection deal under which Verizon will swap
traffic with Internet wholesaler Cogent Communications Holdings
Inc. comes a week after Verizon announced a similar agreement with
Level 3 Communications Inc.
The moves allow Verizon to head off the sorts of high-profile
fights with other carriers that made headlines last year when it
pressed to be paid for carrying heavy traffic.
Cogent and Level 3, which provide service to big media companies
like Netflix Inc., at the time accused Verizon and other home
Internet providers of doing too little to handle the tide of Web
traffic flooding their networks. By late last year the standoff was
causing service to slow and online videos to stutter for millions
of subscribers.
Verizon said the new agreements will address those bottlenecks
by allowing the networks to exchange data more effectively and
efficiently. That would let Cogent and Level 3 satisfy their online
video clients. The deal also includes new links to Verizon's own
content delivery service, which has been courting big media
customers in recent months.
At issue are the agreements that big carriers sign to move giant
volumes of Internet traffic across their networks. The Federal
Communications Commission hadn't regulated those interconnection
agreements in past years, and the public rarely noticed when
companies were at odds.
But the public disputes last year spilled over into the debate
over net neutrality in Washington, prompting the FCC to add rules
that would let officials intervene if a carrier complains of unfair
treatment when it comes to network interconnection.
The new rules take effect in June unless halted by the courts,
where the telecom and cable industries have sued to block them.
Cogent and Level 3 have warned they could take advantage of the
government's new authority to address grievances against other
providers.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
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