The companies that own the Internet break down into different categories: there's so-called backbone networks like Level Three, who own huge stretches of "dark fiber," the big, expensive lines that carry packets from coast to coast and under the ocean. Level Three is also one of the Tier One networks — the top dogs, big enough that they don't have to pay anyone else to carry their traffic, they just trade with their own kind. Just below the Tier Ones are the Comcasts and AT&Ts, the broadband retailers — Level Three may carry your packets across state lines, but it's companies like Comcast who carry them the last mile into your home.
Level Three and Comcast are giant, distended creatures, the megafauna of the late Internet. In January, Level Three took on the job of distributing Netflix's streaming video; on some slow nights, that video accounts for 20 percent of all US broadband Internet use. Comcast is a last-mile behemoth; it brings the Internet into 16 million homes, 20 percent of the US market.
Comcast and Level Three used to have a peering arrangement — exchanging traffic for free — but when Level Three took on Netflix's video, and began shipping a shitload more traffic across Comcast's lines, Comcast said, "Fuck you, pay me." At first glance, that might even seem fair — but on the Internet, nothing is ever as clear-cut as it seems. Networks usually only pay to send traffic destined for a third party, but that wasn't the case here. Comcast wanted Level Three to pay for the right to deliver Netflix video that Comcast's own customers had asked for. What would've happened if Level Three refused to pay? Comcast's customers would've gone without Netflix; and Level Three would've had to tell Netflix that it just dropped up to 16 million customers. Lose, lose.
The two companies stared each other down, and Level Three blinked. It paid up, and in an instant, the balance of power shifted from the content-serving, dark-fiber behemoths to the last-mile connectors.
Nobody knows what the consequences will be. But Level Three versus Comcast wasn't, strictly speaking, a network-neutrality issue — nobody paid to have their packets moved quicker. Nobody threatened to make the other guy's packets move slower. And networks have been charging each other for transit for 15 years: that shit's all in the game.
Point being, even if net neutrality should somehow became the law of the land, it may not be much of a solution. The big companies are really fucking smart, the Internet is really fucking complex, and there's a fuckload of money at stake. And executives at Verizon and AT&T have been promising arrangements like this since at least 2006, when SBC (later AT&T) CEO Ed Whitacre famously asked, of content providers, "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!"
Those comments helped launch the movement for network neutrality — but in the aftermath of Level Three/Comcast, they're sounding more and more like the final word.