Level 3, tw telecom establish peering arrangement

Agree to use 'bit-mile' peering approach

December 5, 2012 | By Sean Buckley

Level 3 Communications (NYSE: LVLT) and tw telecom (Nasdaq: TWTC) on Monday struck a new long-term "settlement-free" peering arrangement that allows the two service providers' networks to exchange data.

Although financial terms of the agreement were not disclosed, it allows Internet customers on one network to send and receive Internet content with customers on the other network.

What stands out about this pact is that it uses a "bit-mile" peering approach that measures both the volume of traffic exchanged and the distance over which that traffic is carried by each network. To ensure fairness, both service providers' networks will carry about the same number of "bit miles" of data.

"We look forward to working with our peering partners to drive broader adoption of this bit-mile model to ensure fair and equitable interconnection," said Jack Waters, Level 3's CTO, in a release announcing the arrangement. "We are also working with providers of traffic-flow monitoring systems to make the measurement process straightforward and consistent across the industry."

This agreement also includes provisions to add capacity and establish new interconnection locations between the two networks to address traffic demands as they arise. However, the agreement does not address the exchange of managed voice traffic.

Both service providers get something from this new relationship.

Crafting workable peering relationships with other carriers has been a major focus for Level 3 in recent years. In 2010, the competitive provider became embroiled in a battle with cable MSO Comcast (Nasdaq: CMCSA) over how much to pay for Web traffic. At that time, Level 3 argued Comcast erected a "toll booth" to block content from Level 3 online video customers like Netflix (Nasdaq: NFLX).

tw telecom, meanwhile, will gain an updated peering arrangement for its IP backbone that will complement its growing metro fiber network, which it uses to deliver services such as Ethernet and VPN to business customers. 

Given its interest in the network peering concept, Level 3 in August established a similar arrangement with Time Warner Cable (NYSE: TWC) that was set on accomplishing two goals: expanding its national network with its core infrastructure services and updating its peering arrangement to exchange IP traffic between the two companies' respective backbone networks.