Level 3 Communications' (Nasdaq: LVLT) ongoing argument with Comcast (Nasdaq: CMCSA) over how much to pay for Web traffic could be the first test case for the FCC's new net neutrality rules. Level 3 contends that Comcast has erected a "toll booth" to block content from Level 3 customers like Netflix; Comcast argues that this is merely a peering argument.
Level 3's approach to net neutrality is to claim that carrying content is the same as providing content and that Comcast cannot, according to the rules, do anything that blocks that-including charging more.
In a related development, Verizon (NYSE: VZ), which admittedly is "not a party to (the) dispute and cannot comment on factual details," has apparently sided with natural enemy Comcast. In a letter to the FCC, Ian Diller, Verizon's vice president of Federal Regulatory Affairs, said the telco's belief is that the Comcast-Level 3 dustup "involves a run-of-the-mill commercial negotiation over the terms of a peering arrangement. It is not a net neutrality issue."
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