In a press release, Level 3 charged that Comcast "will demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast's customers who request such content. By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation's largest cable provider."
Not exactly. The heart of the dispute is about peering. Peering is a business relationship where two service providers agree to carry each other's traffic for free. Ars Technica's Rudoplph van der Berg wrote a great introduction to peering and transit. Vijay Gill has an analysis of Comcast's peering policy. Peering works because both sides have an equitable exchange of data. Peering disputes like the one between Cogent and Sprint in 2008 crop up when one or the other side perceives an imbalance in the ratio of traffic being offered and received.
"The disagreement has nothing to do with the type of traffic Level 3 is sending but with the amount," says Sena Fitzmaurice, Comcast's vice president of corporate communications. "Level 3 notified us that there is going to be an increase of traffic from a ratio of about 2:1 to 5:1 from Level 3 to Comcast. That is highly imbalanced and doesn't qualify for same type of peering relationship previously in place."
The dispute would be a net neutrality issue if Comcast was charging Level 3 more for just the video traffic or if Comcast was charging Netflix to carry its video traffic. But that isn't the case. It's a business dispute that just happens to coincide with Level 3 acquiring a new customer, Netflix, which is going to generate lots of one-way traffic with streaming video. Level 3's claim that "Comcast's current position violates the spirit and letter of the FCC's proposed Internet Policy principles and other regulations and statutes, as well as Comcast's previous public statements about favoring an open Internet," is wrong and will only confuse consumers and policy makers into wrongly thinking Comcast's business decisions are net neutrality issues and that Comcast's decision will break the Web.