[Infowarrior] - The Day The Web Went Dead

[Richard Forno]

The Day The Web Went Dead
Scott Woolley , 12.02.08, 6:00 AM ET

http://www.forbes.com/2008/12/01/cogent-sprint-regulation-tech-enter-cz_sw_1202cogent_print.html

LOS ANGELES--Imagine life without the Internet. Hard? Just ask state  
officials in Maine to tell you about the ugly surprise they had on  
Halloween.

On Oct. 30, Sprint Nextel severed its last connection to Cogent  
Communications, disconnecting two of the Internet's five largest  
backbones. Instantly, major American and Canadian universities lost  
contact with each other. Officials in Maine's state government found  
they couldn't link up with many town governments. Millions of Sprint's  
wireless broadband customers found themselves cut off from thousands  
of Web sites. Yet neither the Federal Communications Commission nor  
the Canadian Radio-Television and Telecommunications Commission took  
any action to restore global connectivity and the Web stayed broken  
for three days.

The recent disruption marked the final blowup in a year-long game of  
chicken played by Sprint Nextel and Cogent and brought to light an  
uncomfortable reality: The Internet is held together by collection of  
secret contracts struck between private companies, free from  
government oversight and regulation.

Financial pundits are having a field day blaming lax government  
oversight for much of the current financial woes. But the disruption  
of the Internet early in November raises an intriguing parallel  
question: Is the Web dangerously unregulated?

Most of the time, the unregulated heart of the global Internet is a  
mysterious place, governed by rules laid out in those confidential  
contracts between private parties. This time, though, Sprint took the  
unusual step of a filing lawsuit in Virginia state court, alleging  
that Cogent breached the terms of a previously secret contract that  
spelled out how the two companies would trade traffic between their  
networks. Cogent quickly counter-sued, laying out a very different  
version of events.

The Cogent-Sprint feud traces its roots back to 2002, when Cogent  
asked Sprint to exchange Internet traffic at no charge to either  
party, a common arrangement between similarly sized networks. At the  
time, Web traffic traveling between Cogent and Sprint was being sent  
through a third network, which Cogent found silly. A direct connection  
would be far more efficient.

Sprint said it would agree to a direct link--but only if Cogent paid  
for the privilege. No chance, retorted Cogent. A swap would benefit  
them both equally, Cogent argued, why should one side pay?

Finally, in 2006, the two companies broke the deadlock--or so it  
seemed. Sprint agreed to connect its network to Cogent's for a 90-day  
paid trial. If Internet traffic flowed back and forth between Sprint  
customers and Cogent customers in large volumes and in roughly equal  
proportions, then Sprint would agree to a permanent no-cost traffic  
swap. The companies signed a contract on Sept. 19, 2006, laying out  
the terms of the deal.

By June 2007, Cogent and Sprint had established high-capacity links in  
six cities in the U.S. and in four more around the globe. With the  
connections open, traffic that had been forced to use a third network  
to travel between Cogent and Sprint now flowed directly. It is just  
these sorts of connections that let the global Internet grow ever  
faster and more reliable.

A few days after the trial period ended in late September 2007, Sprint  
told Cogent it had failed the test. David Schaeffer, Cogent's  
pugnacious chief executive, says he was stunned. The two networks had  
transferred equal amounts of traffic back and forth, a standard  
precondition for no-cost traffic swapping. This time, however,  
Sprint's objection was that the direct links between the two giant  
networks hadn't carried enough traffic under the terms of the contract.

Schaeffer, who is no stranger to fights with other backbone companies,  
says he felt scammed. To get the deal done, Cogent had paid Sprint  
$478,000 for the connection during the 90-day trial. Now Sprint said  
that since test was a failure, Cogent would have to keep paying.  
Schaeffer refused, arguing that Sprint's objection about too-low  
volumes was bogus. (Was it? That gets technical.) Schaeffer quickly  
concluded Sprint never intended to establish a no-cost link to Cogent.  
(Sprint denies that charge.)

The two companies entered a cold war. Rather than disconnect its  
direct link to Cogent, Sprint instead began sending it bills:  
typically around $100,000 per month. Every month, Cogent refused to  
pay, saying it had earned a free connection under the contract. By the  
end of July 2008, a total of $1.2 million in unpaid bills had piled  
up. That's when Sprint decided to sue.

Sprint's lawyers alleged that Cogent had failed the trial and thus  
should be paying for the connection under the contract's terms.  
Cogent's counter-suit claimed that it had actually passed the trial  
and besides, if Sprint no longer felt it was getting value out of  
connecting to Cogent directly, it was free to do what any utility  
would do to a non-paying customer: disconnect them.

That's exactly what Sprint began to do. It started severing the 10  
links between the two networks, hoping that Schaeffer would back down.  
He didn't. At 4 p.m. ET on Oct. 30, Sprint cut the last connection. In  
an instant, customers who relied solely on Sprint (like the U.S.  
federal court system) for Web access could no longer communicate with  
customers who relied solely of Cogent for their Web connections (like  
many large law firms), and vice versa.

Angry calls from customers began to flood both companies, and it  
quickly became clear that Sprint had made a grave strategic error. In  
the unlikely event that Cogent caved completely, Sprint stood to gain  
$1.5 million or so in annual revenue, which would add .004% to the  
company's $40 billion in annual revenue. The downside was vastly  
higher. Sprint is first and foremost a wireless company, deriving only  
6% of its revenues from its Internet division. Sprint's future relies  
on attracting high-paying broadband wireless customers--and it was  
those customers who were all cut off from part of the Internet as a  
result of its fight with Cogent.

That reality appears to have percolated up the ranks at Sprint  
quickly. It cut off Cogent completely late on a Thursday afternoon,  
Oct. 30. By Sunday, Nov. 2, the company had changed its mind and  
reconnected.

In the end, the Sprint versus Cogent showdown provided both an unusual  
glimpse into how the Internet works--and at how resilient and flexible  
the unregulated Internet is. The current laissez-faire system has a  
remarkable ability to encourage privately run networks to voluntarily  
strike deals that benefit everyone, expanding capacity of the larger  
Internet while allowing everyone to connect to everyone else. In the  
rare instances where part of the Net does break down, as in the recent  
fight between Cogent and Sprint, the market provides overwhelming  
incentives to repair the breach quickly.

A permanent solution to this feud seems likely. A few weeks after the  
three-day shutdown, Cogent's Schaeffer ran into Sprint Chief Executive  
Dan Hesse at the Quadrangle Group's Media Conference. While the legal  
battle continues for now, the two men talked on the phone just before  
Thanksgiving. Both sides say they hope to reach an amicable solution.

Odds are, they will. In the end, fighting between big backbones  
benefits neither side.