But Comcast's defense isn't crazy. Level 3 is an unusual beast. In addition to serving as a content delivery network for companies like Netflix, Level 3 also operates one of the largest "Internet backbones," which you can think of as the major superhighways of the network. Internet backbones often connect to one another for free under so-called "peering agreements." The theory is that it's usually mutually beneficial for two large networks on the Internet to connect to one another—customers of each network will be able to get to parts of the Internet that are covered by the rival's backbone. As a result, Comcast and Level 3 have long had a peering relationship, and under that agreement they tend to send each other roughly equal amounts of traffic, with no money passing hands. But now, with the Netflix deal, Comcast says that Level 3 will send it five times more traffic than Comcast sends Level 3.
When traffic between Internet companies gets so out of balance, Comcast says, they usually sign new agreements that involve some kind of payment. Comcast's case is bolstered by the fact that Level 3 has demanded exactly the same kind of payments. In 2005, for example, Level 3 blocked Cogent, another network provider, because Cogent was "pushing a lot more traffic our way than we were their way," a spokeswoman said at the time. (Level 3 eventually signed a new deal with Cogent with strict rules on the amount of traffic that each side could send the other.)
Level 3 and its defenders say that its old dispute with Cogent has no bearing here, because that fight didn't involve traffic that was being generated by end users; in this case, by contrast, Level 3's increased traffic only comes about because Comcast's subscribers will demand lots of Netflix movies. By asking Level 3 to pay for something Comcast's subscribers want, Comcast is double-charging for content—a direct violation of network neutrality.
If you've followed this argument so far, you deserve a medal. For everyone else, don't worry: This is how network neutrality fights go. When you click to watch a streaming movie, you imagine that the path from Netflix to your home computer is relatively straightforward. What actually happens, though, involves a patchwork of regulation, custom, and long-standing formal and informal deals about how the Internet should work. The problem is that the Internet continues to evolve, and nobody—not content providers like Netflix, network companies like Level 3, ISPs like Comcast, or perhaps especially regulators and lawmakers—know what it's going to look like in the future.
The upshot? Kiss network neutrality goodbye. Not the idea—just the push for tough regulation.