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Verizon, Cogent in multi-year interconnection deal

May 01, 2015 6:07 PM ETVerizon Communications Inc. (VZ) StockVZ, LVLT, CCOIBy: Jason Aycock, SA News Editor2 Comments
  • Verizon (NYSE:VZ) and Cogent Communications (NASDAQ:CCOI) averted a possible showdown by striking a multi-year interconnection pact that will govern Internet traffic exchanges between the telecom and the wholesaler.
  • The deal is similar to one that Verizon reached with Level 3 Communications (NASDAQ:LVLT) previously. Firms like Cogent and Level 3 distribute traffic on behalf of major media firms like Netflix that deliver services via Internet, and they have increasingly fought with carriers over whether they should have to pay to connect to networks.
  • In the meantime, disputes started to slow service for millions by late last year. Cogent founder and CEO Dave Schaeffer says links between the two companies are still "massively oversubscribed."
  • Verizon says the new deal will let networks exchange data more easily, while Cogent points to the fact that it won't have to pay Verizon under the deal.
  • The move makes some peace for the two in an area that is about to get heavy regulatory scrutiny under the FCC's new net neutrality rules. The agency reserved the power for one-on-one rulings in interconnection disputes that might come up if a carrier complains.

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