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October 19, 2007

Comcast is Not Alone in Managing P2P Traffic, But...

The AP's Peter Svensson is creating quite a stir with his report that Comcast actively interferes with its broadband customers' ability to use P2P file-sharing programs. Tipped off by Comcast customer and former Intel engineer Robb Topolski (who has been raising the issue of P2P monitoring technology since 2001 September), Svensson actually tested the proposition himself by trying to upload over Comcast's network a copy of the King James Bible from two computers in the Philadelphia and San Francisco areas using BitTorrent's system.

He found that the upload transfer of the Bible was blocked two out of three times on Comcast's systems. Particularly troubling is the apparent fact that Comcast is spoofing faked email addresses using "reset packets," to abort the P2P sharing. The reset packets tell one computer or peer to stop communicating with another computer or peer.

Each PC gets a message invisible to the user that looks like it comes from the other computer, telling it to stop communicating. But neither message originated from the other computer -- it comes from Comcast. If it were a telephone conversation, it would be like the operator breaking into the conversation, telling each talker in the voice of the other: "Sorry, I have to hang up. Good bye."

In Comcast's application of the P2P management technology, the system seemingly originates the reset packet with a "faked return address." Canadian tech company Sandvine is the purported supplier of the "traffic shaping" technology which Comcast deploys.

But Comcast is not alone in using Sandvine's technology to manage the flow of P2P traffic over its network. Virtually every major ISP in North America uses Sandvine's technology to monitor the amount of P2P traffic on the network and slow it down if necessary, lest the traffic overwhelm the networks altogether.

According to ipoque GmbH, 50% to 90% of all Internet traffic is attributable to P2P applications. One Canadian cable company told me about two years ago that if they didn't tamp down on P2P traffic, it would chew up 100% of network capacity.

Curiously, though, Svensson had no problems uploading the Bible on Time Warner or Cablevision systems even though Time Warner, at least, recently deployed a traffic shaping system, more than likely supplied by Sandvine, that has some users upset. AT&T's CEO and Chairman Randall Stephenson just finished telling Web 2.0 attendees that "a lot of our bandwidth is dedicated to peer-to-peer usage. We don't block peer-to-peer."

Stephenson didn't say, however, that AT&T doesn't slow down P2P traffic or cap just how much of the bandwidth can be dedicated to P2P applications. The issue, therefore, is not whether companies use technology to limit P2P services, but whether that technology is used to abort or block file-sharing at the outset. And that's where Comcast looks particularly bad -- the operator is seemingly not "shaping" P2P traffic or managing P2P network consumption but is blocking it altogether, at least on the upload side of the equation.

Whether this is a result of some kind of misapplication of Sandvine's technology (did Comcast, in contrast to its peers, inexpertly establish traffic management thresholds too low so as to block all P2P sharing?) or a conscious decision by the operator to stop all this P2P nonsense, is not clear.

If Comcast is consciously blocking P2P uploads to manage network traffic, it ought to disclose that to consumers at the outset. As Public Knowledge President Gigi Sohn stated today

There is a right way to manage traffic and a wrong way. The right way is to let consumers know how much bandwidth they can use, as companies in other parts of the world do. The wrong way is to take control of a consumer's computer to throttle their use of the network that Comcast simply doesn't like.

Update - A Comcast spokeswoman just emailed the following statement to me. It doesn't really explain why Svensson and Topolski experienced the P2P upload blocks, but my sense is that the company doesn't know why...just yet anyway.

Comcast does not block access to any Websites or online applications, including peer-to-peer services like BitTorrent. Our customers use the Internet for downloading and uploading files, watching movies and videos, streaming music, sharing digital photos, accessing numerous peer-to-peer sites and thousands of applications online. We have a responsibility to provide all of our customers with a good Internet experience and we use the latest technologies to manage our network so that they can continue to enjoy these applications.

Posted by Cynthia Brumfield at 1:58 PM | Print | Comments (0)

October 19, 2007

Google's A Free Cash Flow Machine

If anybody had any qualms about Google based on last quarter's surprising dip in the search giant's growth, the company's Q3 07 earnings report, issued today, should put those doubts to rest. By now everybody reporter and blogger in the tech sector has spread the news that Google's net income soared year-over-year by 46% to $1.1 billion during Q3 07, beating Wall Street's estimates. Revenues jumped by 57% year-over-year and 9% sequentially to reach $4.2 billion.

The search giant managed to pull off this robust growth even though it didn't really keep its promise that it would cool its torrid hiring jag. The number of Google employees jumped 15% sequentially from 13,786 in Q2 07 to 15,916 in Q3 07.

What has been less reported is just how much pure and clear cash Google generated during the quarter. Google's free cash flow (cash flow minus property and equipment purchases) skyrocketed by 113% year-over-year and 65% sequentially to top $1 billion.

Google's cash flow margin reached an enviable 39%, up from 32% in Q2 07. Google is now sitting atop a mountain of $13.1 billion in cash (enough, arguably, to buy Facebook, even at the gross overvaluations being bandied about, without going into debt), despite a spate of acquisitions during the quarter. Now matter what challenges arise for Google, it has enough cash to throw at any problem and the very strong capability of generating even more cash into the foreseeable future.

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Posted by Cynthia Brumfield at 12:14 AM | Print | Comments (0)