 Now, well to California, it's theCUBE at Pier 2.0. Brought to you by the Pier 2.0 Foundations. Learn, connect, and grow. Now, here are your hosts, John Furrier and Jeff Frick. Okay, welcome back, everyone. Here live at Silicon Valley, this is theCUBE. I'm John Furrier with Jeff Frick. Here live at the Pier 2.0 conference, a grassroots movement of internet engineers working on the next generation, peering all the goodness around running big knickers. Our next guest is David Siegel, Senior Director, Internet Service Prize for Layer 3 Product Management. Welcome to theCUBE. Thank you. So, first tell us, what is Pier 2.0? Explain to the folks out there what's going on. It's the first of its kind event. It seems to be kind of an establishment of a new guard of next generation experts from Gen 1 or whatever origination to what's next for network. So, what tell us what is going on here? Well, Pier 2.0 is trying to be an educational institute for building up those next set of engineers. And so far it seems to be a very broad mix of people from diverse backgrounds. Some of it, Jay Adelson spoke this morning about kind of the history of the peering world from his perspective, which is great. Kind of seeing his point of view. I've touched base with him at various points in my career from different perspectives. So, that's kind of nice to have that. I think everybody who's considering getting into the network engineering space, they need to have a sense of where we came from to understand where we want to go. So, I think it's a great forum for that. There's also, there's a lot of different ways to accomplish peering these days too. So, there needs to be a good educational forum to help people understand what the options are for designing a network that's going to enable them to accomplish their peering goals. A lot of action going on. We've been covering our CVM world for five years now and certainly with the Nucera acquisition of software defined networks and just the cloud and virtualization just have created huge opportunities in the enterprise space. But now at the network level, what's the key thing that you're seeing in the evolution of the internet? Obviously, you got the carriers, you got peering, you have interconnection. What's changing? What are the key threshold issues that are being discussed in this community? Well, I think the big thing for my company that we've been involved in lately is the net neutrality discussion. Net neutrality is a huge issue right now. It actually has been for many years but it's getting a lot more press and as a network provider of services to carriers and to content providers, net neutrality is incredibly important to us that that be maintained. So, we've spent a lot of time explaining to regulators the Department of Justice in the United States why peering is important, how it works and how it either benefits or detracts from the consumer experience. And I don't think this conference has quite touched on too much of that yet but I did a little bit in my talk this morning and that's certainly a big issue. So, let me dig a little deeper in that and follow up because it's hard enough for the tech people to keep up with the tech in the world that we live today. For governments and government regulators in Washington and other places, it's got to be even harder. So, I wonder if for the folks at home that maybe aren't as familiar with kind of what the core issues are that are being kicked around on the net neutrality discussion. If you can kind of dive in a little bit and talk about the two or three kind of main topics and the two different points of view on those items. Yeah, the main issue from our perspective is that there's a monopolistic situation in this country. There's not enough competition for broadband. If you're someone at home, you probably have two choices or maybe three and they're completely different choices. On the one hand, you might have your old telephone company who offers DSL services. You might have a cable modem and then less desirable options for getting internet access at home would be wireless or satellite. That's not a great competitive dynamic, right? If your telephone company service is not great in your area, cable is all you have. And essentially your cable company or your telephone company, if they're really your only choice, they can kind of hold you hostage. You buy service from them and you get what you get and they're under no obligation to increase quality if you don't have a choice. And so what we've been trying to educate folks about is the business aspects that are in play with a lot of these providers where they create a competitive situation where they get paid on both sides. So they not only get paid by you as a home subscriber for your service, but they create an environment where they can also charge every application that you want to use. So for example, Comcast has done a deal with Netflix to ensure that Netflix pays them directly in order to have higher quality service so that your Netflix doesn't buffer as much at home. That increases the cost of the Netflix service and makes them less competitive compared to Comcast's own TV service that they want to sell you. Now was that just some smart guy sitting at Comcast figured out that there's a new product that I can now sell back to Netflix in terms of the quality of service? Or what happened before kind of this poster child case kind of elevated into the public consciousness? Well, there was a time way back when when Comcast was buying service from other folks. They didn't have the market power that they have now. And they peered with folks and performance was relatively good. What they did is, once they were on sort of an equal footing with various tier one carriers, they then found excuses not to upgrade. And so what happened is over time, all of the interconnection capacity that they have filled and became congested. And that became the vehicle for any customer sitting behind a congested route and essentially all routes that were not paid to Comcast became congested over time because they didn't upgrade any of them. So then it wasn't a technology play that created this quality of service issue. It was pure business. If I refuse to upgrade unpaid connections, only paid connections get the good performance. And so that's what they've been able to maneuver and multiple carriers have been able to maneuver themselves into a situation where if you want to have good performance to their customers, you have to develop a direct relationship with them that involves you paying them. So I wonder too for the folks at home, if you can just get kind of the peering 101 overview of the vision is right without peering, you throw stuff into the ocean, the packets go swim around and they reassemble at the other end. Talk about kind of the open internet versus a peering relationship and why that's so important for the internet expectations that we have today and why this becomes really a business conversation and not a technology conversation. Well, there really is not much difference between the two. They're this concept of an open internet. It is really kind of a, it's a tier of the internet that exists between smaller players, players that have to try to develop competitive advantages and they do that anyway they can. They do that by improving the relationships that they have with other carriers, establishing that direct connectivity to improve performance without having to rely on a tier one and trying to avoid as much of the performance issues created by net neutrality as they can. But sooner or later, if you're selling to people at home and you have a service that is bandwidth sensitive, you have to overcome that problem. So net neutrality will eventually impinge upon anyone who begins to become successful. And that's what folks need to understand is that the regulatory bodies in this country who are today letting businesses work these things out on their own are being negatively impacted by the fact that not everyone has, not everyone has earnest intentions at heart. Not everyone is motivated by improving the quality of the product that they sell when the product, take the cable modem or the cable broadband industry has a worse rating on the consumer index scale than airlines. And yet those companies- And that was before the video, the audio piece came out that way. The Comcast guy. They continue to add subscribers every single month even though people do not like doing business with them. Well we saw this movie before, they're during the SEALEC days, the policy guys got in and lobbied the laws so the battles are usually lost before they've been fought on the government side. That's, we've seen that before but I want to ask you more importantly around net neutrality now as the policy game continues, what's the innovation impact? So as people look at this and they try to make it so complicated, the proponents and the war of net neutrality makes it complicated so people don't understand the issues but let's try to narrow it down to innovation. Where's the impact to innovation in startups? Who would die? Who would not be around today if net neutrality was not in place or in place going back 15 years ago? Which companies would not be around today? In your opinion. Google, YouTube, Netflix, would there be that kind of innovation? It's hard to say if there's any big players today that wouldn't still be around but conceivably Netflix, imagine if when Netflix had 10 users and no content if every time you tried to watch something you got a buffering signal. They might not have made it before. They never would have made it to the point where they could develop their own content that people wanted to see. Right, although they had the alternate distribution method so at some point the economics and or the ease flipped where they didn't have to ship DVDs anymore and it became okay to do the stream. Well he's talking about critical mass at some point every company that's been involved in the freedom of the internet was to get some critical mass at the tipping point, kicks in. And so the question that's the issue here is that where's the innovation tipping point? If there's so much stringent policy and costs involved you can't monetize that, you got to get it funded and that's just a whole different ball game. Maybe people would still be getting their DVDs and their Blu-rays in the post. In the mail. Instead of being able to deliver them over the internet. The innovation is incredibly important in that respect to what, how people want to use their internet service there's a massive hunger towards using their internet connection more and more. Kids are on it all the time. They're on instant messaging, they're texting and they're on the internet all the time. What about the impact of something like, we're very close to Google, Google goes into Mountain View and other communities and starts setting up basically a Google sponsored wifi overlay. Is that the type of kind of competitive alternative that people need to potentially break the log jam or is that just not really the relative scale in terms of the bandwidth and throughput still not very big? I think what Google is trying to do is not to change the market but they're trying to demonstrate that the market is changeable. That there is an opportunity for new players to come in and do something different and be able to make money in the broadband space and create competition whether or not they themselves become the competition in the long run remains to be seen and I think they've stated that's not their strategy but everything about how they have approached things is to kind of publicly demonstrate yes, community wifi works, yes, community fiber co-ops through Google fiber can work and people can come in and they can create competition and create new services that consumers want to buy and do it at a rate that performs better than the competition and has all the service bells and whistles. What is the key points that people are fighting over right now in your opinion just at a thought leadership level and also at a technical level? What are the big battlegrounds? Obviously you mentioned net neutrality outside of net neutrality. What are the big threshold issues that are being kind of talked about and worked on? Well, obviously the cloud is a big industry buzzword right now. There's a lot of people figuring out exactly what this means to them and there's definitions are plenty plentiful throughout all businesses. One of the things we're trying to figure out is how customers view the value of their own data center as the applications move out of their data center into the cloud environment and their software purchasing models change. What do they feel is missing? And so we've been investing a lot of time with customers and with cloud providers trying to understand how we can solve for some of the gaps like security and SLAs and things like that by taking these cloud platforms that exist and connecting them directly into MPLS VPNs which doesn't use the internet but still enables the customer to have an SLA and also buy the software or the service in the manner that they want to that drove them to consider that cloud purchase in the first place. So this is like the AWS Direct Connect that we hear a lot about? Right. Okay. The Apple Threes Cloud Connect service that we launched where we're enabling our MPLS customers to get that direct pipe directly into those popular cloud services without using the internet. So that's a pretty big topic and obviously a lot of folks moving more and more their applications into the cloud and relying on someone else to provide that infrastructure. You know, I wonder when we will see the day in which enterprises start to shut down their internal data centers because they don't have any applications in them anymore. Well, that was going to be my question because you've been in this space for a long time, right? Level three has been a player in the data center space and the COLO space and the managed service for a long, long time and you've been there. And I was going to say, have you seen anyone even though they light up new applications in cloud instances actually take down and remove boxes from the installations that they have with you guys? Or is it still more additive? Sure, we see customers go through cycles. Usually it's a buying attitude in that company that drives that decision. So a new CIO comes in, wants to make his mark on the organization and says, I'm going to take all these MPLS connections out and we're going to run everything over the internet. And so you'll see that switch. And then five years later, another CIO will come in and say, what are we doing? We've got no quality of service, no guarantees from our provider. We've got to build an MPLS network. So you see this dynamic pendulum shift back and forth between these different approaches to doing business. Some people want to insource all of, as much as they can do all their own network management in-house. Other people want to outsource that using simple managed services and things like that. So we see that pendulum go back and forth with customers all the time. I couldn't say that there's been a specific trend where customers are definitely moving in one direction versus the other. We see a little bit of cross-pollination going back and forth. But generally speaking, we see both our internet product, inner MPLS products, inner managed services products all growing faster than the market, all taking market share and continuing to be very healthy. Dave, my final question for you is for the 2.0 community here. How do you see this group evolving? Obviously there's some business models developing. IIX just got recently scored funding from NEA. There's still innovation to be had as well as this grassroots organization of experts that are coming together. How do you see peer 2.0 evolving? I'm not sure. I haven't been involved that long. It's a brand new organization. A lot of that depends on the kind of people that it attracts. My understanding is that there's obviously some industry veterans here. A lot of them are speaking at the conference to share their knowledge and their history with the newer generation. I understand about 25% of the audience are students today, which is also pretty exciting to see students taking a big interest in this. The presentation that I gave today talks a lot more about the business aspect of peering and how do you make the numbers work for something that inherently doesn't have revenue dollars in it? And so that takes things more into the business realm. And I don't know how many business folks are in the audience today, but definitely we need to develop the people that are involved in peering to have both an engineering acumen and a business acumen. And I hope that this forum can do both. Obviously new people are coming into the industry. Younger guns are coming in, mentoring with the old dogs, as they say in the internet days. Thanks for coming on. I really appreciate spending the time. David Siegel here with Layer 3. Level 3. Level 3, sorry. We got Layer 42 coming on. Not to be confused. Level 3 communications. We'll be right back here live in Silicon Valley after this short break.