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Loss ratio based random early detection (LRED) scheme has been recently proposed for improving the response and robustness of active queue management (AQM) in Internet routers. It measures the latest packet loss ratio periodically, and adjusts its packet loss probability around the measured value. Our goal is to identify the key factors that drive the effectiveness of this design. We present a stability analysis for the TCP/LRED delayed feedback system. Our analysis suggests that the stability of LRED scheme can be decoupled from TCP load N. Thus LRED scales well with a wide range of traffic conditions. Furthermore, based on the stability analysis, we propose a scalable algorithm both for TCP load N and for link capacity C. In the end, we study the packet loss ratio estimate scheme, which is a key factor of LRED, and present a full average loss (FAL) filter algorithm. Simulations validate that the proposed filter algorithm responds quickly to the change of traffic conditions and achieves a steady estimate in the presence of extremely short term flows.