Some time ago I published some blog entries about net neutrality, and the actions of the FCC and the carriers. Yesterday there was a new announcement about these topics, which have many Internet analysts and net neutrality advocates quite upset. The issues are, unfortunately, hard to summarize, so I’ll just provide links to some good things to read.

This article in Wired Magazine is a good place to start.

The negative comment from Marvin Ammori, quoted in the Wired story, comes from this story published (perhaps in other places as well) in the Huffington Post, with a lot of analysis.

There is more analysis here, from Josh Silver of Free Press:

and more from him, the day before the announcement:

This article shows how happy the carriers are with the announced plan.

For some historical perspective, see this story from the Washington Post.

This is another attempt to explain what is all means, from CNBC.

This is an article published in Atlantic Monthly opposing the proposal.

What I don’t quite get is why prominent Silicon Valley investors are happy about this. This one quotes Ron Conway, the most famous of the Silicon Valley “super-angel” investors: John Doerr, perhaps the most famous VC anywhere, is also in favor, although I could only find that short quote.

I have been told that Google and other internet companies are running full page advertisements asking Obama to live up to his commitment to net neutrality.

One Internet or Two?

Here’s the heart of the matter: The meaning of the Google-Verizon proposal depends on what the meaning of “Internet” is. There are two ways of looking at it.

First, there’s Verizon’s way. Verizon CEO Ivan Seidenberg is essentially saying: Right now, we provide three services to you, over the copper or fiber-optic wire: telephone, television, and Internet. All we’re talking about is allowing us to do more, by providing “additional, differentiated online services” along with the three that we already provide. The Internet stays net neutral, so there’s nothing to make a fuss about. He suggests that examples of what these additional services might be include “health care monitoring, the smart grid, advanced educational services, or new entertainment and gaming options.”

Second, there’s everybody else’s way. The Google-Verizon proposal means that there are two internets, running over the same infrastructure. The first one is the Internet we all use. The second is paid-access-only, owned by the carriers. Its traffic can take priority over the traffic on the Internet. Large content providers would be able to buy from the carriers preferred, guaranteed bandwidth, and the Internet gets whatever is left over, which it can share in a “neutral” way. But what actually happens it the opposite of net neutrality.

Is this second option what they mean? Notice that Google’s own statements use the phrase “the public Internet”; why put in the word “public” other than to contrast with something else, a second, private Internet?

And, don’t forget, net neutrality does not apply to mobile/wireless networks. Why not?

What happens if there are technical advances allowing Verizon to replaces their wire and fiber cables with a new, even-better home service that doesn’t use wires at all? As wires become quaint old technology, does that mean the FCC loses all of those powers? And what about connections that traverse many different physical media? That’s what the “inter-” in “Internet” means. Do the rules for wireless “trump” the others and apply to the whole communication?

Politics and Diplomacy

Initially, I was surprised, disappointed, and even angered by Google. I expect no better from Verizon (or any of their direct competitors), but Google is a company that I’ve respected and admired for a long time. Their external handling of this matter has severely tarnished their “Don’t be evil” image.

If Google says that the carriers are putting up a strong fight against net neutrality, I believe that. I have no problem with Google’s negotiating a proposal, privately, with Verizon, per se. But the best proposal they could agree on is unacceptable to me, and to many others, as you can see from the articles referenced below.

It would have been pleasing and gratifying had Google “come out fighting,” denouncing Verizon, and saying that net neutrality, everywhere and anywhere, was utterly mandatory to any possible agreement. Instead, it looks as if Google’s very first move in the game is to give in to Verizon’s lousy proposal. It makes Google look as if they were every bit as enthusiastic about this compromise as Verizon must be.

But think about it some more. First, there’s real evidence that the carriers have a lot of political power, i.e. ability to influence the decisions of the Federal Government. Look at how the courts have been interpreting laws in ways that give the FCC little power. How did Congress react? How did the Obama administration act? Talk is cheap; now they have to actually do what they said. But as far as I can see, they don’t seem to be fighing back.

Now, taking this into account, imagine being in Google’s shoes. If Google simply insists strongly on full net neutrality, and then do not succeed, Google will end up looking powerless. People will respect Google less when Google tries to influence public policy and it does no good. That would be bad not only for them, but for us: despite the current imbroglio, Google can be, and usually is, a powerful participant on the correct side of the issues.

What’s really happening? There are many interpretations that are consistent with the facts (to greater or lesser degrees). Here’s the one that I think puts the best light on Google. The carriers are fighting hard, and have demonstrated lots of political power. Google is trying to negotiate the best deal that they think they can get, and call that a “first proposal that is a starting point for discussion.” Meanwhile, Google is trying to acquire power for net neutrality, to fight back. One way is to urge us all to write letters to our congresspeople asking for net neutrality, which they are urging us to do. If Google really wanted this deal, why would they exhort us to pressure Congress to enforce net neutrality?

This is the world of diplomacy, which often seems opaque, confusing, and even silly from the outside. I have no expertise here, but diplomacy is a serious and important pursuit, and in the present situation it’s the only way to go. Nobody can actually get their way by force. Diplomats, especially in multi-party negotiations that are novel rather than routine, are in extremely difficult positions when it comes to saying anything in public. My interpretation of what many statements mean is from within that kind of framework.

Google is Handling This Poorly

I always tell people to hold their judgment of a genuine controversy until they have heard out the other side. What has Google said?

Full disclosure: I like Google, and have many friends who work there. It’s likely that my employer will be bought by Google and that I will soon be a Google employee. I give you my word that I am not changing, or even shading, my opinions on account of anh of those things. I think that the “best light on Google” interpretation is likely to be close to the truth, but I cannot prove it. I am 100% in the “net neutrality” camp. Also, as soon as anti-trust issuees are cleared, Google will buy ITA Software and I will be a Google employee. I have always liked Google a lot, and I feel that my own situation has nothing whatsoever to do with what I’m writing here. When I do become a Google employee, I will have to stop writing about these topics, since what I say then would be subject to interpretation as Google official policy no matter how hard I disclaim that. But right now, the ITA/Google deal has not been done, and it might theoretically never happen (I have no inside knowledge whatsoever), so right now I am definitely not a Google employee. Still, you should apply all the usual caution you bring to bear on anything you read, especially on Internet blogs.

And in all fairness, remember that the audience for this isn’t just you and me. Google knows that this will be scrutinized by Verizon (and other carriers), the FCC, Congressional staffers, and so on. As I said earlier, I believe that they are trying to appear to Verizon as someone who can be worked with, and they must not offend anyone in public, lest they hurt their ability to influence parties in negotiations.

Nevertheless, I am not just disappointed but even rather appalled and outraged by Google’s comments to the press and outside world. It’s amazingly similar to the way bad politicians talk: spin, misleading, non-sequiturs, and even a few falsehoods. I hope Google will learn from this experience that if you talk like a sleazy politician, it’s very hard to hold the moral high ground of “don’t be evil”. I hope they’ll find better people to do public relations in the future.

For starters, on August 5, Google “denied reports that it is in talks with Verizon for a deal that could undermine Net neutrality. Google officially announced: “We have not had any conversations with Verizon about paying for carriage of Google traffic. We remain as committed as we always have been to an open Internet.”

Note the very careful wording. They have not talked about paying for the carriage of Google traffic. This was literally true, but utterly misleading. (They sure fooled me! See my earlier blog essays.)

Then Google released a statement on their Google’s Public Policy blog, called Facts About Our Network Neutrality Policy Proposal. It’s in “myth versus fact” format.

MYTH: Google has “sold out” on network neutrality.

It sure looked that way to me at first. I now believe that Google does not want this proposal to turn into reality, although the bad scenario in which it does is a real possibility. But Google appears to be hypocritial.

“Google has been the leading corporate voice on the issue of network neutrality over the past five years. No other company is working as tirelessly for an open Internet.” Sorry, that looks like Google talked when talk was cheap, but now that push comes to shove, it’s caving in.

That was my own immediate reaction. But in my “best light on Google” theory, this statement is a slightly coded way of saying “we are going to do real work, and pay real costs, to get net neutrality rather than this proposal”. It’s so hard for us to know what’s happening behind the scenes.

MYTH: This proposal represents a step backwards for the open Internet.

The proposal would give the FCC enforcement power over the “wireline Internet”. But that misses the whole point, since by “Internet”, it doesn’t include the “additional services”! Also, I don’t know about you, but I have never even heard the term “wireline Internet” before, ever. What, exactly, does that mean? Anything that does not go over protocols like CDMA? Anything that does not go over actual cables?

MYTH: This proposal would eliminate network neutrality over wireless.

Google says: “However, in the spirit of compromise, we have agreed to a proposal that allows this market to remain free from regulation for now, while Congress keeps a watchful eye.”

In other words, Google’s compromise is that there will be no regulation at all. They consider this OK because (1) wireless is more competitive because there are more than two providers to choose from; (2) airwaves are in contention, unlike cable, so “carriers need to manage their networks more actively”; (3) Congress will keep a watchful eye.

Regarding (1): I was at a talk (the MassTLC Innovation unConference) in which an expert explained that you need at least four or five wireless carriers to get a competitive market. The expert was one of the leaders of the Android group at Google.

Regarding (2): The fact that there is contention over the airwaves is the main reason that the FCC exists and has regulatory power in the first place! This is a “freedom is slavery” argument. (This is a metaphor, not a literal reference to slavery. It’s from George Orwell’s novel “1984″.)

Regarding (3): The claim is that we can relax, because if anything bad happens, Congress will step in and save the day. But in light of what’s clearly going on, the carriers have a huge influence over Congress, and what they’re doing is avoiding any regulation. Will Congress suddenly develop a backbone and do something, especially after the carriers have set everything up the way they like it?

The proposal says that the wireless providers should be “fully transparent with users” about “congestion management”. First, being fully transparent doesn’t protect users; it just means that users know what they are getting, whether they like it or not. Second, what is the line between “congestion management” and “preferential treatment”? Without a very crisp distinction, the two might slide together, which is exactly what we’re worried about.

They also propose that the Federal Government (hmm, why not the FCC specifically?) should “monitor and report regularly on the state of the wireless broadband market.” Again, we’ll know what’s happening to us; not very comforting.

Now here’s what I really consider sophistry: “Importantly, Congress would always have the ability to step in and impose new safeguards on wireless broadband providers to protect consumers’ interests.” Well, that’s already true. It’s always true. After all, no proposal would bar Congress from making laws in the future! Google is saying soothing things that actually don’t mean anything. I don’t know about you, but that makes me feel that I am being taken for a ride.

The next paragraph is designed to persuade us that “open Internet wireless platforms” are coming all by themselves. That’s nice. I guess we can just trust the providers and go home.

I know, I know, I ought not be sardonic and sarcastic. But my meta-point is that, above and beyond the specific facts about wireless vs. wired and so on, Google is sounding like they are trying to fool us. Some of the sentences in this blog item afre downright insulting: do they really expect me to believe this, or to consider this a substantive rebuttal?

MYTH: This proposal will allow broadband providers to “cannibalize” the public Internet.

Here they describe the “additional services” and say that they “are not part of the Internet.” They say: “We have a number of key protections in the proposal to protect the public Internet”. Why qualify “Internet” with the adjective “public”?

“First, the broadband provider must fully comply with the consumer protection and nondiscrimination standards governing its Internet access service before it could pursue any of these other online service opportunities.” Exactly what standards are we talking about here?

“Second, these services must be ‘distinguishable in purpose and scope’ from Internet access, so that they cannot over time supplant the best effort Internet.” Again, this sidesteps the key point: these “additional services” run over the same infrastructure as the Internet, and they will get priority, thus slowing down the Internet. And what, exactly, is the “purpose and scope” of the Internet, and, most important, who gets to make that decision?

“Third, the FCC retains its full capacity to monitor these various service offerings, and to intervene where necessary to ensure that robust, unfettered broadband capacity is allocated to Internet access.”

Well, I’m very comforted that nobody is taking away the FCC’s ability to monitor what’s going on, but being able to take action is what matters. They say that the FCC “retains” its capacity to do those things, but the last time I looked, I thought that the FCC’s powers in these areas had been greatly curtailed:

The record so far is indicative of how the FCC has functioned to date, and reflects the way the Commission has shrunk from its responsibilities to deal with crucial issues about the future of the Internet. Instead of issuing orders in dockets on a non-discriminatory Internet or on re-establishing the FCC’s ability to protect consumers and set rules of the road for broadband, the Commission has abdicated its responsibilities.

“It’s up to Congress, the FCC, other policymakers – and the American public – to take it from here.” What that ends up sounding like is: “now that Google has sold out, it’s up to everybody else to proceed without Google’s clout.”

But we really need to do it. We have to make it clear that we want net neutrality.

Appendix: The Anti-Google Press

The Huffington Post ran (at least) two articles, after the real story came out about what Google and Verizon were proposing. The first is called Google-Verizon Deal: The End of The Internet as We Know It, and the second is called Google-Verizon Pact: It Gets Worse.

PC Magazine ran a story called Google Acknowledges That Verizon Owns Your Internet, which approaches the issue from a different perspective. For example, it brings up Google’s “Nexus One”, an Android phone to be available on many carriers. But they didn’t market it seriously, hardly sold any, and killed the project in less than a year. There can be any number of reasons for a project to fail, but the Verizon deal certainly raises questions about whether Google could have caved on creating this kind of competition among the carriers. I think it’s likely that Google really did intend to do that. But now, we all have to wonder what the motivations were for killing the project, and we’ll never really know. By creating this kind of suspicion, the Google-Verizon proposal erodes the public’s trust in Google.

Wired Magazine ran a story called Here’s The Real Google/Verizon Story: A Tale of Two Internets (UPDATED). I will quote the two strongest paragraphs (the word “flame” probably isn’t entirely out of bounds to describe this):

So the Google-Verizon deal can be summed up as this: “FCC, you have no authority over us and you’re not going to do anything about it. Congress, we own you, and we’ll get whatever legislation we want. And American people, you can’t stop us.”

This Google-Verizon deal, this industry-captured FCC, and the way this is playing out is akin to the largest banks and the largest hedge funds writing the regulatory policy on derivative trading without any oversight or input from the public, and having it rubber stamped by the SEC. It’s like BP and Halliburton ironing out the rules for offshore oil drilling with no public input, and having MMS sign off.

Later, the article calms down, and get more analytical:

And that would be the first question, assuming this tale of two internets ever gets written: To what extent would an inherently more private network mingle with the public internet? Would it be like pay cable and satellite TV, which now provides some content that had previously been available on “free” TV, without killing broadcasting entirely? Or would it be like network television and syndication, which killed local station production and innovation?

There’s also Infoworld’s article.

Appendix 2: Google vs. Antitrust

I am sure that Google does not believe that they are doing anything evil. The question is whether living with a “Don’t be evil” slogan has stopped them from being able to see their own missteps when they happen. This problem was discussed in a thoughtful article by Fred Vogelstein, published in Wired last summer, that made a big impression on me. It’s called Why Is Obama’s Top Antitrust Cop Gunning for Google? I recommend strongly that anyone interested in Google’s place in public policy read this article. It’s not an anti-Google screed at all. I found it fair and disinterested. Of course you will make up your own mind.

Most relevant to the present discussion are these two paragraphs:

For much of its history, Google has responded to most criticism with two words: Trust us. The company has repeatedly persuaded skeptics that its immensity is a mere byproduct of its altruistic mission and that the algorithms it uses to organize the Internet, while proprietary, are objective and benevolent. But in an economy destroyed by bad faith, secretive formulas, and complicated mathematics, trust is in short supply, and Google’s assurances are losing their persuasive power. More than 15 years ago, federal regulators began making Microsoft the symbol of anti-competitive behavior in the tech industry. Now, a newly activist DoJ may try to do the same thing to Google.

Just like Gates before him, Schmidt says he has no plans to change his company’s trajectory in the face of regulatory challenges. Microsoft’s belligerence was a function of its will to power, a refusal to believe that the government had the authority or intelligence to take it down. Google still thinks it can get regulators to see it as it sees itself: not as a mere company but as a force for good.

Why This Is Interesting

On Thursday, I wrote about the alleged Google/Verizon deal, which was being said to be against the concept of net neutrality. This was remarkable, both because it was so far from that one would expect, and because it was published in many major media despite total denials from both companies.

This kind of journalistic train wreck doesn’t happen every day! Usually I’m annoyed when the reporting of the news is bigger news than the news itself. But in this case, I think it sheds a fascinating light on how technology reporting works.

Technology affects ordinary people profoundly these days. But major news outlets are under extreme time pressure to get stories out, and also don’t always have the technical expertise to fully understand the implications of a story in such a short time. The combination of these factors can lead to a lot of confusion.

(You can skip to the last section if you want to get to the exciting punchline.)

Even More Coverage

Many, many web sites picked up the Google/Verizon story.

eWeek first ran a story, by Clint Boulton, similar to the ones I referred to. It also said was that the FCC had been having talks with Google, Verizon, Skype, and AT&T, which they cut off on 8/6, citing too much disagreement.

In The Huffington Post, on Thursday morning, Josh Silver wrote a story entitled Google-Verizon Deal: The End of The Internet as We Know It. He completely believes that net neutrality is now dead. He does not even mention the denials from both companies. Maybe they hadn’t come out at the time he wrote this, but if so, that shows a serious weakness in our “24-hour news cycle”! This, in turn, was picked up in other blogs.

Later that afternoon, Huffington published a story Bianca Bosker published Alleged Verizon-Google Deal: Who’s Saying What, which leads with the denials from Google and Verizon, then the stories from the big newspapers.

Congresswoman Anna Eshoo, D-Menlo Park, who sits on the House Energy and Commerce Committee, spoke as if she took the story as true. She’s entirely right about net neutrality, other than the specific recent news story. I can sympathize with her and her staffers for feeling that if a story has been ruin The New York Times, The Wall Street Journal, and The Washington Post, then it’s not necessary to do costly and difficult research to make sure it’s true. The resources of a congressperson are not infinite, and you have to draw the line somewhere before you decide that something is worth believing. I hope that her constituents will be sympathetic about this; her heart is obviously in the right place.

The Cringely Theory: A Content Distribution Network

Then the New York Times called out a famous tech journalist, Robert X. Cringely. Actually there is no such person; it’s just one of the people who writes under that pen name, maybe Mark Stephens and maybe not.

The op-ed piece by Cringely hypothesizes (entirely as a guess, as far as I can see) that Google would set up mirror servers around the world at Verizon backbone routers. Strangely, he doesn’t mention that this concept has been around for years. It’s called a Content Distribution Network. The most famous is Akamai (generally considered the premium service) but there are many others. Does this Cringely actually think he just invented the idea? And why does he think that’s what Google and Verizon are doing? This guess sounds entirely inconsistent with what we know.

The Cringely story got slashdotted in the late morning of Sunday Aug 8 (twelve hours before I now, as I write). Most accept the CDN theory.

One commenter points out that CDN’s are like network non-neutrality in that he who pays more gets better bandwidth and latency, and this has been true for years. Whenever one hears something simple and think, “Why didn’t I think of that?”, one must pay attention!

But then there’s a thoughtful reply, by Stephen Friederichs, which is worth reading in full:

This is different in that Google actually paid for something physical and not just a “It’d be a shame if your nice Internet caught on fire” protection scheme. What I feared about a lack of net neutrality wasn’t Google getting faster because they paid, but everyone else getting slower. These large communication companies have a history of trying to sell the same infrastructure as many times as they can. This is different in that new infrastructure was created instead of old infrastructure unfairly and arbitrarily reapportioned.

The Wayne Rash Theory: Technical Improvements

Today eWeek published a long story. by Wayne Rash. He says Google and Verizon are simply trying to work out how to give everybody good service on audio and video, in light of the latency issues on the Internet.

Indeed, although audio and video are rather jittery, I’ve been amazed that they even work as well as they do, since the Internet was not at all designed for such services. Go back and read the debates about how “packet switching” (what the Internet does) is inferior to “circuit switching” (what the phone system does). It’s a lot more complicated than that in real life.

Rash goes on to say that the New York Times was “swayed” by the advocacy group called Public Knowledge, who he says are very hard-line about net neutrality. He says: “In other words, we’ve gone through two days of kerfuffle based on sloppy reporting, lazy journalism and technology coverage from a publication that doesn’t understand technology.”

The comments on the article are thoughtful and interesting, too.

I find Wayne Rash’s theory to be, by far, the most plausible explanation, in light of
what we know now. If this story be true, it means:

• The change helps to set proper priorities and handling for network traffic of certain kinds, not from different providers.
• Network neutrality is helped, rather than hindered, since some of the network neutrality arguments get confused and veer off into this separate issue.
• Google isn’t evil, after all.

My Sony Vaio laptop has a touchpad that lets you control the mouse position.  There are two nice buttons on it to do click-left and click-right.  Unfortunately, if you touch the touchpad, even very lightly, it does a click-left.  More unfotunately, I seem to do this fairly frequently when I am touch-typing at high speed.  I’m still not precisely sure why, but I don’t care.

I want to disable the touch-the-touchpad features.

I looked all over for some way to control the touchpad, with no luck.  I tried downloading software from Sony that might have such a thing; no luck.

So I tried Sony eSupport.  My computer is not under warantee, but they say you can have 15 free minutes.  I asked to go into a chat session, and got into one very promptly.

It took a long while, but I finally got an answer: because I upgraded to Windows 7, there is no way to fix the problem.  I said, OK, just show me how to disable the whole touchpad; I’ll just use a mouse.

The service person said, yes, I will do that for you.

The service person then went into this long and complicated routine to be able to operate my machine remotely, which involved installing an app, installing a java applet, etc, etc.  She ran some “Omni PC Health” thing, which claimed that my computer was horribly screwed up, running at only 40% of its performance, and was infected with malware.  Then she started telling me (this is via chat) of the wonderful virtues of their paid support, and how it would rid me of all these terrible problems, fix my horrible (but entirely unspecified) malware problem, and so on.

In short, the purpose of Sony’s “free support” is to scare people into paying money to Sony.  This is fraudulent marketing.

There was a satisfaction survey at the end.  I explained all this (briefly) and told them they ought to be ashamed of themselves.  They should.

Caveat: This story is changing in real time, so this essay may get obsolete quickly. Take a look at the comments to see if there are updates.

The New York Times, Bloomberg, and the Washington Post today said that Google and Verizon are talking about a deal in which Google/YouTube would pay Verizon to get more bandwidth for their own content. This is opposed to the principle of net neutrality, which Google has strongly supported for years, so this news is stunning, if true.

Verizon and Net Neutrality

Last October the CEO of Verizon made a speech about how net neutrality would be a bad thing, and would help Google et. al. at the expense of Verizon et. al. The key point, surprise surprise, is that he says net neutrality will hurt Verizon’s profit margin, who might take its ball and go home.

New York Times

Edward Wyatt of The New York Times today (8/5/2010) reports that Google and Verizon are working out terms so that Google/YouTube can pay Verizon to give them more “speed”/”priority”. Also fees for users from ISP’s will go up. His source is “People close to the negotiations who were not authorized to speak publicly about them.”

The article goes on to say: The FCC may squash this. Talks between the FCC and various companies continue. They are “jokingly” [my quotes] called the “secret meeting” [their quotes]. [Yeah, no kidding! It's surely what used to be called a "smoke-filled room".] Google, Verizon, AT&T, Skype, cable system operators, and the Open Internet Coalition, which has many members, including Amazon, ACLU, Am. Library Assn., ask.com, eBay, evite, Facebook, Google, match.com, NetFlix, PayPal, Skype, TicketMaster, TiVo, Twitter, and YouTube.

The Times story said nothing about who has how many lobbyists, who in Congress oversees the FCC, who contributes to the campaign of the committee members, and so on.

The first comment on the story simply said “Et Tu, Google?”, and more than one comment said “So much for ‘Don’t be Evil’.”

Wall Street Journal

The WSJ ran a story saying largely the same thing as the NY Times:

Bloomberg

Todd Shields (tshields3@bloomberg.net) at Bloomberg ran a related story:

Verizon Communications Inc. and Google Inc. have struck their own accord on handling Internet traffic, as both participate in talks by U.S. officials on Web policy, two people briefed by the companies said.

We’ve been working with Google for 10 months to reach an agreement on broadband policy,” said David Fish, a Verizon spokesman. “We are currently engaged in and committed to the negotiation process led by the FCC.”

Google has “nothing to announce at this point,” said Mistique Cano, a Washington-based spokeswoman, in an e-mail.

They also point out that announcing Android phone availability has helped Verizon earnings a lot.

Their quote in favor of net neutrality comes from Andrew Jay Schwartzman of the Media Access Project, a public-interest law firm.

Verizon and Mountain View, California-based Google proposed in a January filing at the FCC areas of compromise for regulating Internet service providers. The companies said preserving an “open Internet” calls for “minimal interference from the government” for applications, content and services, such as Google and Twitter.

Google

Google issued the following denial, at about 10:30am EDT:

@NYTimes is wrong. We’ve not had any convos with VZN about paying for carriage of our traffic. We remain committed to an open internet.

On Gizmondo they macroexpanded this from tweet-ese to English:

The NYT is quite simply wrong. We have not had any conversations with Verizon about paying for carriage of Google or YouTube traffic. We remain as committed as we always have been to an open Internet.

Google has been on record as supporting net neutrality for years.

A Google/Verizon deal of the kind described by the New York Times would enact precisely the pay tiers that Schmidt fiercely fought in 2006. Jeff Jarvis calls Google’s agreement a “devil’s pact with Verizon for tiered internet service.” Huffington Post blogger and Free Press president Josh Silver warns, “The deal marks the beginning of the end of the Internet as you know it.”

This may in fact be just the latest crack in Google’s support for net neutrality. The Wall Street Journal reported in 2008 that Google was approaching broadband providers in the hopes of creating a “fast lane” for its own content.

In Jan 2010, Google came out strongy in favor of net neutrality.

Net Neutrality Background

Back in Nov 2005, Vint Cerf, one of the creators of the Internet, now the Chief Internet Evangelist at Google, testified in absentia (he was receiving the Presidential Medal of Freedom at the White House!), to Representatives aJoe Barton and John Dingell, then of the Committee on Energy and Commerce in the House, strongnly in favor of net neutrality. In Oct 2009, he was also interviewed in the Washington Post supporting net neutrality.

He co-wrote an open letter to Julius Genachowski, the FCC Chairman. The net neutrality proposal wasn’t public yet, but the ISP’s were fighting against it. The point isn’t to disallow traffic shaping at the packet level, but to “prevent anti-compeitive practices.” It’s interesting that they used that particular phrase, which comes from the Sherman anti-trust act. The letter was signed:

• Vinton G. Cerf, Internet Pioneer
• Stephen D. Crocker, Internet Pioneer
• David P. Reed, Internet Pioneer
• Lauren Weinstein, Internet Pioneer
• Daniel Lynch, Internet Pioneer

The FCC issued the “Notice of Proposed Rulemaking” very shortly thereafter, and then voted with 3 in favor, and 2 in favor of some but not the rest. ArsTechnica analyzes what they voted for, and shows ambiguities and exceptions. However, this ruling was made null and void, by the Comcast decision.

Comcast Decision

Comcast was ordered by the FCC to stop throttling traffic from P2P services such as BitTorrent. I can see how they might not like this given that they are charging a fixed fee for bandwidth.

Gizmondo says:

Never mind the huge conflict of interest, that most of them are also trying to sell you video services through your TV, so they’d prefer you not watch it for free on your computer, or that Comcast is now buying the majority of one of those networks who produces content for your TV.

For instance, totally hypothetically, now that Comcast, via its NBC shares, owns a chunk of Hulu, it could give network priority to Hulu over Netflix Watch Instantly streaming. Or Microsoft could pay Comcast to give Zune Video priority over another service on the network.

Also, Comcast is trying to buy NBC Universal, which includes NBC and several cable channels. Would it favor its own content? So far, they say, surprise surprise, that they won’t. To me, that means they won’t do it until they do it.

The FCC sued to prevent Comcast from interfering with its customers’ use of peer-to-peer networking applications. In April 2010, the case reached a court one step away from the US Supreme Court, namely the US Court of Appeals for the D.C. Circuit. They decided to make a broad ruling (rather than one narrowly-tailored to this case) that the FCC does not have “authority to regulate an Internet service provider’s network management practices.”

The Court vacated the order, and granted Comcast’s petition for review. This means that Congress would have to pass a law to give the FCC these powers. Until then, the FCC is powerless to order Comcast and friends to stop throttling P2P sites.

The National Cable and Telecommunications Association stated that the court ruled that the FCC decision “was wrong”. This is highly misleading: what they ruled is, right or wrong, the FCC doesn’t have the power to do this. The Court’s decision is not specious; it is quite plausible.

But, because the ruling was so broad that the FCC cannot mandate net neutrality either, unless new laws are passed! I worry that once non-neutral charging is in place, imposing net neutrality could be much harder, so the delay could be harmful (in my non-expert opinion)

A New York times article about the decision points out that “some conservative Republicans” will be against giving more power to the FCC. That’s a nice, polite way of putting it; I’d be very surprised if more than one or two Republicans vote to give the FCC any new powser, and the Democratic “majority” is fractured into micro-interests rather than working together. The article continues:

As a practical matter, the court ruling will not have any immediate impact on Internet users, since Comcast and other large Internet providers are not currently restricting specific types of Web content and have no plans to do so.

Until they do.

Worst Case Scenario

Without net neutrality, your Internet bill could look like your cable TV bill, with extra monthly fees for optional services like movies, news, international news, web search, and finally a big fee for full Internet access. Of course, the carriers say that they have “no intention” of doing this. If they did have an intention to do it, or were even considering it, of course they’d say that they’re not doing so. Why give the enemy advance notice of your attack?

The only thing we know for sure that they’re doing is thinking about how to make more money. There’s nothing wrong with making as much money as you can, legally. But it’s up to society (ultimately, the voters) to decide what’s legal: what are the rules of the game that are in the public interest. They’ll try hard to change the rules. The power of the political donor class, and their lobbyists, is beyond the scope of this essay. But I hope that we won’t end up with this.

Losing Net Neurtrality: The Worst Case Scenario (from Gizmondo)

You can find out all about it at http://www.google.com/press/ita/,
and you can Google for “Google ITA” to find everybody’s opinion.  To everyone who sent congratulations, thank you!

Microsoft is complaining that Google’s deal giving them access to millions of digitized books is anti-competitive and monopolistic.

The idea of Microsoft demanding protection from monopolistic practices is utterly breathtaking in its degree of chutzpah and hypocrisy.

I suspect that Microsoft is trying to appeal directly to Christine Varney, the head of the anti-trust division at the Department of Justice, who has been an outspoken critic of Google. (I mean “appeal” in the colloquial sense, not in the term-of-art legal sense, of course.)

Lots more info about the Google case can be found in a recent Wired article.

this article in Mass High Tech talks about early stage venture funding in New England. Here are the numbers that the article provided. I did some averages to keep all the figures “per month”.

• Jul, Aug, Sept 2008: 6 deals, $34M total
• Jan, Feb, Mar 2009: 3 deals, $17M total
• Jul 2009: 15 deals, $97M total

James Geschwiler, executive director of Common Angels, is quoted extensively in the article, which ends: “After all, when the economy is down, investors should be taking advantage of the lower costs. [James] said: ‘I didn’t have to go to business school to learn “buy low, sell high.”‘”

Supercapitalism: The Transformation of Business, Democracy, and Everyday Life, by Robert Reich, is the most interesting book on the American government and how it relates to our lives that I’ve read in a long time.

In a nutshell, the thesis is: “Capitalism has become more responsive to what we want as individual purchasers of goods [and investors], but democracy has grown less responsive to what we want together as citizens.” “Democracy means more than a process of free and fair elections. Democracy, in my view, is a system for accomplishing what can only be achieved by citizens joining together with other citizens–to determine the rules of the game whose outcomes express the common good.”

He makes what I consider an extremely cogent, well-written, and persuasive argument to support this. He explains why it happened, focusing on the history of the American economic and governmental structure starting in the post-War era (the fifties), and showing how major changes started in the Seventies and continued to the present.

He offers explanations for:

• Why CEO pay has soared into the stratosphere and what prevented it from soaring before
• Why inflation has become less of a threat than it was three or four decades ago
• Why antitrust laws are less important today as a means of restraining economic power than they were previously.
• Why there are so many more corporate lobbyists and lawyers in Washington, D.C.
• Why politicians demand that companies be “patriotic” and put America before other nations
• Why a bigger fuss is being made over corporate philanthropy when corporations were never set up to be charitable institutions
• How someone can fret about the decline in hourly wages and simultaneously hunt for the best deal from China or India, which is often at the expense of an American’s wages or even job.
• How someone can lament the decline of independent retailers on Main Street while at the same time do most of their shopping at big-box retailers and online.
• Why a person who is deeply concerned about global warming might nonetheless buy an SUV
• Why politicians like to publically excoriate CEOs but then enact no laws making what they did illegal
• Why the move toward improved corporate governance makes companies less likely to be socially responsible
• Why the promise of “corporate democracy” is illusory
• Why the corporate income tax should be abolished
• Why companies should not be held criminally liable
• Why shareholders should be protected from having their money used by corporations for political purposes without their consent
• Why large companies have less economic power now than they had three decades ago
• Why the immense increase in corporate lobbying is due to a decrease in the market power of the corporations

You may be thinking about some of these points: “Oh, it’s obvious why.” But Reich’s explanations are often not what you’d expect.

None of this happened because of Ronald Reagan or Margaret Thatcher; the trends were clearly under way before they came to power, and the same trends can be seen in other countries to some extent. Neither were they caused by heroic or villainous CEOs; the changes are structural, not personal.

“The executives of Wal-Mart or any other large company are not brutally insensitive or ruthlessly greedy. They are doing what they’re supposed to do, according to the current rules of the game–giving their customers good deals and thereby maximizing the returns to their investors. Just like players in any game, they are doing whatever is necessary to win. But just as all games require rules to define fair play, the economy relies on government to set the economic ground rules. If government wanted to do something about the means Wal-Mart employs, it could change the current rules. In theory, it could enact laws to make it easier for all employees to unionize, require all large companies to provide their employees with health insurance and pensions, enact zoning regulations to protect Main Street retailers from the predations of big-box retailers, and raise the minimum wage high enough to give all working people a true living wage. All such measures would have the likely effect of causing Wal-Mart and other large corporations across the board to raise their prices and reduce returns to investors.”

Reich is not especially advocating that government should do these things. His point is to show what could happen, and why things are happening the way they are. He would like there to be more public conversation about whether or not to make these kinds of tradeoffs. The last sentence is “The first step, which is often the hardest, is to get our thinking straight.”

The writing style of the book is simple and direct, and fun to read. He has a lot of supporting facts and figures as well as good illustrative stories.

I believe that his overall point is extremely valid, and provides a useful framework for thinking about the vital issues of our economy and our government.

I heard on Marketplace (American Public Media’s radio show) about footnoted.org, where Michelle Leder exposes juicy information about corporations found in the footnotes of their reports. If you’re a shareholder, you might be interested to know how your management is spending your corporation’s money. Here are some fun ones:

• Fred J. Kleisner, Interim President and CEO of Morgans Hotel Group, had to relocate to New York City. The company is paying all his expenses, including a housing allowance of up to $30,000 per month. “Even in Manhattan, that guys you some nice digs.” He also gets a $750K salary with a bonus up to 200% is he meets performance targets.
• For their CEO Michael McGrath, I2 Technology paid nearly $1 million flying him between the company’s offices in Dallas and his home in Maine.
• Countrywide gave CEO David Sambol a $2.7 million promotion bonus shortly before their stock imploded.
• Qwest Communications CEO Edward Mueller’s stepdaughter attends high school in California, but Qwest is based in Denver. But no problem; she’s allowed to use the company’s Falcon 2000 private jet for her commute to school. This could cost Qwest as much as $600K, assuming normal charter rates. In fact, more than half of the CEO’s in a recent study are able to use their corporate jets for personal trips.
• David Peterschmidt is leaving as CEO of Openwave Systems after three years, for which he’ll get a lump-sum payout of $1.5 million and full vesting of his 175,000 shared of restricted stock — also worth about $1.5 million. This was while Openwave’s shares fell by 17%; it has been falling and falling ever since. Meanwhile there has been a shareholder lawsuit, involving Peterschmidt and others, claiming the the stock price dropped because of the company’s options backdating scheme, which encompassed seven years and led the company to restate its financials. In 2007, they lost $197M on revenues of $290M.

It’s good to be CEO.