Google and Verizon: Did They or Didn’t They?
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
Todd Shields (email@example.com) 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 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.
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.
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 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.
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.