Yesterday, Google and Verizon held a press call in which Google’s Eric Schmidt and Verizon’s Ivan Seidenberg announced a joint policy proposal containing a set of general principals which they say will “make a constructive contribution to the dialogue” about net neutrality and open Internet principles. I realize this content will be a bit thick to wade through, but it’s important to understand what net neutrality is in order to facilitate a dialogue about what it will mean to the future of Internet access in the home and mobile markets.
Net neutrality proposals have been bounced around like a hot potato for a few years now. For all of you who may have heard the term “net neutrality,” but don’t know what it means, here’s a quick primer. The FCC currently has no authority over regulating Internet content and its delivery. This means that businesses are free to offer access to Internet services (i.e. broadband) in any manner they choose; with the understanding that the free market will guarantee that consumers have adequate access to the content and applications of their choice.
In October 2009, the FCC issued a Notice of Proposed Rulemaking, which proposed a set of net neutrality principles which it would seek to enforce against Internet service providers in order to guarantee principles of non-discrimination and transparency in the manner in which broadband providers manage data traffic and provide access to the Internet to their customers.
The FCC’s proposal did not differentiate between methods or manners of delivery in its quest for non-discrimination. The FCC’s Notice of Proposed Rulemaking defined “nondiscriminatory” by requiring that broadband providers could not “(a) favor or disfavor lawful content, applications, or services accessed by their subscribers, or (b) charge a content, application or service provider for enhanced or prioritized access to users.” The FCC’s proposal would continue to allow broadband providers to charge different rates for different broadband speed tiers. Essentially, the FCC has been marketing its proposal in a way that requires broadband providers to not prioritize any one type of content over another, and the example has that has been used to demonstrate this is that currently, a large corporation could pay a broadband provider to deliver its content more rapidly than a competitor’s content, thereby making a “pay-to-play” situation where smaller, less well financed competitors content is throttled back in some way.
In April, 2010, the U.S. Court of Appeals for the District of Columbia Circuit ruled in the FCC vs. Comcast case that the FCC does not have the authority to regulate an Internet service provider’s network management practices. In response to that ruling, the FCC announced in May that it would move to reclassify broadband from an unregulated information service to a regulated common-carrier service under Title II of the Communications Act. Many industry observers noted that after the court’s decision in the Comcast case, the FCC would have to seek more input and involvement from the broadband industry in shaping rules that could garner more broad-based support.
There are various segments of the business and political world that have taken various sides from the beginning of this debate, including most of the big players in the broadband market like Verizon, AT&T, and Google, with Verizon and Google having been on opposite ends of the debate. In January, 2010, Google posted on its Public Policy Blog an article explaining its stance on net neutrality is to “keep the Internet awesome for everybody,” and to effectuate that goal, Google advocated for the FCC to “re-adopt rules to prevent network providers from discriminating against certain services, applications, or viewpoints on the web, and requiring them to be transparent about how they manage their networks.” Essentially Google has been a strong advocate of net neutrality. Verizon, on the other hand, has opposed net neutrality regulation as impedance on its ability to compete in the marketplace and manage its network infrastructure.
So, now back to the Google/Verizon net neutrality joint policy proposal. Essentially, the big news is that Google and Verizon have come together in agreement on several specific aspects of a policy framework that they hope will guide future developments in the push by the FCC to regulate Internet access. Specifically, the two companies have agreed upon the following general principles: 1. the Internet would be open and available to all legal content, services, applications, and devices; 2. Internet traffic and content should be delivered in a enforceably non-discriminatory way; 3. Internet access would be provided to consumers in a transparent manner; 4. the FCC would use a complaint-driven process to enforce consumer protection and nondiscrimination practices; 5. broadband infrastructure would be a platform for innovation allowing providers to create new services that are distinguishable from traditional broadband internet services and therefore would not be subject to the same rules; 6. wireless broadband requires unique hardware and is the subject of rapid change and therefore would not be subject to the same rules; and finally, 7. the companies mutually support universal access to broadband for all Americans.
I think as it relates to the wireless industry, Google and Verizon’s proposal would essentially leave the structure as it is today, with wireless carriers limiting access to certain technologies and services, imposing limits on data usage, and charging consumers differently for different levels of data usage. The joint proposal went so far as to say “we would not now apply most of the wireline principles to wireless, except for the transparency requirement.” The net neutrality discussion is a complicated matter that I won’t pretend to be competent enough to objectively provide an opinion on, but on this aspect of the proposal, I will wholeheartedly agree. Wireless broadband access should be limited in order to protect its wide scale availability on-demand. Remember the Apple press event where the iPhone 4 was announced and Steve Jobs was having trouble demonstrating one of the basic features of Apple’s new device? Steve blamed the debacle on the fact that the horde of live-bloggers in the room was eating up all of the bandwidth. Imagine if suddenly, wireless carriers could not restrict access or availability to their wireless data networks (with the infrastructure as it currently exists) and consumers were free to use it as they wanted without regard to the amount of bandwidth their devices gobbled up, and regardless of what external devices they connected. One could imagine the problems that would arise.
So, as it specifically relates to the exclusion of the wireless broadband providers, I agree with Google and Verizon’s joint proposal as the right policy choice for consumers right now.
So, for the one or two of you that stuck with me on this article, let me know what you think about net neutrality in general, and whether or not you even care. One thing is for sure, this topic isn’t going away anytime soon. In some ways, the battle is just heating up, so you might as well pay attention and think outside the box at how these proposals will impact not just your pocketbook, but the future of innovation in the industry.