August 10, 2010

Google, Verizon Propose ‘Open Internet’ Policy

In a policy statement released on Monday, Internet search giant Google and US telecom titan Verizon proposed a legal outline to safeguard "Ëœnet neutrality' but said the rules shouldn't apply to wireless broadband Internet connections.

"We both recognize that wireless broadband is different from the traditional wire line world, in part because the mobile marketplace is more competitive and changing rapidly," the companies said in the joint statement.

"In recognition of the still-nascent nature of the wireless broadband marketplace, under this proposal we would not now apply most of the wire line principles to wireless."

Google and Verizon made a detailed plan for US legislators to create laws aimed at preventing Internet service providers from violating "net neutrality" by giving some data priority over other digital information.

The announcement marks a surprising industry compromise over so-called "net neutrality" -- a term that means high-speed Internet providers should not block or slow information or charge websites to pay for a fast lane to reach users more quickly. But it is unclear if the two companies can get lawmakers or regulators to move forward with their proposal.

Analysts said the Federal Communications Commission is unlikely to cheer for a proposal that would only apply to a small percentage of Internet channels.

The FCC has been trying for months to make rules for how Internet traffic should be managed on telephone, cable and wireless devices. The effort met confusion and disorder in April when a court ruled that the FCC overstepped its boundaries by sanctioning Comcast for blocking bandwidth-hogging online applications.

The joint proposal by Google and Verizon on Monday came after the FCC failed to broker an agreement on net neutrality among broadband providers and web companies.

Stifel Nicolaus analyst Rebecca Arbogast said the compromise would not be enough to avert a potential move by FCC Chairman Julius Genachowski to reclassify broadband into a stricter regulatory system -- one that would allow it to police Internet traffic.

"He is looking for greater network neutrality safety safeguards and a broader agreement among parties," Arbogast told Reuters.

Failure to come to an agreement on rules for wireless devices -- which could have wide-ranging implications for media companies and wireless manufacturers trying to determine their next investments -- is one of the major reasons the talks at the FCC have failed.

Handheld devices are a lucrative business for companies expecting growth in wireless broadband Internet services as more and more people are using smartphones and other wireless devices.

Public interest groups lashed out at the proposal, calling it another failure to protect wireless Internet users.

At the meetings, the hope among FCC officials and the companies was that, if they could solve the net neutrality challenge, the FCC would drop a broadband reclassification proposal.

But the meetings were suspended after reports of the side deal between Verizon and Google, who created their own proposal after previously being on opposite sides of the debate.

Chief executives for Google and Verizon said during a call with Reuters that the proposal doesn't represent a business arrangement and there are no plans to provide Verizon consumers with Google services and products.

"As far as we're concerned, there would be no paid prioritization of any traffic over the Internet," said Verizon Chief Executive Ivan Seidenberg.

But while the companies said the proposal does not allow for paid prioritization on the public Internet, carriers should be able to make private arrangements with service and application providers to let them offer differentiated services outside of the public Internet.

"Examples of this could be very highly sophisticated healthcare monitoring services, or smart grid services or super advanced educational type things, or even entertainment services," said Seidenberg.

AT&T said it was not partial to the proposal, but did not outright oppose it either.

"The Verizon-Google agreement demonstrates that it is possible to bridge differences on this issue," AT&T spokeswoman Claudia Jones told Reuters.

Telephone companies previously suggested that another agency with competition and consumer protection missions such as the Federal Trade Commission might be better suited to regulate broadband.

Google and Verizon said the FCC should have full enforcement authority over the rules, including the ability to impose up to $2 million fines on companies that violate the proposed rules.

However, it would not let the FCC go beyond the net neutrality rules written in potential legislation. "This deal proposes to keep the FCC from making rules at all," Joel Kelsey, political adviser at public interest group Free Press, told Reuters.


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