by AMY SCHATZ And AMIR EFRATI
Wall Street Journal
August 10, 2010
Google Inc. and Verizon Communications Inc. on Monday called for equal treatment of most Internet traffic while at the same time saying fast-growing cellular networks and yet-to-be-developed broadband services should be exempt from such restrictions.
The ideas outlined in the proposal put forth by the Internet search giant and one of the largest broadband providers stand in contrast to the Federal Communications Commission's recent proposals on "net neutrality" rules, which would prevent companies from giving preferential handling to certain types of online traffic.
In Google's case, the proposal's endorsements of two-tier Internet service and a hands-off approach to cellular-based Web services represent a break with many other online companies, which have argued for strict neutrality in how Internet traffic is treated. Google itself previously expressed general support for rules prohibiting discrimination among forms of Web traffic.
The joint endorsement of exempting wireless services from net neutrality is a significant victory for cellular broadband providers such as Verizon, which have said that excessive regulation of those services would stifle their investments.
Cellular Internet access is becoming an increasingly important profit center for telecommunications companies as more consumers adopt mobile Web tools such as smart phones like the iPhone and phones based on Google's Android software.
Some consumer advocates slammed the proposal, saying it could result in the creation of private, closed broadband networks akin to cable TV systems, as opposed to today's open Internet in which anyone can create a website or online service.
Google and Verizon called their statement of principles a legislative proposal. More precisely, it is a high-profile effort to influence a debate in Washington over the future rules of the road for the Internet-a debate that Congress has yet to begin in earnest.
The Google-Verizon statement is also aimed at the FCC, which has proposed applying to broadband services the rules originally designed to ensure the free flow of calls over telephone lines.
Last week, the FCC abruptly called off closed-door talks with industry lobbyists that were aimed at reaching a compromise on net neutrality. News of the impending Verizon-Google agreement was cited as a reason for abandoning the talks, said people familiar with the negotiations.
In 2002, the FCC deregulated Internet lines to encourage more investment. Earlier this year, the agency proposed reversing that decision after a federal appeals court said the FCC overstepped in 2008 when it sanctioned Comcast Corp. for deliberately slowing some customers' traffic.
FCC officials are trying to find a way for the agency to act as an Internet traffic cop without the need to take the controversial step of re-regulating Internet lines. The agency proposed doing that earlier this year; however, phone and cable-TV companies have protested the idea.
A spokeswoman for FCC Chairman Julius Genachowski declined to comment Monday on the Google-Verizon proposal.
Democratic FCC Commissioner Michael Copps said its past time for the FCC to act on net neutrality. "Some will claim this announcement moves the discussion forward. That's one of its many problems," he said in a statement.
AT&T Inc., a big broadband and cellular rival to Verizon, said in a statement that it would examine the proposal and that it is "committed to achieving a consensus solution to the net neutrality issue, either with the FCC or with the Congress."
The Verizon-Google agreement would provide a loose framework for protecting Internet traffic that the companies said would "provide certainty that allows both Web startups to bring their novel ideas to users, and broadband providers to invest in their network."
The proposal would allow broadband companies to charge companies or consumers more for "additional, differentiated online services," such as 3D movie streaming or gaming. That traffic would run in priority lanes alongside the traditional Internet.
Google Chief Executive Eric Schmidt said Google wouldn't pay Verizon or other Internet service providers to offer such premium services for Google's products, including its YouTube video service. "We like the public Internet and we intend to use it," Mr. Schmidt said.
The proposal wouldn't change what consumers get from either company. But consumer advocates blasted the plan. They worry that over time broadband providers would allocate a bigger chunk of their capacity to the priority lanes at the expense of the traditional Internet.
Along with Internet companies, including Amazon.com Inc. and Facebook Inc., public advocates have argued rules are needed to prevent broadband providers from favoring their own services or extracting money from companies for speedy delivery of Web traffic.
"It is conceivable under the agreement that a network provider could devote 90% of its broadband capacity to these priority services and 10% to the [regular] Internet," said Gigi Sohn, president of Public Knowledge, a digital advocacy group.
Joel Kelsey, an adviser to media watchdog Free Press, said that "Google and Verizon can try all they want to disguise this deal as a reasonable path forward, but the simple fact is this framework.would transform the free and open Internet into a closed platform like cable."
Phone and cable companies say they need leeway in managing their Internet networks so bandwidth hogs such as video services don't take up too much capacity. They also say they need some pricing flexibility to offer new Internet services to help them recoup the billions of dollars they spend to build out broadband networks.
Richard Bennett, a senior research fellow at the think tank Information Technology and Innovation Foundation, whose funding comes mainly from phone and cable companies, called the Google/Verizon proposal a "good starting point for Congress."
To believe that some Internet applications shouldn't receive priority treatment is "na´ve," Mr. Bennett said. "It's like they are saying all cars have to cost the same-that you should be able to buy a Ferrari for the price of a Geo Metro."
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