Would Google-Verizon deal kill net neutrality?

The Internet was abuzz today over published reports about negotiations between Verizon and Google that could undermine the push for network neutrality - for which Google was once a staunch advocate.

Then, in midafternoon, came this news: The FCC's chief of staff, Edward Lazarus, said via email that "the recent round of stakeholder discussions" - criticized by net-neutrality advocates as backroom dealing - were now on hold. Lazarus said:

We have called off this round of stakeholder discussions. It has been productive on several fronts, but has not generated a robust framework to preserve the openness and freedom of the Internet – one that drives innovation, investment, free speech, and consumer choice. All options remain on the table as we continue to seek broad input on this vital issue.

Earlier, several news organization had said a deal was near between Verizon and Google. The New York Times reported:

Google and Verizon, two leading players in Internet service and content, are nearing an agreement that could allow Verizon to speed some online content to Internet users more quickly if the content’s creators are willing to pay for the privilege.

The charges could be paid by companies, like YouTube, owned by Google, for example, to Verizon, one of the nation’s leading Internet service providers, to ensure that its content received priority as it made its way to consumers. The agreement could eventually lead to higher charges for Internet users.

Such an agreement could overthrow a once-sacred tenet of Internet policy known as net neutrality, in which no form of content is favored over another. In its place, consumers could soon see a new, tiered system, which, like cable television, imposes higher costs for premium levels of service.

Sources familiar with the negotiations say the draft deal would essentially allow Verizon to say that it was offering two kinds of broadband Internet service through its single set of fiber-optic pipelines.

One would be a "best-efforts open Internet," which would be governed by some version of network-neutral principles - though probably by principles that would allow it to discriminate between types of bits, such as video bits versus voice or text, but not between providers.

The other would be a "managed services" Internet, in which Verizon could discriminate in any way it sees fit - including through exclusive deals that would allow it to, say, favor one video-on-demand service over another.

On the wireless side - a key concern for both Verizon and Google, who have partnered to provide Android smartphones that compete with Apple's iPhone - the only requirement would be "modest rules of disclosure," one source told me.  

Open-Internet advocates are worried that any deal between Verizon and Google could sway the Federal Communications Commission and network-neutrality supporters in Congress to quit pushing harder for stronger net-neutrality principles. 

Some advocates are willing to accept tiered pricing for the types of bits being transmitted, to facilitate the development of high-bandwith services, though they see devils in the details. But their big fear is that the small group of businesses that already dominate the broadband Internet - telecom companies such as Verizon and cable companies such as Comcast - want to develop it as their private fiefdoms.  Without neutrality, not only could they block or disfavor companies that attempt to offer services that compete with their core video and telecommunications products, but they could extract tolls and pick winners and losers in any new Internet-based sectors as they develop. 

"It’s a name change to take the issue off the table, and to give cover," says Harold Feld, legal director for Public Knowledge, the advocacy group. "What we have here is an effort to solve the problem by rebranding the concept of 'Internet fast lanes' as 'managed services.' It’s not 'fast lanes,' it’s 'hot lanes.'"

A key concern with the reported deal is the question of how much bandwith would be accorded to the "best efforts open Internet" versus the "managed-services" side of the pipelines. "We don't want the 'best efforts Internet' to be cannibalized by the managed services," says Gigi Sohn, president of Public Knowledge.

Some neutrality advocates are hoping that the private talks themselves will energize opposition.

"Companies do what companies have to do," Feld told me.  "We’re hoping that once people see that two companies can go into a private room and try to divide up the Internet, people will rise up and say maybe the FCC ought to get involved."

It's not yet clear whether the FCC's announcement was a sign of blowback from the leaked reports on a Google-Verizon deal.

Google's policy team used Twitter to offer a terse denial: "@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."

A little after 3 p.m. came Lazarus' statement saying the "stakeholder discussions" were on hold. And Friday morning, the Times quoted FCC chairman as standing up, at least in principle, for net neutrality. It said he "believed it was 'unacceptable' for Internet service providers to offer faster Internet transmission to content providers willing to pay higher fees."

PC World had a good summation of the initial news reports here, and pointed out that a deal could jeopardize the kudos Google has won in the past by suggesting that its "commercial interests were secondary to preserving a level playing field for all Internet companies."  In a follow-up here, PC World said the deal might not gain wider support.