Trust Us, We’re Corporations

Updated, 11.41 AM PDT. That’s the message underlying the news that Verizon and Google have reached their own “self regulation” — an agreement that violates the spirit, and perhaps the letter, of net neutrality.

Net neutrality is, for the internet, akin to what happens on telephone networks: AT&T can’t treat an incoming call from Verizon any differently than it treats one from its own subscriber. With net neutrality, the anti-discrimination ethic has been focused on bits. In other words, the carriers — the infrastructure owners — should not be able to block, slow down or speed up the bits based on their points of origin or destination.

This is also how the electric grid works:

A useful way to understand this principle is to look at other networks, like the electric grid, which are implicitly built on a neutrality theory… The electric grid does not care if you plug in a toaster, an iron, or a computer… The electric grid worked for the radios of the 1930s [and] works for the flat screen TVs of the 2000s. For that reason the electric grid is a model of a neutral, innovation-driving network.

This concept of neutrality is an old one, dating to the Roman Empire and early English common law. “Common” in those days was akin to being “open to the public;” common law applied to innkeepers, shipowners, ferrymen, surgeons and the like.

By common law, common carriers were 1) required to serve upon reasonable demand, any and all who sought out their services; 2) held to a high standard of care for the property entrusted to them; and 3) limited to incidental damages for breach of duty.

Flash forward to the 20th century. The U.S. Supreme Court ruled that a telegraph company is a common carrier. As such, it could not discriminate: it had to offer its services to its competitors. It is that discriminatory principle that is threatened by the Google/Verizon agreement as leaked to the press.

To make this marriage of convenience seem like an even worse idea, it comes as the FCC seeks to develop a policy on net neutrality. You see, Congress has ducked its responsibility to the consumer by repeatedly refusing to take up the issue of net neutrality. On the other hand, Congress was quite willing to act on the intellectual property concerns of Hollywood and the RIAA.

At least nine times in the last seven weeks — including Wednesday, with another meeting scheduled for Thursday — a group that includes Google, Verizon, AT&T, Skype, cable system operators and a group called the Open Internet Coalition has met with top F.C.C. officials to discuss net neutrality and the agency’s legal basis for regulating Internet service.

Cable and telephone companies want free rein to sell specialized services like “paid prioritization,” which would speed some content to users more quickly for a fee. Wireless companies, meanwhile, want no restrictions on wireless broadband, which they see as a different technology than Internet service over wires.

Many content providers — like Amazon, eBay and Skype — prefer no favoritism on the Internet or they want to be sure that if a pay system exists, all content providers have the opportunity to pay for faster service.

The back rooms and halls of the FCC are not where these discussions should be taking place. They need to see the light of day. Haven’t recent events (Wall Street’s CDOs, unscrupulous mortgage bankers, BP) shown us that blind trust in mega-corporations is a misplaced act of faith?

Google has more than one reason to be talking to Verizon: there’s both YouTube and Android. It’s important to remember that Google’s tentacles have a long reach. Will a deal like this tarnish Google’s “do no evil” pledge?

Should Google be able to buy a faster delivery for its YouTube content? What does that potentially mean for YouTube’s competitors, from Blip.tv to Brightcove? What does it mean for the mobile phone market? Is subsidizing YouTube and Android with revenue from search any different from Microsoft subsidizing its xBox and internet efforts with revenues from its Windows operating system monopoly?

In the case of net neutrality, I’m skeptical that the Verizon/Google marriage is good for anyone other than the two parties. How bad it is for everyone else has yet to be determined. Trust Verizon to “not harm consumers“? Not a chance.

The old joke used to be, “I’m from the government and I’m here to help you.” Today it’s, “Trust us, we’re corporations; what’s good for our bottom line is good for yours, too!”

Update: 11.45 am
This morning, Verizon asserts that the NYTimes article is wrong but says not a word about the Bloomberg, WashingtonPost or Politico stories, which were the basis for my response.

Google’s Eric Schmidt “declined to confirm” the Verizon deal yesterday, but it also sounds as though he did not deny it:

“We’re trying to find solutions that bridge between sort of the ‘hard-core Net neutrality or else’ view and the historic telecom view of no such agreement,” Schmidt told reporters on the sidelines of the Techonomy conference…”

And what, exactly, does “hard-core Net neutrality” mean? In 2006, Schmidt wrote:

Today the Internet is an information highway where anybody – no matter how large or small, how traditional or unconventional – has equal access. But the phone and cable monopolies, who control almost all Internet access, want the power to choose who gets access to high-speed lanes and whose content gets seen first and fastest. They want to build a two-tiered system and block the on-ramps for those who can’t pay.

But the leaked agreement describes a two-tiered system based on payment.

What do you think? A trial balloon? Someone who wanted to sabotage any potential side-deal between the two?

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