Google, Verizon propose Net neutrality framework

CEOs from Google and Verizon Communications on Monday announced a proposal to policymakers for keeping the Internet open.

The companies jointly suggested a legislative framework for consideration by lawmakers. The major breakthrough in the proposal is an agreement that the nondiscrimination clause that the Federal Communications Commission has proposed as part of its regulatory efforts would be enforceable.

"We agree that, in addition to these existing principles, there should be a new, enforceable prohibition against discriminatory practices," the proposal states. (See entire document embedded below.) "This means that for the first time, wireline broadband providers would not be able to discriminate against or prioritize lawful Internet content, applications, or services in a way that causes harm to users or competition."

In September last year, FCC Chairman Julius Genachowski proposed turning the commission's four principles of network openness into official regulation. And he suggested that the FCC add two more "principles" as part of these new rules.

The existing principles can be summarized this way: Network operators cannot prevent users from accessing lawful Internet content, applications, and services of their choice, nor can they prohibit users from attaching nonharmful devices to the network.

Broadband service providers, such as AT&T and Verizon, have said they can live with these existing four principles becoming enforceable, and Verizon reiterated that in its joint proposal with Google. But the biggest sticking point in this debate has centered on one of Genachowski's additional principles. Specifically, the one that prevents Internet access providers from discriminating against particular Internet content or applications.

Broadband providers have argued that without specific definitions and parameters, this nondiscrimination clause could prevent carriers from selling any kind of differentiated service.

But based on the policy statement issued by Verizon and Google, the two sides have reached an agreement on how best to handle nondiscrimination, while protecting broadband providers' right to provide differentiated services. In exchange for agreeing to not discriminate or prioritize traffic on the public network, the phone company wants there to be safeguards in new regulations or laws that protect a broadband service provider's right to develop new services.

"Our proposal would allow broadband providers to offer additional, differentiated online services, in addition to the Internet access and video services (such as Verizon's FIOS TV) offered today," the companies' policy proposal states. "This means that broadband providers can work with other players to develop new services...Our proposal also includes safeguards to ensure that such online services must be distinguishable from traditional broadband Internet access services and are not designed to circumvent the rules."

Some examples of services the companies mention include health care monitoring, the smart grid, advanced educational services, or new entertainment and gaming options. During a conference call with reporters, Verizon CEO Ivan Seidenberg further explained that Verizon wanted to keep the option for broadband providers to sell network capacity to companies willing to pay for that service to deliver higher quality service.

Because the Internet is a best effort network--meaning no traffic get priority and is instead first come first serve--some bandwidth intensive services, such as high-definition or 3D video, would benefit greatly from having their own dedicated slice of bandwidth. Seidenberg said he has no intention of selling priority traffic slots over the public Internet. But he wanted to make certain that Verizon had the option to sell dedicated capacity to potential customers over its dedicated network.

Verizon already runs its Fios TV over such a dedicated network. And for years, Verizon and other phone companies with nationwide IP network coverage have sold premium, dedicated bandwidth services to corporations.

"We have to be flexible," said Seidenberg. "Verizon is standing tall. We said we agree that there should be no paid prioritization of traffic over the public Internet. Google (and others) will continue to innovate, and we have to feed that cookie monster. All we have asked is that we are allowed to offer services like Fios."

The companies have been working together on the Net neutrality issue for almost a year. In October, they issued a shared statement of principles on Net neutrality. And then, a few months later, they submitted a joint filing to the FCC. In late March, the CEOs discussed their interest in an open Internet through an op-ed in The Wall Street Journal.

Reports had surfaced that the two companies were contemplating some sort of commercial business deal as they developed their joint proposal for policy makers, but Google CEO Eric Schmidt insisted during the conference call that there was no such deal, and that the announcement released Monday was just a "a joint policy announcement."

"There is no business arrangement, and reports that there were a business arrangement were false, misleading, and not correct," Schmidt said. Verizon CEO Ivan Seidenberg reiterated Schmidt's comments, saying "there is no prioritization of any traffic that comes from Google, period."

Schmidt also discounted speculation that Google may be considering launching new services that would use some of Verizon's dedicated bandwidth. He said Google does not plan on developing products or services that run over anything but the public Internet. "We like the public Internet and we're going to use it," he said.

As previously mentioned, the principles in the proposal would not apply to wireless networks, which Seidenberg said are "in a slightly different place" compared to wireline networks. Verizon was concerned that new regulations on wireless networks before they were completely evolved could present problems in optimizing their performance, he said.

"We both recognize that wireless broadband is different from the traditional wireline world, in part because the mobile marketplace is more competitive and changing rapidly," the companies said in their policy statement." In recognition of the still-nascent nature of the wireless broadband marketplace, under this proposal we would not now apply most of the wireline principles to wireless, except for the transparency requirement."

Updated at noon PDT with additional details about the joint proposal and comments made by Verizon and Google CEOs during a conference call.