the Google-Verizon plan unveiled yesterday

GOOG and VZN made their new internet plan public yesterday.  An explanation is available on the GOOG public policy blog, which links to the proposal’s text on Scribd.  (I searched without success to find the proposal on the VZN website.)

the plan

It has some straightforward features, followed by a couple of curve balls.  First, the plain vanilla–

fixed-line internet

The proposal has five points that deal with the fixed-line internet as it exists today.  They are:

1.  Service providers can’t prevent lawful activity, including sending and receiving content, running applications and using services, and connecting devices to the network.

By implication, service providers would be able to stop unlawful activity or actions that harm the network or users.

2.  Service providers wouldn’t be able to engage in “undue” discrimination against lawful activity in a manner that causes”meaningful” harm.

3.  Service providers would have to disclose terms of service and network management practices “in plain language” and in enough detail that users can make informed choices.

4.  Providers can do “reasonable” network management, including measures to reduce congestion, ensure security and eliminate unwanted or harmful traffic.

5. The FCC would enforce consumer protection and nondiscrimination requirements, not by general rulemaking, but by case-by-case actions against violators.

This leaves the FCC relatively toothless, but that’s basically where Congress and te courts have the agency now.

the eyebrow-raising ideas

These have generally drawn the most unfavorable comment in the blogosphere so far.

1.  Wireless would be exempted from all the fixed-line rules, except for #3, transparency in terms of service.  In other words, service providers could deny access to users if it wanted and prioritize content.  Very convenient for Android-based phones on the VZN network.

2.  “additional or differentiated services” could be offered by any service provider who also runs a broadband internet service governed by the plain-vanilla rules.  On this “differentiated” network, which could make use of internet content, the service provider would be able to prioritize traffic.  On its blog, GOOG offers the examples of online gaming/gambling, education (distance learning?), entertainment (movies, concerts?), and health care monitoring as examples of possible additional services.

my thoughts

It sounds to me like GOOG and VZN want to make very large capital investments in wireless and fixed-line internet service networks and want to setle the ownership issue before they do so.

Up until now, the cable and telephone companies that have built out multi-billion dollar internet networks have been compelled–rightly or wrongly–by their semi-monopoly status to accept the rules of “net neutrality.”  If DIS, for example, wants to offer an internet on-demand movie download service over, say, the Comcast network, in direct competition with Comcast’s own cable on-demand service, net neutrality says Comcast has no choice but to allow this to happen.  More than this, Comcast has to make every effort to ensure DIS has enough bandwidth that its service will be successful.

In some sense, then, content providers own the network just as much as the firms who built it, who are relegated to being nothing more than “dumb pipes” that deliver content to consumers.  I’m not trying to make judgments about what should or should not be the case.  I’m simply trying to describe the current state of affairs.

GOOG and VZN, it seems to me, are content (resigned?) to this being the case with capital investments made to date.  But before they commit new money to build new network infrastructure (GOOG, I think) or enhance an existing one (VZN Wireless) they want to make sure they own the network in the strongest possible sense.

Yes, if GOOG and VZN are permitted to build on their own terms, there’s a chance that the existing fixed-line internet–already a laggard in world terms–will develop more slowly than it would otherwise.  On the other hand, without some assurance that they will own the resulting network, I don’t think a non-utility like GOOG will build anything.  Also, there may be more competition in private networks than one might initially think.  Where GOOG treads can AAPL be far behind?

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