Google and Verizon's anti net-neutrality plan

Source: http://www.nytimes.com/2010/08/16/technology/16google.html?_r=3&partner=rss&emc=rss

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Google Plan With Verizon Disillusions Some Allies
By CLAIRE CAIN MILLER and MIGUEL HELFT
SAN FRANCISCO — On Friday at lunchtime, as Google employees dined al fresco, a hundred protesters descended on the company’s Silicon Valley campus. A group called the Raging Grannies sang a song called “The Battle Hymn for the Internet,” and others carried signs reading, “Google is evil if the price is right.”

They were there to complain about what they saw as Google’s about-face on how Internet access should be regulated and to deliver a petition with about 300,000 signatures.

Several of the groups at the protest, like MoveOn.org and Free Press, once saw Google as their top corporate ally in the fight for net neutrality — the principle that the Internet should be a level playing field, with all applications and services treated equally.

But a week ago, Google stunned many of its allies by crossing the aisle and teaming up with Verizon Communications to propose that net neutrality rules should not apply to wireless access and to outline rules for the wired Internet that critics say are riddled with loopholes.

Google’s compromise with Verizon is the latest collision between idealism and pragmatism at the company, which has long promoted the idea that its mission, organizing the world’s information, is for the public good, as underscored by its unofficial motto: “Don’t be evil.”

Some say that as Google has grown up and become a large multinational company, it has been forced to start weighing its business interests against the more idealistic leanings of its founders and many of its employees.

“I don’t know that Google pondered the moral decision this time,” said Jordan Rohan, an Internet and digital media analyst at Stifel Nicolaus. “I think the business decision to cooperate with Verizon superseded the other complications and side effects that it may cause.”

Google strongly defends its proposal with Verizon, saying it does not violate net neutrality principles and, if adopted by regulators, would protect wired Internet access more than it is protected now.

“We don’t view this as a retreat at all,” Alan Davidson, Google’s director of public policy, said in an interview. “Google believes very strongly in net neutrality.”

But the proposal left Google’s former allies, as well as many other technology and media companies, feeling disappointed and even betrayed. The risk, they say, is that without adequate regulation, Internet access companies could exercise too much control over what their customers can do online, or how quickly they can gain access to certain content. They could charge companies for faster access to consumers, hurting smaller players and innovation.

“Google has been the most reliable corporate ally to the public interest community,” said Josh Silver, president of Free Press, an advocacy group. “That is why their sellout on net neutrality is so stunning.”

The proposal from Google and Verizon was all the more surprising to some advocates because it was released just as broader talks brokered by the Federal Communications Commission were close to producing a draft compromise agreement, according to three people briefed on the talks, who agreed to speak on the condition of anonymity because the talks were supposed to be confidential.

Unlike the Google-Verizon proposal, the agreement would have imposed some rules on wireless Internet, these people said.

“We were very close,” said one person briefed on the talks. Both the F.C.C. and Google declined to comment on those discussions. After reports of a Google-Verizon deal emerged, the F.C.C. called off the talks, which in addition to those two companies included AT&T, a cable industry group, Skype and the Open Internet Coalition.

Though Google has long said that it thinks openness rules should be applied broadly to Internet access, the company was persuaded that wireless is different because it is evolving rapidly and there is more competition, Mr. Davidson said. Wireless carriers say they need more leeway to manage their networks because it is difficult and expensive for them to add more capacity.

The shift was also a pragmatic compromise to get “broader support, in this case from Verizon and hopefully others,” he said.

Still, Google’s new position on net neutrality represents a scaling back of the company’s ambitious goals. When Google began building a presence in Washington in 2005, net neutrality was one of the first issues it embraced. And over the years, Google’s drive to open up the wireless industry became a corporate mission, backed by the company’s financial might.

In 2007, Google made a $4.7 billion bid in a government auction of wireless airwaves. The company’s goal was not to win the auction, but to raise the price above a threshold that would set off rules forcing openness on the airwaves. Verizon won the auction and soon plans to deploy a high-speed network that will be bound by those rules.

In January, Google introduced its own phone, the Nexus One, and opened an online store to distribute it. By selling directly to consumers, Google was challenging the control that wireless carriers have over the distribution of phones, especially in the United States. But Google quietly killed the Nexus One and the phone store this year.

Analysts say Google’s new, more conciliatory approach to the wireless industry was born of necessity.

Verizon offers a number of smartphones that run the Android software from Google, and Verizon is handling growing amounts of data flowing through its network to and from those phones. The volume will only increase as new mobile devices are developed and people use them to watch movies and do other bandwidth-intensive activities. Meanwhile, Google is looking to the mobile Web to feed much of its future growth.

“This is about Google becoming friendlier with the wireless industry so that more Google searches are conducted on wireless devices,” Mr. Rohan said. If wireless was exempted from net neutrality rules, Verizon could limit the use of some applications and spend less money improving its network, or get paid by Web companies for delivering content.

Some people see echoes of Google’s decision to go into China in 2006. In that case, after a lengthy internal debate, Google put aside its aversion to censorship and decided to enter what quickly became the world’s largest Internet market. Google has since pulled its search engine out of mainland China after online attacks that originated there, but the decision to do business there tarnished the company’s reputation among human rights advocates and disappointed many employees.

“I don’t fault Google and Verizon for striking a deal,” said Susan Crawford, a professor at the Benjamin N. Cardozo Law School and a longtime supporter of net neutrality. “A large private company is always going to operate in its own interest, and for anyone to believe otherwise would be naïve.”

Professor Crawford, who is critical of the proposal, said the F.C.C.’s lack of action on access rules pushed Google to seek a compromise. “Google had no choice but to cooperate with the friendliest carrier it can find, which is Verizon,” she said.

But disappointed consumers and advocates seem to be holding Google to a different standard, in large part because of the image it created.

“If the world of business is an ugly world full of rats, they’ve managed to create a bushy tail for themselves and come across as a very, very cute rat with terms like ‘Do no evil,’ ” said Scott Galloway, professor of brand strategy at the Stern School of Business at New York University. “The downside of that is that people have expectations that they’re going to fight these quixotic battles, and the bottom line is their obligation to their shareholders.”

Not all believe that Google has betrayed its principles. Some longtime Silicon Valley chroniclers say they still think Google is trying to do the right thing, not only for itself, but also for the Internet as a whole.

“I would rather have a company like Google that means to do no evil and is struggling with compromises on these hard issues than a company that doesn’t see a struggle,” said Tim O’Reilly, founder and chief executive of the technology publisher O’Reilly Media. “Most companies don’t even see things in those terms.”

Ashlee Vance contributed reporting from Mountain View, Calif.

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