The New Internet Superhighway: A Private Proposal

Since its inception, the Internet has been a single-lane, open access superhighway. But it may not remain that way for much longer. If you’re an online business owner or investor, you may want to prepare your company to do business in a new (and more expensive) marketplace.

On August 9th, Google and Verizon Communications issued a joint proposal for Internet legislation that may signal the end of the open Internet as we know it today. Online businesses may soon find that the doors to a net neutral environment have been shut, as carriers create new ways to generate profits through a multi-tiered network, one of which may be a lane for a “private” Internet.

In general, “net neutrality” has meant that Internet Service Providers (ISPs) must treat all information traveling over their lines in similar fashion. They aren’t allowed to discriminate, prioritize, or cut side deals that favor certain information (or companies) over others.

With the exception of mobile Internet, current net neutrality regulations enable any website owner to have the same open access to those ISP lines as the next website. Many consider these rules to be the guiding force behind the innovative growth of the Internet.

It’s believed that the open, single-tier nature of the Internet is what enabled innovative start-up companies like Facebook, Twitter, The Huffington Post, Politico, ProPublica, and even Google, to compete against deep-pocketed, mega-companies such as Microsoft, Yahoo, AOL, Amazon and the Wall Street Journal, back when they were initially vying for an audience.

Under the practice of net neutrality, ISPs could neither charge those start-ups differently, nor slow down their service, regardless of the size, name or influence of the website and investors backing them.

For obvious reasons, ISPs have been opposed to both net neutrality and Internet regulation by the Federal Communications Commission (FCC) because, according to them, it blocks the carriers from capitalizing on new money-making opportunities and from expanding their broadband infrastructure.

However, the FCC wants to preserve the open Internet and maintain the power to regulate cases of discrimination by ISPs that try to “prioritize” access to web service. Proponents of net neutrality fear that new and innovative online businesses wouldn’t be able to compete against larger, more established companies that have the capital to spend on securing exclusive Internet lines.

But last week, ISPs may have gotten what they’ve been fighting for—an influential joint proposal that would give them the power to both create and largely control a multi-tiered Internet network, including a private network traveling on faster broadband lines.

The legislative proposal that Google public-policy director Alan Davidson and Verizon’s top public affairs executive, former Republican Congressman Tom Tauke presented to the government last week pays lip-service to the idea of net neutrality on the surface. However, when you get into the details of the document, you’ll find that it proposes something more.

Basically, the Google-Verizon proposal spells out their agreement on how to best handle nondiscrimination, while protecting broadband providers’ rights to provide “differentiated” services. In exchange for agreeing not to discriminate or prioritize traffic on the public network, Verizon wants there to be safeguards in the government’s new regulations or laws that protect a broadband service provider’s right to develop new services.

The Google-Verizon proposal would create a 3-tier Internet marketplace:

1st Tier – The Public Internet: Consisting of the open, net neutral Internet as we know it today; This tier would function more like a slower, public access network of basic web browsing for companies that didn’t (or couldn’t) pay the extra fees ISPs would require for speedy delivery of their web content

2nd Tier – The Private Internet: Using a second broadband platform, ISPs could provide “additional, differentiated online services”, such as video downloads, 3-D broadcasts, health care monitoring, gaming options, or educational services; Websites would have to pay ISPs an exclusive fee to deliver their content over these fast-access lines

3rd Tier: The Wireless Internet: Consisting of Internet access on devices like smartphones and wireless laptop cards, the rules would be left to the will of the individual carrier instead of net neutrality regulations; (The proposal argues that the wireless Internet industry is too competitive to warrant regulation)

The proposal also includes several references regarding their desire to weaken the FCC’s power to regulate Internet discrimination.

If a website or online service provider believes that they’re facing “meaningful harm,” Google would encourage them “to use nongovernmental dispute resolution processes established by independent, widely recognized Internet community governance initiatives.” Also, “The FCC would be directed to give appropriate deference to decisions or advisory opinions of such groups.”

Though neither company has the power to create Internet policy, the Google-Verizon proposal shouldn’t be taken lightly. Both Google and ISPs have a well-known reputation for exercising an enormous amount of political clout in Washington.

For instance, Google CEO Eric Schmidt sits on the President’s Council of Advisors on Science and Technology. And several former Google employees are working in various levels of the Obama Administration.

But why would Google, once a strong promoter of the open Internet, join forces with Verizon to support a proposal ending the level playing field for online businesses? After all, it was only a few years ago that Google founders Sergey Brin and Larry Page were the beneficiaries of an open Internet platform that enabled them to compete with the established “big dogs” of the world wide web (and let’s not forget about Google-owned YouTube’s humble beginnings).

One suspicion is that Google has much to gain by having a private Internet of “differentiated services”. For example, a key business for Google is Internet video, which could generate massive amounts of revenue for the company if it ran that video on the 2^nd, pay-for-play, tier.

It’s also been argued that net neutrality proponents have become so weakened that they had to quickly cut the best deal possible with their opposition, or risk losing everything.

In the words of Bloomberg’s Rich Jaroslovsky, “Either way, it’s hard to shake the feeling that Google, having taken full advantage of the Net we’ve known for the last 15 years, is now helping pull the door shut behind it. A long time ago, I learned a valuable lesson from my dad. ‘There are two parties in this country, but they aren’t the Democrats and the Republicans,’ he said. ‘They’re the Ins and the Outs.’ Google and Verizon just made clear they’re members of the same party.”

If you’re an online business owner or investor, then it’s a safe bet to check your maintenance record. Though it’s uncertain whether the Google-Verizon proposal will become the basis for the government’s new Internet legislation, change is surely coming to the Internet superhighway. And you don’t want to find yourself stuck on the side of the road watching the future pass you by.

Further Information

Bloomberg Businessweek: ‘Surrender Monkey’ Google Slams the Door Shut: Rich Jaroslovsky / PC World: Google-Verizon Net Neturality Critics Pile On / ABC News: What Would A ‘Private’ Internet Look Like?

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