Google's deal on equal Internet access opens door to new clout
Tuesday, August 10, 2010
Google has long presented itself as looking out for the little guy. It easily could have used its wealth and power to gain preferential treatment from Internet providers but always said it would not because that could prevent the next start-up in a Silicon Valley garage from enjoying similar success.
But as Google has gotten bigger and entered new lines of business, it has revised some of its principles -- and it is drawing criticism from start-ups and public interest groups along the way.
Google and Verizon Communications on Monday confirmed that they've put aside their differences and agreed that rules ensuring equal access to the Internet shouldn't apply to mobile phones. They also said a company such as Google could strike a deal to pay for more capacity on a carrier's network for zippier downloads of its own sites over those of competitors.
That means Verizon could block an application such as Microsoft's Bing search service from its subscribers' mobile phones, or it could charge consumers extra for access to certain popular applications delivered at better quality than other Web sites.
Google chief executive Eric Schmidt said in a conference call with news media that though Google has agreed to these changes in principle, the firm wouldn't actually pay for preferential treatment on land-based broadband networks. He said that Google would only operate on the "public Internet" that is accessed by any user and that it would not cut special deals to deliver YouTube or other services to fixed-wire consumers at a higher rate.
But analysts pointed out that even if Google doesn't take up that practice, its agreement could lay the groundwork for other companies. Firms could pay providers such as Verizon for extra space on their "pipeline" into American homes, they said.
"We both recognize that wireless is in a slightly different place than wireline," Verizon chief executive Ivan Seidenberg said in a news media call. "What we're concerned about is the imposition of too many rules up front that would not allow us to optimize . . . the supercharged growth we've seen in the past."
The announcement illustrates a shift in direction for Google, which has been the corporate evangelist for open network practices, particularly on wireless networks. Three years ago, Google's top executives were lobbying the Federal Communications Commission to break open the closed nature of wireless networks, with rules that would allow a consumer to put any wireless device on any network and access any software or Web site.
But now that Google has partnered with Verizon Wireless to make cellphones based on its Android software, the fastest-selling smartphone platform currently, the search company says it understands the unique bandwidth constraints on mobile networks. This is the big frontier, where analysts say Google needs to extend the cash-machine ad service that has experienced such great success with desktop Internet users. In their announcement, the Internet giants said that "net neutrality" rules, as they are called, would be too "onerous" for the mobile phone market.
"There is a lot of concern that the flexibility that Google is willing to give on wireless is . . . because they feel they have a path forward in their commercial dealings," said Rebecca Arbogast, head of tech-policy research for investment firm Stifel Nicolaus.
The companies' proposal is meant to be a legislative blueprint for a law overseeing broadband service providers such as AT&T, Comcast and Verizon. The companies said Congress should empower the FCC to be the traffic cop making sure consumers have equal access to Web content from their home computers, and meting out fines of up to $2 million on companies that block or give priority to some Web sites on the Internet.
Other companies have argued for the same rules to apply on mobile networks. Skype, for example, has argued in meetings with the FCC that the agency should prevent carriers from blocking services such as its own from the iPad and from the Droid or other smartphones.