Net neutrality battle moves to endgame

In the absence of a coherent set of regulations or broad industry agreement about how the internet should be run, some of the biggest companies involved have decided the time has come to put their own stamp on the future of the web.

That was the clear message on Thursday as details of a bilateral deal between Google and Verizon over the handling of internet traffic began to emerge – and as US regulators called off their own search for an industry-wide plan.

The Google/Verizon gambit sent a strong blast of realpolitik through a policy debate that has simmered all year.

Preserving an open internet by ensuring all online traffic is treated equally – a principle known as net neutrality – has been a favourite project of Barack Obama’s administration and Julius Genachowski, its appointee at the helm of the Federal Communications Commission.

Although industry observers warned that it was hard to predict the effects of the Google/Verizon deal without seeing the full details, its broad outline was enough to cause consternation among many who have backed Mr Genachowski’s cause.

Under the plan, Verizon would be free to charge internet and media companies extra for guaranteeing a high quality of service for distributing their content. It would also be free to block services on its wireless network.

Both provisions appear to run counter to positions Google has struck publicly in the past. To Google’s enemies – and even some supporters – the plan looked like a sharp, even cynical about-face. It also represented a political calculation that could backfire.

As the strongest public advocate of net neutrality, Google’s interests had been closely aligned with those of both the White House and the FCC. But by advancing a plan that appeared to reflect its own corporate agenda the company has risked disrupting some important relationships, to judge by the unease that was evident on Thursday in some official quarters.

Thursday’s moves signalled that the fight over net neutrality is about to move into its endgame in Washington. In one possible outcome, an alignment of commercial interest between some of the biggest internet services, telecommunications and cable companies would lead to de facto standards on how the web is run.

In the other, the FCC would be forced to try to assert its authority to impose rules to keep the internet open – a response that would guarantee a protracted legal challenge, and which might lack political support in Washington.

Thursday’s developments appeared to tilt the argument in favour of a de facto, industry-led answer. When they unveil their plan publicly, the two sides are expected to hold it up as a model for how internet traffic should be handled. However, what suits Google and Verizon may not suit other interested companies.

A close business relationship between Google and Verizon, forged over the carrier’s successful backing of Google’s Android mobile phone handset, has created a commonality of interest between the two that may not be felt elsewhere.

Rebecca Arbogast, an analyst at Stifel Nicolaus in Washington said AT&T, a fierce Google rival, may take a different position – not to mention the cable television companies who would probably see any future “premium” Google video service over the internet as a threat.

For Mr Genachowski, meanwhile, news of the deal has served as a cruel reminder of the dangers of an exposed political position. Without a strong legal foundation for imposing rules to keep the internet open, the FCC chairman has proposed extending his agency’s remit under what are know as “Title 2” rules.

That approach has threatened to backfire. In an election year, the White House will find it hard to expend political capital to back the FCC – and communications companies and unions have opposed net neutrality on the grounds that it could threaten jobs. With Google and Verizon now trying to set the terms of the debate Mr Genachowski’s job just got a lot harder.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web.