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The Bandwidth Black Market: Verizon, Google & Net Neutrality

[Update]: Google’s since updated everyone via Twitter claiming that the New York Times’ original report was false, saying: “@NYTimes is wrong. We’ve not had any convos with VZN about paying for carriage of our traffic. We remain committed to an open internet.” Take that for what you will, but our original report (complete with Rob’s thoughts) remain below.

I’m sure that you’ve heard the term “net neutrality” as its been a buzz word lately, but similar to the trend regarding “the cloud”, many people hear it but don’t understand it. Perhaps that’s because for two years the FCC has been discussing the issue but failed to impose any rules to enforce it. Apparently Verizon and Google are taking matters into their own hands, creating a private partnership designed to both exploit the lack of lawmaking while urging the FCC to move forward.

CompetitionAllow me to explain: Verizon is an internet service provider. They make money by delivering content to user’s computers – something that we call bandwidth. But what if Verizon could selectively choose how fast (and if at all) certain content loads? What if they slowed down websites of competitors, sped up their own offerings, or even demanded money from companies who wanted an inside track to speedy load times?

Google and many others have pushed for “net neutrality” which essentially states all content is created equal. Meanwhile ISPs like Verizon suggest they deserve the freedom to treat content however they choose. The governmental stalemate has led to a private deal made by Google and Verizon and it should turn a few heads. From the New York Times:

Google and Verizon, two leading players in Internet service and content, are nearing an agreement that could allow Verizon to speed some online content to Internet users more quickly if the content’s creators are willing to pay for the privilege.

The charges could be paid by companies, like YouTube, owned by Google, for example, to Verizon, one of the nation’s leading Internet service providers, to ensure that its content received priority as it made its way to consumers. The agreement could eventually lead to higher charges for Internet users.

If you’re thinking, “Quicker YouTube loadtimes? SWEET!” then knock it off. This deal has the potential to open the door to a lot of ugly stuff. Imagine content providers constantly wheeling and dealing, paying ISPs to get preferential treatment at the expense of competitors and innocent bystanders who simply want to load their favorite website. While it would take a severe course of action to degrade into a total black market ideology, without any net neutrality laws in place, anything could happen.

To be clear, the supposed deal would not include slowing data or giving preferential treatment to data on Verizon’s mobile network. To be even more clear, this entire report must be considered rumor until something more official finds its way to the stage. But from the looks of it, this could be the new reality, at least for a short while.

Greg Sterling from Search Engine Land likened the deal to a form of “internet payola“, a claim I wholeheartedly support. Looking at the issue from that standpoint, it seems like a no-brainer for the FCC to impose guidelines. Easier said than done.

You know all those person-to-person file sharing networks that have consistently cropped up ever since the advent of Napster? In 2008, Comcast was ordered by the FCC to stop blocking and/or throttling traffic from these P2P networks. The volume and burden of this traffic must have been affecting Comcast’s bottom line, and they felt it was only fair that they have control over this type of use of their network, so they fired back. In a 2008 lawsuit, Comcast won its case against the FCC, arguing they had no legal authority to regulate their control of traffic through their network.

Obviously there needs to be some sort of middle ground. While ISPs SHOULD have the right to control and manipulate data that could be perceived as malicious, over bearing, unwanted, or whatever else, the measures they take should be defensive in nature and not designed for the sheer purpose of profit. Leveraging their user base and offering unfair advantages to companies who pay them more money should be, if not completely outlawed, at least severely restricted to special case scenarios.

throttleThat’s my opinion but I’m sure you have your own. What do you think of this supposed deal? Of net neutrality in general?

I want to reiterate that these deals would NOT extend to the mobile landscape, but I think it’s important we start discussing them now, because mobile would be a natural extension. Especially once Verizon and other 4G networks start to take shape and television, video and large data transfers become much more regular on your mobile device.




  • McParty

    Don’t do it GOOGLE!!!!!!!!!

  • Ryan

    Yeah, this net neutrality thing really needs to move forward. I fear this is the start of some really dark times for the internet.

  • DanGrover

    You often write your opinions as if they’re fact. I really don’t like that.

  • Daniel

    According to bloomberg.com, the New York Times is only accurate in that Google and Verizon negotiated net neutrality on everything but mobile networks, and hence Verizon will be allowed to do traffic discrimination on those lines.

    To be honest, some traffic should be prioritized, and I could understand them charging Skype/Microsoft (XBOX Live)/Blizzard/etc. to have their traffic “prioritized” to reduce latency for their customers… It may increase latency for web pages by 50-150ms, but would that really matter? Prioritizing is fine, but traffic should never be throttled.

    http://www.bloomberg.com/news/2010-08-04/google-verizon-are-said-to-have-reached-deal-on-how-to-handle-web-traffic.html

  • Mike W

    Let me get this straight, Google is arguing FOR neutrality and then they go and cut a deal with an ISP to get preferential treatment for their websites?

    I understand that they are free to operate within the current legal structure but there should come a time when you make your choices based on the principle of the matter.

    Tisk tisk google.

  • Ron

    Keep the FCC out entirely. Regulations will have unintended consequences. these companies’ bandwith are private property if they choose to take money from websites so be it. if consumers demand faster web acess to other sites then they will provide it or lose customers. the best solution is the free market. the problem is cable monopoly. get rid of regulations so that multiple cable ISPs can operate in the same area that way consumers can choose which provider/content partnership they want.

  • Dane

    If the “Smarter than Us” scientists create a viable ethernet connection using quantum entanglement, then these infrastructure rooted and controls should no longer be an issue. (Think of something like the Ancible from the Ender’s Game fiction)

  • Cris_Tate

    @DanGrover then don’t read it you whiny troll.

    As for the article I fully and whole heartily agree.

  • Andrew

    It’s a blog… don’t get your panties in a bunch about it.

  • destardi

    I think people are jumping to conclusions here.

    Google has been a strong proponent of Net Neutrality; I do not believe that they would sell their principles down the river especially if it impacts their own bottom line.

  • Phil

    Seems to me Google is trying to CYA in case net neutrality doesn’t pan out. And with the ignorance of the people in this country that run around crying wolf about “big government” with no understanding of the issue whatsoever it may end up falling through. Funny thing is they’ll be the first ones crying when someone outbids their favorite political talking heads for priority and silences them.

  • Phil

    Oh an rest assured the public will be silenced on the internet. You’ll only see and hear what people want you to see and hear. Theres a particular old and rather independent politician out there gaining a lot of popularity right now. He’s a very genuine guy in my opinion but has a dangerously blind belief in “market forces”. He was once asked what he thought about allowing media consolidation (one company owning all the media in your area) and said let the market figure it out. When asked about how that pans out for the people’s ability to voice independent news and opinions he said well the people have the internet now. He’d apply the same rules to net neutrality and the internet would be taken from the people as well. I urge people to think about that before jumping on the bandwagon.

  • nick

    I always figured stuff like this would happen. this sucks, even as a rumor.

  • Skunkpbguy

    Let the market dictate what works, when users walk away or never adopt something, it FAILS. Look at the Google Wave and many other items, fads that never catch on are called failures.

  • Gerg

    This news brings out the dark urges of government control, but I’ll try and resist that.

    If it’s true, we should lobby and fight this. Boycotts? I might end up not getting FiOS after all if this ends up being true. I’ll put up with Comcast’s crappy service than allow myself to be a part of these things.

  • http://youtube.com/fablehousestudios Zed Fable

    I always get a knot in my chest when net neutrality comes up- and not because the concept itself scares me, but because its so sneaky. I mean, at first look, I reacted the way that the gentleman who wrote this article did. Throttle my bandwidth? Give authority to limit my connectivity to some random company with crap support that will never listen to me? Horror!

    But you have to think deeper. Net Neutrality is a trojan horse that comes in appearing like a gift to civil liberties but packs just the opposite inside. Think about it- there are some cases of abuse curbing going to far (comcast vs. p2p) but nothing like what people are talking about has happened yet. Now certainly, these scenarios are plausible and could happen- but they haven’t.

    Thats when you have to think about it- who would watch the rules? Who would benefit? The FCC- a federal government institution. It doesn’t prevent censorship and throttling, it just makes it so the government is the only group that can. It puts the internet- still in the U.S. an amazing vehicle for free expression and freedom of thought- into the hands of a government institution, and by extension, into politics in general.

    Someone has to classify whats fair for content types and speeds. Which means the data and connections have to be audited. Which means the government has more information about where everything that is being send and received. Sure, it might improve things in the short term. And no, the free market isn’t the fastest or most efficient. But think about it- do you want them to have that power? Do you want speed rates to become a political football? I’d rather take my chances with competition.

    Remember, wanting watchers is fine in theory. But you have to ask yourself- who watches the watchers?

  • Ian

    “without any net neutrality laws in place, anything could happen”

    Sensationalize much? Regulation we may need, but I prefer that come in the form of *competition*, not a group of politicians who have mostly their own self-interests in mind deciding what kind of deals a private company can make.

    The main problem with the broadband industry is the fact that, outside of big cities, most people only have one option. Change this, and the market will regulate itself.

  • Bryan

    This is just shrewd business. Think about it. The FCC must now shit or get off the pot. If they rule in favor of neutrality, Google gets a short term increase in market share because they are simply faster than the competitors. If the FCC rules against neutrality, Google is already a leg up on the MicroHoo alliance.

  • Mike W

    Just realized that my previous comment makes it sound like I’m in favor of this neutrality thing. That is certainly not the case. I am in favor a a free market system where I decide who gets my business based on what I want and what I know.
    My comment was more to illustrate that Google is playing from both sides of the field. This is dishonest at best. If they, as a company, are in favor of net neutrality then they should put their full force behind it and accept it if they lose.
    @Zed: Who watches the watchers indeed. Government has no business regulating the content that we view or disseminate over the web.

  • Rob M

    So long as we have to pay an ISP to use their equipment, I feel they very much have the right to do whatever they want with their pipes (unfortunately). Net Neutrality is a utopian viewpoint that today’s model cannot support. Until there is a paradigm shift in how content is delivered to consumers, it will never be realized.

  • Luke

    @Ron You are 100% correct. FCC should stay out of it, but deregulation needs to occur so that more providers can equally compete in the same territories. The free market will let the people choose who deserves our subscription fees based on their actions, like bandwidth throttling and preferred treatment. I would support a regulation that forced ISPs to inform customers who was getting the special treatment though.

  • furqan

    I am hating visiting all the tech sites today, and learning that they are quoting an article that deduced a very horrible and completely wrong conclusion of their own without any research. Both cnet and bloomburg articles have made it clear that the deal is that verizon will NOT throttle anything (net neutrality wohoo!) on home/wireless internet connections. Apparently Verizon was throttling torrents and other stuff (just like Comcast), so the deal is that they will stop doing that (hence the confusion about speeding up sites). This is a win for net neutrality, not a loss.

  • Jonathan Drake

    “that could be perceived as malicious, over bearing, unwanted, or whatever else”

    Sorry Mr. Rob Jackson, but statements like this tell me you should stick to your day job of aggregating content. Perceived is a problem here and Bit Torrent has been and was even more in the recent paste “perceived” as malicious and unwanted. The problem is that Comcast blocked the entire protocol at the time and now there are a lot of legitimate companies using it to distribute media legally as well. So if they tried to do the same thing today, wait until those content companies show up who are the very people they are trying to claim are “hurt” if they don’t block the traffic.

    Case in point there is no all assuming solution. Killing pipes and supporting corporations on the internet will turn it into an interactive TV which do nothing but create a nice little “blacknet” of sorts in the years to come and a lot of civil unrest. Net Neutrality isn’t worth the consequences no matter how appealing it is by making a few quick bucks.

  • Gerg

    Guys, this news story is still a big news story, but almost everyone got it wrong:

    http://news.cnet.com/8301-13860_3-20012723-56.html?tag=mncol;txt

    “”People get confused about Net neutrality,” Schmidt said. “I want to make sure that everybody understands what we mean about it. What we mean is that if you have one data type, like video, you don’t discriminate against one person’s video in favor of another. It’s OK to discriminate across different types…There is general agreement with Verizon and Google on this issue. The issues of wireless versus wireline get very messy…and that’s really an FCC issue not a Google issue.” “

  • jdog
  • Alex

    I just have to say, if Verizon started selectively slowing down certain kinds of data on my phone while I was on a data plan, I think that would constitute a breach of contract. I’d try to get out of my contract without an ETF, and if they didn’t let me, I’d look into joining a class-action lawsuit.

    But as others have said, there’s no indication this applies to verizonwireless.com at all.

  • su2lly

    I called BS on this story early on and I was right. Great to see the tech community turning into a bunch of knee jerk reactionaries like every other group around today.

  • James

    Please, please, please keep the government away from my internet. With the current proliferation of different high-speed data providers exploding throughout the US, healthy competition will force ISPs to provide the type of access that consumers desire. We have some much information available to us today, and so many dedicated consumer advocates out there for us, that as soon as companies start trying to limit our internet choices, we will find out and there will be great pressure brought to bear against them.

    Government does not step into an area with a small handful of regulations and then say, “Oh, yes. Our work here is done. Let’s sit back and watch the results.” No, they will keep finding newer and more onerous regulations. Once we let the government get their toe in the door of internet control, it won’t be long until political censorship is occurring.

  • Al McElmon

    Perhaps google is doing this to force a ruling.

  • scarshapedstar

    “Let the market dictate what works, when users walk away or never adopt something, it FAILS.”

    Does the term “monopoly” mean anything to you? I don’t know where you live, but where I am I have a whopping ONE broadband provider. If they decide that they’re going to limit my connection to 100 kb/s on every site other than Hulu… what exactly would be my recourse? Go back to dialup?

    Why is it so hard for people to think this through? Free-market voodoo doesn’t cure rent-seeking, monopolistic behavior; it creates it. Always. Corporations are obligated to maximize their profits, are they not?

  • PhoneDog

    I was ready to step on my Hero and Reflash my HD2 back to WinMo, Say it aint so!

  • CaptBebops

    This must have been a hot morning in Mountain View this morning hence the recant. I’m sure the phones and emails were busy. Companies gotta learn that unless we maintain net neutrality they’ll feel the wrath of the development community. Also let your local small businessman know how slow their web page will load if there is tiered service. Get their wrath up too.

    Some of the arguments against net neutrality are so lame and written by people who are really out of touch and out of date.

  • Rob

    I had to skip reading the posts. Too many people are sheep, and will head in any direction they are herded; apparently even Android fans.

    Here’s some insight for you: An Android tablet by Motorola will reportedly feature a Verizon FIOS content stream. Their talks can range anywhere from the best route to ensure streamlined integration to, yes, possible tiered pricing, although the tiered pricing for FIOS service would probably land on the shoulders of the end user. It’s possible that Verizon was attempting to have the service subsidized by Google. Expect to hear about talks between Verizon and Motorola as well.

  • Roger

    What Google and Verizon are doing is fine. I am all for Google prioritising its own traffic. That way I know my HTC EVO will get the best service possible. Only those companies who are too small or too short sighted slow to cut a deal first will complain. Go GOOGLE!

  • Concerned Reader

    Sounds like Google want to prioritise certain types of traffic that do not discriminate between organisations. ie. Google’s favourite formats = good….the rest = bad. And I suppose that only the formats Google supports (ie video formats) will benefit so either everyone else better jump on board the Google gravy train or suffer the consequences. I bet they will patent their favourite formats too….just to ensure they win either way.
    Don’t be Evil…Hmmmfff!

  • PowerUser

    I remember in 2007 the FCC was trying to require the carriers to stop selling devices (phones) that where locked to their own networks. In other words you could buy a phone and then activate on whatever cell phone carrier you choose. It sounded like they were all going to go for it and then it never materialized. What the hell ever happened to that idea?

  • locqutus of borg

    Isn’t there a old saying about its better to light a candle than curse the darkness. well ladies and germs, heres a chance for the all garage and basement computer people and people perhaps just mechanically inclined to develop a low cost/no cost system using surplus 18 inch dishes and a wireless microwave based download system direct from the orbitting satellite.
    You’re all professing “never again” as far as google and verizon goes, but theres a big difference,
    a real big one. Verizon has progressively over decades of time been building and progressively updating/improving its cell phone system, at a cost of billions of dollars.
    They also spend billions every year on thier cellphone system and presumably thier hardwired cable lines,and their hardwired telephone lines.

    Build the alternative better infrastructure if you don’t like the deal.