Verizon and Google Announce Legislative Proposal on Internet Regulation

August 9, 2010. Verizon and Google announced that they have reached an agreement regarding the regulation of broadband internet access service (BIAS) providers, which they urge the Congress to adopt as legislation.

See, two party proposal titled "Verizon-Google Legislative Framework Proposal" and Google statement titled "A joint policy proposal for an open Internet".

Google's Alan Davidson wrote that this is a "suggested legislative framework for consideration by lawmakers".

Core Consumer Protections. This proposal includes variations upon the three core consumer protection provisions found in the Federal Communications Commission's (FCC) August 2005 Policy Statement, as well as various proposals styled as "network neutrality" or "internet freedom", such as the rules proposed by the FCC in October of 2009. See, "Text of Proposed Internet Regulation Rules" and related stories in TLJ Daily E-Mail Alert No. 2.008, October 23, 2009.

See also, TLJ chart comparing the key language of the FCC's 2005 Policy Statement, the FCC's 2009 proposed rules, and the just released Verizon Google proposal.

That is, the Google Verizon proposal addresses consumers' accessing the content of their choice, consumers' running the applications and using the services of their choice, and connecting the devices of their choice.

Also, the Google Verizon proposal, like the 2005 policy statement and the 2009 proposed rules, subjects these three principles to the BIAS providers' reasonable network management practices (RNMP). However, the just announced proposal provides that a broader range of activity qualifies as RNMP. It also shifts some responsibility for determining what constitutes RNMP from the FCC to standard setting organizations.

The RNMP language of the just released proposal provides that BIAS providers "are permitted to engage in reasonable network management. Reasonable network management includes any technically sound practice: to reduce or mitigate the effects of congestion on its network; to ensure network security or integrity; to address traffic that is unwanted by or harmful to users, the provider's network, or the Internet; to ensure service quality to a subscriber; to provide services or capabilities consistent with a consumer’s choices; that is consistent with the technical requirements, standards, or best practices adopted by an independent, widely-recognized Internet community governance initiative or standard-setting organization; to prioritize general classes or types of Internet traffic, based on latency; or otherwise to manage the daily operation of its network."

The three core consumer protection provisions are also subject to a major limitations. They do not apply to wireless BIAS providers.

Thus, the proposal provides that non-wireless BIAS providers are prohibited from preventing their users from "sending and receiving lawful content of their choice", "running lawful applications and using lawful services of their choice", and "connecting their choice of legal devices that do not harm the network or service, facilitate theft of service, or harm other users of the service".

Also, the devices item is more limited in this proposal than other network neutrality proposals. For example, the FCC's proposed rules provide an exception only for devices that harm the network. The Google Verizon proposal contains exceptions for devices that harm the network, as well as those that harm a service, facilitate theft of service, or harm other users of the service.

Competition. One element of the FCC's 2005 policy statement, and the FCC's 2009 proposed rules, is absent from the Google Verizon proposal -- the competition principle.

For example, the FCC's proposed rules provide that a BIAS provider "may not deprive any of its users of the user's entitlement to competition among network providers, application providers, service providers, and content providers".

Non-Discrimination and Prioritization. A fundamental element of network neutrality proposals is the non-discrimination principle. This too is in the Google Verizon proposal. However, it contains a substantially watered down version.

The FCC's proposed rules, for example, provide simply that BIAS providers "must treat lawful content, applications, and services in a nondiscriminatory manner".

The just released proposal first exempts wireless BIAS providers, and then provides that non-wireless BIAS providers are "prohibited from engaging in undue discrimination against any lawful Internet content, application, or service in a manner that causes meaningful harm to competition or to users." That is, discrimination is permissible if it is not both "undue" and does not cause "meaning harm to competition or to consumers".

Some discrimination that harms providers of other providers of content, applications or services, but which does not cause meaningful harm to competition or consumers, is permissible under the proposal.

However, the largest loosening of the non-discrimination principle is found in its concept of prioritization. The Google Verizon proposal adds that a BIAS provider "could offer any other additional or differentiated services. Such other services would have to be distinguishable in scope and purpose from broadband Internet access service, but could make use of or access Internet content, applications or services and could include traffic prioritization."

The proposal does not define or explain the term "differentiated services".

Google's separate statement elaborates. It states that "our proposal would allow broadband providers to offer additional, differentiated online services, in addition to the Internet access and video services (such as Verizon's FIOS TV) offered today. This means that broadband providers can work with other players to develop new services. It is too soon to predict how these new services will develop, but examples might include health care monitoring, the smart grid, advanced educational services, or new entertainment and gaming options."

Various network neutrality proponents promptly labeled this as an exception that could swallow the rule.

For example, Benjamin Lennett of the New America Foundation (NAF) stated in a release that "The proposal's endorsement of differentiated services would completely undermine investment in the open Internet. Instead, such services incentivize providers to build a privatized broadband superhighway to carry the content and applications of only the largest Internet and media companies. This ``new Internet´´ would be completely managed and controlled by the ISPs, more like cable television than the open communication platform the nation has come to rely on for commerce and free speech."

Similarly, the Public Knowledge's (PK) Gigi Sohn stated in a release that "while there would be no pay for priority on the best efforts Internet, there are almost no limits on so-called ``managed services,´´ other than that they would need to be ``distinguishable in purpose and scope,´´ from the Internet. Thus, it is conceivable under the agreement that a network provider could devote 90% of its broadband capacity to these priority services and 10% to the best efforts Internet. If managed services are allowed to cannibalize the best efforts Internet, whatever protections are agreed to for the latter become, for all intents and purposes, meaningless."

On the other hand, Robert Atkinson, head of the Information Technology and Innovation Foundation (ITIF), stated in a release that "A new generation of applications is emerging on the Internet that will ultimately require advanced treatment by network operators. Commercial Internet users have access to a wide array of service options today that they use to ensure that their most advanced applications, such as high-definition video conferencing, receive priority over more traditional applications such as web surfing. This is a constructive practice with considerable consumer benefit when implemented properly."

Transparency. The Google Verizon proposal contains a transparency requirement. This is the only requirement that it would impose upon wireless BIAS providers.

It states that All BIAS providers, including wireless, are "required to disclose accurate and relevant information in plain language about the characteristics and capabilities of their offerings, their broadband network management, and other practices necessary for consumers and other users to make informed choices."

Enforcement. The Google Verizon proposal addresses enforcement. It provides that BIAS is interstate, and that the FCC would have exclusive jurisdiction, thus eliminating state and local governments, as well as other federal agencies, such as the Federal Trade Commission (FTC), from enforcement.

It also proposes to preclude any private right of action.

It also proposes to deprive the FCC of rule making authority.

Finally, in the case of RNMP, it would require deference to standards setting organizations.

The Google Verizon proposal states that "The FCC would enforce the consumer protection and nondiscrimination requirements through case-by-case adjudication, but would have no rulemaking authority with respect to those provisions."

It also states that "The FCC could grant injunctive belief for violations of the consumer protection and non-discrimination provisions. The FCC would impose a forfeiture of up to $2,000,000 for knowing violations of the consumer-protection or non-discrimination provisions. The proposed framework would not affect rights or obligations under existing Federal or State laws that generally apply to businesses, and would not create any new private right of action."

The PK's Sherwin Siy stated in a release that "The section on ``case-by-case enforcement´´ directs the FCC to defer to rules set by industry-led advisory groups. Combined with the proposal's recommendation that the FCC have no rulemaking authority with respect to consumer protection and nondiscrimination, the agreement outsources the FCC’s powers and authorities to the very industries these rules are supposed to oversee."

In contrast, the ITIF's Atkinson stated in his release that "the framework captures the consensus that exists across the Internet ecosystem to the effect that case-by-case review of Internet business practices is preferable to overly-prescriptive rules".

Unrelated Issues. The proposal also addresses several issues that are not elements of network neutrality or internet freedom. For example, it proposes to expand the FCC's universal tax and subsidy program to cover broadband.

It also proposes to subject BIAS providers to disability access requirements. However, it does not propose to subject providers of applications or services to disability access requirements.