Commentary

In A Scenario Without Net Neutrality Does Google Pay Or Charge?

Google tweet

It's not often that Google execs get so disgusted with the press that someone publicly denounces a news report of a speculative event. That's what happened Thursday on Twitter (not Buzz) after The New York Times reported Google and Verizon nearing an agreement that would allow the telecom carrier to speed some online content to Internet users more quickly if that content's creators paid for the privilege.

That idea has floated around the industry for years.

Some say it's already being done to some extent. Not that content providers "pay" to get their stuff in front of consumers faster, beating out the competition, but that some companies get preferential treatment during peak hours of the day. The pipes are only so wide, you know. Of course, that's clearly hearsay, a suspicion execs just won't confirm.

Most of that hearsay came from Hollywood's movie studio execs during my days of covering digital cinema, the ability for movie studios to turn reeled films into digital bits and bytes and transfer the files via satellite or through heavy duty fiber optic pipes from the studio's distribution facility to the movie theaters. One of the first to go digital, National CineMedia, for example, began with advertisements. They could match the ad with the movie at any theater they support from a control room in Denver.

It was all about giving movie goers an experience they couldn't get elsewhere, but studio heads needed the pipes to deliver digital movies tied to ads, real-time interactive video games and live events. The movie studios field tested these ideas in the early and mid 2000s at one location in Los Angeles. The makeshift digital cinema lab housed in an old movie theater rented and supported by funding from the University of Southern California (USC). The digital road, of course, eventually led to 3-D movies.

Studios, big and powerful, couldn't get preferred treatment. So they built their own infrastructure. The content creators built the infrastructure to distribute the content from the distribution centers to the movie theaters. At first, movie distribution centers began couriering hard drives to theaters with digital movies. They did this as the studios invested millions of dollars to build the infrastructure that would allow them to digitally send these files through satellites. I'm not suggesting all companies can afford to do this. I'm just laying the groundwork for brainstorming, a process that makes marketers, well, marketers.

The digital cinema scenario, though a little off topic, demonstrates the need for the infrastructure and process that would keep the Internet neutral and free based on the fundamental principle-an open Internet and free from favoritism. AT&T, Verizon and cable providers have already made it too costly.

Although unconfirmed, it's been reported Google built a private Internet bypass network along with necessary server farms that allow the tech company to negotiate free peering agreements with ISPs. As for the ongoing debate about net neutrality, Sanford C. Bernstein & Co. Analyst Craig Moffett sums it up quite nicely in a research report published Friday:

"Two nights ago, it was reported on Bloomberg that Verizon and Google had reached a bilateral agreement on net neutrality. With few details reported at the time, the accord was arguably a positive sign for ongoing negotiations between a larger group that included not just Google and Verizon, but also AT&T, the NCTA, the Open Internet Coalition, and Skype.

"But then the New York Times reported the details. And as soon as it was reported that Google had agreed to paid-for prioritization, it was over. Perhaps we'll never know whether the Times story was planted as a torpedo for the broader negotiations, whether the Times misconstrued a less ambitious agreement to allow for managed services, or whether Google and Verizon simply badly miscalculated the inevitable reaction (or even the more Machiavellian prospect that one of them intentionally agreed to a deal they knew would be untenable as a way to derail the process). In any case, both parties immediately denied the story. But it was too late."

Industry and consumer advocates fear a private Google-Verizon agreement would undermine fair net neutrality rules.

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