Google and Verizon have developed a “Proposal” on Internet access which I am sure they expect to serve as a template, starting point and frame of reference going forward (See http://www.scribd.com/doc/35599242/...). In light of the FCC’s judicial reversal in the Comcast case, the absence of substantive progress at the FCC and the unlikelihood of congressional action, two major stakeholder can and have taken the lead. It should come as no surprise that Verizon and Google have emphasized and begrudgingly compromised on their corporate interests. Any support for an “open Internet” and consumer protection is subordinate, or the product of serendipity.

The Good.

The proposal embraces three of the four Internet policies briefly articulated by the FCC in 2005. They pass on endorsing competition, but at least indirectly now agree that the 1968 Carterfone policy applies to the Internet, wired and wireless. Additionally, they support non-discrimination, albeit not applicable to wireless and conditioned by the ambiguous modifier “undue.” Google and Verizon accept exclusive FCC jurisdiction to oversee broadband Internet access service along with hefty fines for violations. The companies wisely exempt software applications, content or services from FCC jurisdiction.

The Bad.

Google apparently caved on applying the conditional non-discrimination policy to wireless, an increasingly important broadband medium. The rationale for exempting wireless does not pass the smell test: “the unique technical and operational characteristics of wireless networks, and the competitive and still-developing nature of wireless broadband.” The technical and operational aspects of wireless strongly necessitate the non-discrimination requirement. Spectrum scarcity, ISPs’ incentive and ability to discriminate in favor of corporate affiliates or favored third parties, deep packet inspection, traffic throttling, and the ability of ISPs to obscure discriminatory practices necessitate FCC scrutiny of discriminatory and anticompetitive practices. Wireless carriers in the U.S. operate in a mature market with near saturation in voice market. The top four carriers control over 92% of the market and the top two with over 60% share (Verizon and AT&T) are vertically integrated and have substantial wireline broadband market power. This is hardly an infant industry in need of government nurturing.

Increasingly consumers will use wireless broadband as their preferred medium for Internet access. I have parted with network neutrality advocates by supporting some types of price and Quality of Service discrimination, including “better than best efforts” routing. However, abandoning scrutiny of discriminatory practices all but guarantees that ISPs will migrate from controversial, but lawful practices, into the realm of what Comcast did and beyond.

The Ugly.

A vacuum of leadership, initiative and follow through has provided Google and Verizon with this opportunity to help shape the agenda and frame the issues. The FCC has a history of deferring to industry to compromise and reach consensus. In old school telephony, the major interconnection and revenue sharing arrangements for decades occurred when the National Association of Regulatory Utility Commissions decided it was time. The NARUC-managed deals took the name of the location where the association members met, e.g., The Ozark Plan. So there is a history of stakeholders making the deal.

Still I feel as though the “fix is in” when major stakeholders can cut a deal and move on to the main goal of “enhancing shareholder value.” I would like to see the addition of “in a socially responsible manner,” but that may be too much to expect even from “do no evil” Google.