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Google and Verizon Propose a Second, Paid Internet. What Does That Mean?

Last week’s New York Times report on Google’s and Verizon’s alleged plans to undercut net neutrality might have been deeply flawed, but they weren’t entirely unfounded. Google and Verizon have indeed been working on a seven-part joint proposal concerning the future of the Internet, and they unveiled it to the press and to the world today.

While the proposal stresses a commitment to the continued neutrality of the broadband Internet as we know it, legally enforceable by the FCC as never before with fines of up to $2 million per infraction, it allows for the possibility of a sort of second Internet, which reporters on the call referred to as the “private Internet.”

This may protect net neutrality on the Internet as we know it, but could badly wound it on the Internet as we don’t yet. What does it mean, exactly?

First, let’s look at the key passage in the proposal as written:

Sixth, we both recognize that wireless broadband is different from the traditional wireline world, in part because the mobile marketplace is more competitive and changing rapidly. In recognition of the still-nascent nature of the wireless broadband marketplace, under this proposal we would not now apply most of the wireline principles to wireless, except for the transparency requirement. In addition, the Government Accountability Office would be required to report to Congress annually on developments in the wireless broadband marketplace, and whether or not current policies are working to protect consumers.

Of the “most of the wireline principles” referred to here, the most important has to be the allowance of premium, paid online content. “Importantly, this new nondiscrimination principle includes a presumption against prioritization of Internet traffic – including paid prioritization. So, in addition to not blocking or degrading of Internet content and applications, wireline broadband providers also could not favor particular Internet traffic over other traffic.”

So what sort of content would we need this premium, private Internet for? Unclear. The policy proposal mentions such services as “health care monitoring, the smart grid, advanced educational services, or new entertainment and gaming options,” which, last we checked, seem like they’d work just fine over the broadband ‘Net.

Peter Kafka reports that during a press call this afternoon, Verizon CEO Ivan Seidenberg leaned heavily on streaming 3D video as a service that might be private Internet exclusive. From his partly paraphrased notes:

Q: OK, so what would an entertainment service on this non-public Internet be like?

Seidenberg. I’ll give you an answer “and then you’ll trivialize it”. But! Let’s say the Metropolitan Opera wants to do 3-d broadcast. Maybe they don’t want to use the public internet for that.

But as Michael Wineberg points out, every time that a new web technology have emerged in recent memory, be it voice over IP, streaming video, or graphics-intensive gaming, some people has made the argument that the broadband Internet isn’t sufficient to handle it. But every time, they’ve been wrong. Wineberg points to Microsoft’s and NVIDIA’s experiments in using Silverlight to stream 3D over broadband as evidence that we don’t need a private Internet to spur innovation.

In whose interest, then, is a paid, private Internet transmitted over wireless? Spoiler alert: The wireless companies’. Broadcasting data wirelessly is expensive, thanks to the limited number of spectra over which they can transmit and the limited bandwidth of all cell towers. In Fred Vogelstein’s excellent Wired article on the souring of AT&T’s relationship with Apple, he writes that wireless companies are doing what they can to keep their costs down, but can’t keep up with consumers’ growing appetite for data:

Two gigabytes may seem like a lot of data now, but it won’t for very long; witness the recent release of the iPad 3G, with its data-rich apps, and the iPhone 4, with its video chat. As consumers’ appetite for data grows, they will be asked to pay more and more for service that is not likely to be much more dependable than it is today. If AT&T’s customers are this angry when they are paying $30 a month for data, imagine their reaction when the bill tops $100.

Carriers are doing what they can to fend off this deluge. They have successfully lobbied the FCC to begin the process of opening up new spectrum — radio frequencies that can carry wireless data — over the next five years. They have rolled out technology like femtocell base stations that allow cell phone customers to route calls through home broadband connections. And in the next few years, they will switch to new wireless transmission standards like LTE that can relay more than twice as much data over the same amount of spectrum. But even these measures aren’t likely to be enough.

Even right now, basically every wireless company cheats on the unlimited data services they currently offer: Verizon’s unlimited data plan, rumored to end soon, caps out at 5GB/month; T-Mobile was recently sued for offering ‘unlimited’ 3G data that isn’t actually unlimited; AT&T, perhaps most honest of all (but no less disliked for it), killed off unlimited data entirely in June, charging $10 for each additional gigabyte over the 2 GB per month afforded to “heavy Internet users.” The idea of streaming data hogs like 3D over their networks must give wireless providers nightmares.

A paid “private Internet” could help cover wireless providers’ surging costs, and it might be easier to sell to consumers than exorbitant a la carte data fees. But as laptops give way to smartphones in popular consumption, the question of a separate wireless Internet becomes a lot more important. Make no bones about it: The Google-Verizon proposal, despite its tentativeness and its welcome safeguards for broadband, is a step away from net neutrality.

Michael Suen contributed research.

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