Thoughts on Verizon and Google

In early 2007 I attended a talk at Fordham Law School by William Barr, the former US Attorney General and current Verizon General Counsel and Executive Vice President. The premise of his talk was that regulation, of the network neutrality kind, would only hurt technological innovation in the broadband and Internet space.

A lot of has changed since then, and now that Google and Verizon have stuck a deal purportedly threatening the openness of the future of the web, I thought I'd revisit some of my thoughts from that night as well as muse about what this deal might mean and why its happening now.

During his lecture Barr attempted to point out that there had never been an instance of a telecommunications company violating the terms of network neutrality, so why would they begin now? Out of nowhere, from behind me, someone shouted "What about Madison River?" That person was Tim Wu, who I didn't personally know at the time, but who would later become a friend of mine. Tim had interrupted Barr to remind him aboutMadison River where a local telecom had blocked VoIP connections for broadband subscribers because the telephone company didn't want to compete with inexpensive internet telephony. It was precisely the kind of violation of network neutrality that Barr was claiming could never have happened. Barr dismissed Madison River as an isolated incident which didn't represent the overall policy of non-discrimination by the telecom industry.

Later in the lecture, Barr tried to envision an industry closely regulated by the FCC in order to uphold network neutrality. This would be a world that Barr thought no one would want: innovation would peter out as businesses would face a high barrier of entry in the form of regulations. Conversely, if corporations had the opportunity to really invest in research and development without the fear of future regulatory action, then they might come up with services and tech that would be even better than TCP/IP. Barr believed that it was naive for us to blindly accept that TCP/IP was the best we were going to get for transferring data and communications over a network. Who is to say Verizon or AT&T couldn't come up with a better protocol? TCP/IP has plenty of performance issues (real time synchronous voice communication was a huge challenge), so why not let Verizon innovate at the protocol level, and sure, maybe they'd prioritize some kind of traffic, but it would be for the benefit of technological innovation. Just think of all the potentially amazing applications they'd could come up with if the FCC just left the innovation to Verizon's R&D lab instead of the open internet and the public?

Just say no to walled gardens.

During the question and answer period, I asked Barr why he thought that consumers wanted more walled gardens of content, and whether it was wise to assume the market was going to support another set of AOLs, Compuserves and Prodigys? He replied that of course they consumers wanted better content -- video on handheld devices was going to be the future and the telecoms were going to be the only companies who could deliver it. I insisted that consumers only really want the internet in their pockets and that he was kidding himself if he thought a curated walled garden on a handset would be nearly as appealing as an actual functional web browser (something no mobile company had delivered yet).

In a sense we were both wrong and we were both right. Consumers did want mobile video on demand, but they also wanted the entire open web in a functional experience.

Prior to Barr's lecture Verizon had announced a half-baked partnership with YouTube which would offer limited and selected versions of YouTube videos for watching on handheld devices. Then, a couple of months later, Steve Jobs announced the iPhone which would have even greater support for YouTube. Verizon was banking on curated portals inside hobbled handsets, and Apple had just bet the farm on the touchscreen and a mobile Safari browser. We know who won this battle. Does anyone ever talk about watching YouTube on their 3 year old cell phone any more? Does anyone even remember the partnership?

Why Verizon and none of the other telecoms never fully invested in a serious mobile browsing experience is best explained by their general hostility to the open web. The big telecoms have always loathed the net, whether it was manifest in an engineering snobbery towards the "dumbness" of TCP/IP or the fact that the net worked best when it treated their products not like products at all but like common utilities, something no company wants. So it has never been surprising that the telecommunications industry never bothered to create a real mobile browsing experience; they were too eager to strike Big Deals with Exclusive Providers of Proprietary Content than supply an actual connection to the open web.

Steve Jobs, to his credit, saw the opportunity to serve consumers what they really wanted, and he and Apple have since been handsomely rewarded for creating a mobile browsing experience worth using. Google's choice to freely offer Android was a brilliant bit of strategy: all of the telecommunications firms and handset manufacturers were panicking and desperate to compete with Apple's iPhone, so why not give supply them what they wanted?

So now Verizon and Google are making an uneasy deal behind the FCC's back and trying to assuage the FCC and the public that they're really doing it in the name of technological innovation. Think about all the applications that could exist if we didn't have to rely on the Internet! Healthcare Monitoring! The Smart Grid! Advanced educational services! Incredible entertainment and gaming options! These are all ghosts of walled gardens past and there's no reason to believe that a competitive startup can't supply these exact services over the open web.

The wireless component of the Google/Verizon deal is the biggest wild card and the most controversial aspect of their joint policy proposal. The two companies argue that the principles of network neutrality shouldn't apply in the wireless space. I couldn't agree less. The telecoms have demonstrated very little capacity for innovation in the wireless space in the last 15 years (why is it so hard to develop SMS applications? why is Google voice such a pain to reconfigure as my voicemail? etc.), so why would we trust them now?

Ultimately, why shouldn't the principles of common carriage and network neutrality apply to the wireless space? Because its too difficult? Too expensive? I don't buy it. What the wireless space needs now is faster and cheaper TCP/IP service and a more open application infrastructure. Negotiating one off deals for new channels and services will only remind us of Compuserve circa 1999.

Lessig, Crawford and Wu have a good post about the proposal, but also read Jonathan Zittrain's thoughts on it here too.

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