To follow up my post from a week and a half back, it turns out the reports on the Google-Verizon deal were more or less accurate. Google and Verizon have thrown in together on a proposal for net neutrality legislation. Don't be fooled into thinking the result is a thoughtful compromise--it is a near total capitulation on the part of Google to Verizon's demands (see here for a good "that was then, this is now" comparison of Google's positions). The proposal has been hashed over quite a bit, and I don't want to repeat what has been said elsewhere (you can see here or here for decent commentary, here for a survey of coverage). At a high level, the critical issues are: a) it completely exempts wireless from any rules; b) it creates an incredibly broad exception for any sort of managed services (allowing the creation of tariffed fast lanes); c) the non-discrimination language is so vague that it's hard to tell whether Comcast's interference with BitTorrent (which the FCC previously ruled against) would even be covered; d) the FCC is prohibited from engaging in any prospective rulemaking; e) the FCC's enforcement power is capped at a $2m fine (a pittance for the big carriers); and, f) the FCC is required to grant considerable deference to industry organizations in interpreting the rules. It is, as I stated in my last post, a devastating defeat for net neutrality.
And the deal leaves the FCC in an awful situation. Already the FCC spent so long dithering on this topic that they allowed the carriers to wage a massive and surprisingly successful campaign to lobby Congress against net neutrality (see here for an example of just how much clout they have). It's not a big stretch to think that all of those congressmen will jump on board with the Google-Verizon plan. And given how well respected Google has been as a net neutrality champion, it would not be surprising to see a lot of other more net neutrality-friendly legislators hoodwinked into thinking this is a legitimate compromise that they can get behind. Come November the political situation will only get worse. If the FCC was too timid to act before, the chances of them taking bold action now is about nil. The only real hope is that Genachowski feels so backed into a corner that his only choice is to fight back hard (I'm not terribly optimistic on this).
While I noted before that Google has real conflicts of interest on the net neutrality question, on reflection it is still pretty stunning that they did this. Google is increasingly stepping into fraught policy questions, from net neutrality, to international trade and human rights, to antitrust, to copyright (also this), to privacy issues, and others. In all of these areas, Google has long benefited from its pro-technology, pro-openness, "Don't Be Evil" image. It's not that Google could do no wrong, so much as that techies would always give them the benefit of the doubt. That makes a big difference. But no longer. Google irrevocably shattered that image in a single blow (though the constant drip of all these other issues over the past several years surely didn't help). They will now be viewed as just another mercenary big company feeding its bottom line. The betrayal on net neutrality will cost them on many fronts, and unless there is some quid pro quo from Verizon that we don't yet know about, it doesn't seem like Google got much out of this deal. It's really difficult to fathom why they did what they just did.
Update (8/16): As if on cue to prove my point that things will only get worse, the Tea Partiers just launched a crusade against net neutrality.