With Google’s Money and Infrastructure, Does Net Neutrality Really Matter?

Earlier today, The Wall Street Journal published a story outlining Google’s (s goog) OpenEdge efforts in which it portrayed the initiative as a sign the company is moving away from the network neutrality cause. The idea of equal access and equal treatment of all packets has been a network ideal for a long time and Google has been among its staunchest defenders, which is why I was left incredulous by the report. The story was quickly debunked by Richard Whitt, Google’s Washington-based telecom and media counsel, who labeled it as “confused.”

David Isenberg explains in excruciating detail the differences between Google’s OpenEdge edge-caching efforts and what network neutrality means to its advocates. “The concern of Network Neutrality advocates is not with access but with delivery…Since the edge caching Google is proposing is about access, not delivery, there’s no problem,” writes Isenberg, who is a well-regarded telecom and broadband thinker.

But when it comes to access, the argument is different. By spending an ungodly amount of money on its infrastructure, Google has been able to build a massive advantage over its rivals. This edge-caching network can only serve to increase that advantage.

Here’s how: By getting carriers to connect directly to via OpenEdge, consumers are able to better experience Google’s products, such as YouTube, because videos have to traverse fewer networks. As Google correctly notes, these are non-exclusive deals with carriers; anyone can sign up for them, and the likes of Akamai (s akam) and Limelight (s llnw), for example, already have similar deals in place. In other words, Microsoft (s msft) and Yahoo (s yhoo) can build their own private caching network if they want to, too.

No money has to change hands in these interconnection deals, which are already commonplace in telecom. But while traditionally they’ve been made between carrier operators, with Google’s OpenEdge, the search giant would be able to shunt traffic to broadband owners’ networks without paying money to intermediaries. There is nothing illegal about this.

Startups can get similar kinds of service by buying bandwidth from companies such as Level 3 (s LVLT) and CDN operators such as Akamai.  In other words, their cost of doing business will be much higher than Google’s. As I noted in my post from last December, Google’s infrastructure is its strategic advantage, and this new aspect of the business only helps them lower their costs and hence their profitability.

“Network neutrality is a myth, and it always has been,” Richard Bennett, a fellow broadband enthusiast, writes on his blog, which I think sums the situation up nicely. In response to the post I put up soon after the WSJ’s story was first published, Bennett also left this comment: “Google already has a fast lane to most of the Internet thanks to its private server farm being wired directly to most of the public exchange points. This plan would simply put Google on an equal footing with Akamai, who already has a footprint inside major ISP networks.” He goes on to add, “Google has to do something like this to avoid being clobbered by ISP-friendly P4P as well as by Akamai.”

Google has other reasons to roll out this edge caching service. Akamai and other CDN operators are working on technologies that would allow them to insert and better target advertisements from their edge devices. Even Cisco Systems (s CSCO) wants to get into the game; it’s been working on a new edge router that allows it to insert advertising for its customers, such as cable companies.

If these technologies catch on, then Google’s core advertising franchise could come unglued. No wonder the company is ready to cut deals and grow its presence on the edge of the network.