Google and Verizon’s Net Neutrality Compromise is Pretty Weak

Updated: Google and Verizon have agreed to a compromise on network neutrality that lays out seven principles tied to how operators can manage traffic on their networks. As expected, the compromise makes network neutrality enforceable on wireline networks, without extending the same to wireless. However, the agreement does ask for transparency in network management on wireline and wireless networks.

The Google and Verizon agreement also leaves room for broadband operators to offer managed services, although Verizon CEO Ivan Seidenberg pledged that the goal of such managed services would not be to circumvent providing quality services to consumers, which was a concern the FCC had for such products. Google CEO Eric Schmidt and Seidenberg followed up their announcement with a conference call, and I’ll update this post with more information from that.

The formal announcement today follows the last Thursday’s collapse of closed door negotiations related to net neutrality after the news of Google (s goog) and Verizon (s Vz) reaching a side deal leaked, and follows almost a year of debate on the issue of how and when a broadband provider can discriminate against certain types of web traffic. Google and Verizon have been working together on this for the last 10 months, and filed a joint statement to the FCC laying out their common ground on network neutrality in January. However, a close reading of Google’s comments on network neutrality from the same time suggested that their work was a meeting of minds, not a marriage.

Both the FCC and President Obama have been public supporters of network neutrality, but the effort to institutionalize the issue into a regulatory framework was stymied in April when a federal appeals court said the FCC didn’t have the proper authority to regulate broadband –ironically the court case stemmed from when the previous FCC had chastised Comcast (s cmcsa) for interfering with the flow of P2P files on its network in a clear violation of net neutrality principles.

Update:After the conference call and reading the agreement, I’m not sure there’s much to say beyond the fact that this agreement basically keeps the network neutrality situation the same. It formalizes the original Broadband Principals from 2005 for wireline and adds transparency as a requirement when mucking about with traffic for both wireless and wireline networks. Essentially, if Verizon wants to block something on its wireless network, it just has to tell you: kind of like AT&T did when it tried to keep Slingbox off its network last year.

The compromise also includes a carve out for “additional online services” that look a lot like the managed services that the FCC was so concerned about last year. From the agreement:

Additional Online Services: A provider that offers a broadband Internet access service complying with the above principles could offer any other additional or differentiated services. Such other services would have to be distinguishable in scope and purpose from broadband Internet access service, but could make use of or access Internet content, applications or services and could include traffic prioritization.The FCC would publish an annual report on the effect of these additional services, and immediately report if it finds at any time that these services threaten the meaningful availability of broadband Internet access services or have been devised or promoted in a manner designed to evade these consumer protections.

This is theoretical today, and is where the potential for big controversy lies. Google’s Eric Schmidt stressed that Google wouldn’t send its traffic over an additional online service, and suggested that if Verizon did end up degrading the “public internet” that competitors would arise to address the problem, something that’s pretty hard to believe given the costs associated with building a network. However, when Verizon’s Siedenberg said on the call, “Who knows what new services technology will bring in the future?” and suggested that 3D content or any other service needing certain quality of service guarantees might be delivered over such a specialized service, it doesn’t take a lot to see Verizon angling to protect its ability to profit over its control over its pipes.

The good news is nothing about this compromise has any teeth without the FCC deciding to made it part of its official rules on network neutrality. However, given the FCC’s precarious position as a broadband regulator and a lack of support from Congress on this issue the temptation to accept this compromise as good for everyone may force a version of network neutrality that leaves mobile, one of the fastest areas of innovation on the web, out of the new rules. It also enables an alternative version of the public Internet that could lead to the creation of a first-class and a second-class system of packet delivery.

Related GigaOM Pro Content (sub req’d): The New Net-Neutrality Debate: What’s the Best Way to Discriminate?