A network neutrality policy proposed recently by industry giants Google and Verizon not only sparked controversy here in the United States, but the news is making waves internationally as well.

The proposal aims to ensure network (or “Net”) neutrality for wireline internet services but not for rapidly growing wireless ones. It also calls for “full transparency” across both wireline and wireless broadband platforms, and calls for the FCC to have authority to adjudicate user complaints and impose injunctions and penalties against bad actors.

Pro-neutrality groups such as Public Knowledge, Open Internet Coalition, and members of the SavetheInternet.com Coalition, blasted the proposal as one that would only benefit industry behemoths and would be a detriment to startups, consumers, and others. They argue in favour of neutrality for all parts of the internet and against allowing service providers to block or restrict certain users over others. Some also oppose the FCC allowing industry to take the lead in proposing such policies, and say the FCC would not have enough enforcement power under the proposal. Opponents also fear this proposal would result in a tiered system where those entities with the deepest pockets would enjoy faster internet, thereby discriminating against others.

“It should not be the policy of Federal Communications Commission nor Congress to allow the largest telecom and internet companies to write the regulations that determine the future of the internet,” said Benjamin Lennett, policy analyst for the New America Foundation’s Open Technology Initiative. “If we have learned anything from the failures of financial deregulation or the past administration allowing Big Oil to write our nation’s energy policy. We cannot leave it to the market to regulate itself.”

On 18 August, the Information Technology Industry Council (ITI) held the first of a series of new Net neutrality discussions in their offices with various stakeholders; neither Google nor the FCC are involved. These talks are “aimed at developing internet openness principles that can achieve broad cross-sector support,” said ITI President Dean Garfield. “Over the last few months, much work has been directed at developing such a solution – including by Google – with significant positive steps forward. This new effort will build on that work to arrive at something that can achieve both public and private sector support and strike the balance of encouraging continued innovation and investment in the internet.”

But some neutrality advocates call these talks yet another “backroom corporate deal.”

“Industry deal-making is no substitute for responsible policymaking,” said Free Press Policy Counsel Aparna Sridhar. “This latest effort by a few large companies to dictate the rules behind closed doors will not protect internet users. Industry titans will propose rules that serve only their own interests.”

Many groups are particularly upset with Google, which has been a staunch advocate of neutrality both here and abroad, in countries such as India. The Open Internet Coalition – of which companies and groups such as Facebook, Amazon, eBay and Google are a part – opposes Google’s move.

“Google has always presented itself as a different kind of corporate entity,” said Justin Ruben, executive director of MoveOn.org. “The fact that they are involved in a deal that would kill internet freedom directly contradicts this image. We hope that Google will reconsider before they are seen as just another giant corporation out to make a buck regardless of the consequence.”

Facebook said it continues to support neutrality for landline and wireless services.

“Preserving an open internet that is accessible to innovators – regardless of their size or wealth – will promote a vibrant and competitive marketplace where consumers have ultimate control over the content and services delivered through their internet connections,” Facebook said in a statement.

Google denies it has “sold out” on Net neutrality, calling the proposal the “best policy solution we could devise together.” “Given political realities,” the company said, “this particular issue has been intractable in Washington for several years now. At this time there are no enforceable protections … against even the worst forms of carrier discrimination against internet traffic.”

Verizon defended itself against one media characterisation of the deal, pointing out on 18 August that the proposal includes: “Prohibitions on blocking or degrading, enforcement of a non-discrimination requirement and a presumption against all prioritization on Internet connections … stronger than what the FCC could obtain through its threatened imposition of old-world telecom regulations” on broadband networks.

AT&T argued in its policy blog that, “wireless is different” and that it should not be subjected to the same regulatory framework as wired services. The company noted the “ever-constant struggle between capacity and demand” for wireless services and calling on policymakers to reallocate more spectrum for Commercial Mobile Radio Services use and to protect wireless broadband networks from “onerous new net neutrality regulations.”

Although Microsoft has not publicly commented on the proposal, it has voiced support for Net neutrality and is reportedly involved in the ITI talks. On the policy issues section of its website, the company said: “It is also important that broadband users continue to enjoy basic Internet ‘freedoms,’ such as the ability to access any site and use any lawful application or device. These Internet freedoms further fuel innovation.”

On 16 August, a group of congressional Democrats wrote a letter to FCC Chairman Julius Genachowski, blasting the “industry-centered” policy, and calling for formal FCC action “rather than expansion upon a proposal by two large communications companies with a vested financial interest in the outcome.” That letter also voices support for the FCC’s “third way” proposal – a response to the Comcast court decision that would reclassify data transmission as a telecommunications service that could be directly regulated. This method would also give the FCC clearer oversight in this area.

The Recording Industry Association of America and 12 other groups also sent a letter [pdf] to Google encouraging internet service providers (ISPs) and other intermediaries “to take measures to deter unlawful activity such as copyright infringement and child pornography.”

International Level

The result of the net neutrality debate does not just affect the United States. Other countries are watching as they form their own policies on the issue.

Luis Villarroel, director of investigations for the Latin American Corporation for Research of Intellectual Property for Development, or Corporación Innovarte, in Chile, fears that whatever model of neutrality is adopted in the United States will later be “exported to the rest of the world” via free trade agreements – the mode in which he says America has been pushing other solutions to issues such as domain-name resolution and internet service provider (ISP) liability.

“So certainly [it] is very important for all that US get it right on this, and certainly there are many good reasons to ensure network neutrality for wireless services, where more should be done,” Villarroel said.

In July, Chile adopted an amendment that mandates net neutrality for legal activities and requires ISPs to provide users information on what broadband speeds they offer. Ronaldo Lemos thinks Chile’s law can also serve as a model to be adopted by other Latin American countries. Lemos, the director of the Center for Technology and Society at Fundaçao Getulio Vargas (FGV), a think-tank and law school in Brazil, stressed that in developing countries, portions of the network infrastructure were built with the help of government. Brazil’s National Broadband Plan (Plano Nacional de Banda Larga), is one example of where government dollars are helping roll out universal broadband throughout the country.

“It is hard to argue against net neutrality in such cases,” Lemos told Intellectual Property Watch. “These networks must be neutral, and regarded as ‘common carriers’.”

Brazil is drafting new legislation encompassing net neutrality called “Marco Civil” (Civil Rights Framework for the Internet), spurred by the Ministry of Justice and the FGV’s Center for Technology and Society. Lemos explained that during the drafting process, telecommunications companies protested against neutrality in Brazil while public interest groups rallied for it. The final draft should be completed this year.

“Because of its timing, the Google/Verizon deal has the potential of stirring up more controversy, creating incentives for the different views to become even more extreme,” Lemos added. The Brazilian legislation “will certainly take into account the issues raised by the Google/Verizon deal.”

The European Union has launched a consultation on key net neutrality questions, including whether providers should be able to regulate internet traffic and prioritise some traffic over others, and whether there is sufficient competition and transparency among providers. France-based neutrality advocacy group La Quadrature du Net (LQDN) is one entity that will provide input to that process early next month.

“The Google/Verizon could have a lasting impact on the Net neutrality debate everywhere, especially if it is followed by [legislation], in the US and beyond,” said LQDN spokesman Jérémie Zimmermann. “The lobbying power of these two companies combined with that of other telcos agreeing with their position – AT&T, etcetera – is huge.”

Zimmermann added that the Google/Verizon proposal’s “lawful content” language implies that it should be excluded from net neutrality rules.

“This is wrong, and we greatly opposed this in the European Parliament in the Telecoms Package debate: a given content is not lawful or unlawful, it is the usage that is done with it (accessing it, copying it, etc.) that could be declared unlawful… after a decision of the judicial authority,” he added. “The notion of ‘lawful content’ put into the definition of network policies could lead to “automated justice” being handled by machines (deep packet inspection, filtering, etc.), under supervision of private actors.”

Pieter Hintjens, CEO of the Brussels-based iMatix Corporation, which develops software that makes it possible for others to create distributed computer applications, told Intellectual Property Watch that not only is extending network neutrality to wireless networks is “fundamental,” but so is reducing wireless data costs both domestically and when roaming.

“Without network neutrality, a mobile operator can forbid competing applications, e.g. VoIP [voice over internet protocol], and in many countries without network neutrality legislation, this is what happens,” Hintjens said. “Clearly this is not in the interests of an efficient, open, competitive economy.”

“Economic growth depends on competition, not cartels,” he added. “Europe especially risks being left with serious damage to its economy as European firms find themselves unable to compete in an increasingly one-sided” market.