Google, Verizon Agree On Web Traffic Proposal

SAN FRANCISCO (Dow Jones)–Google Inc. (GOOG) and Verizon Communications Inc. (VZ) on Monday jointly agreed that wireline broadband providers should not be able to discriminate against lawful Internet content providers and that the regulators should have authority to stop offenders.

But the proposal, which takes the form of a suggested legislative framework for consideration by lawmakers, also left room for broadband providers to offer new “differentiated online services,” in addition to the Internet access and video services available today.

The agreed principles also do not apply to the wireless broadband market, in part because the mobile marketplace is more competitive and changing rapidly.

“For the first time, wireline broadband providers would not be able to discriminate against or prioritize lawful Internet content, applications or services in a way that causes harm to users or competition,” Google said in a blog post. “This new nondiscrimination principle includes a presumption against prioritization of Internet traffic–including paid prioritization.”

Saying that carriers and Internet companies depend on each other, Google Chief Executive Eric Schmist said the agreement was designed to strike a balance over the thorny issue of “network neutrality.”

The Google-Verzion agreement was announced several days after reports that they had reached a pact on net neutrality that could undermine federal regulators’ effort to dictate the way Internet providers manage traffic on networks they have spent billions of dollars to build.

Reports last week that the two companies had reached an agreement prompted the Federal Communications Commission to cancel talks aimed establishing so-called net neutrality rules that would ensure carriers treat all content equally, and not slow or block access to websites.

Internet companies like Google and Yahoo Inc. (YHOO), which offer broadband-intensive Web content such as video, have called on the FCC to prevent carriers from blocking websites, or selectively delaying access.

Cable and phone companies have argued that such regulation would limit the prices they can charge businesses and consumers, and hamper their ability to invest in new infrastructure to cope with the growing data traffic on their networks.

The companies in January filed a joint submission to the FCC endorsing “a principled approach to finding common ground with respect to an open Internet.”

One key principle the two sides agreed upon was that federal authorities should be able to address bad actors on a case-by-case basis when market forces and self-governance are found to be inadequate. The also agred that parties should be able to seek resolution of complaints by the appropriate federal agency of jurisdiction.

Shares in Google were up 0.6% at $503.52, while Verizon stock rose 1.5% to $29.99.

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