The plot to maim Google: How AT&T and Comcast plan to upend the internet

The world's most valuable brand backed out of the net neutrality fight. Here's how it could backfire in a major way

Published October 17, 2014 10:58AM (EDT)

              (Associated Press)
(Associated Press)

One of the more interesting aspects of the debate over net neutrality is that search giant Google is no longer a vocal supporter of the policy, even though the phone and cable industry are turning the net neutrality debate against Google.

Net neutrality is the principle that data on the internet must be given equal treatment by network providers. Under the principle, Comcast, Verizon, or AT&T could not treat some websites worse than others, or charge big web companies to be in Internet fast lanes unavailable to smaller companies (like Salon or your friend’s blog). This idea of neutrality is a basic principle of anti-monopoly regulation that goes as far back as Roman law. Sometimes called “common carrier” law, it was used to regulate railroads, phone companies, toll roads, and even taverns.

The reason for network neutrality is simple: Comcast and Verizon could create an unequal web, silencing some and imposing anti-competitive charges. We already see behavior like this, with Netflix required to pay extra to Comcast to reach its customers, even though Comcast’s own online video offerings don’t pay a toll. Years ago, AT&T CEO Ed Whitacre asked of Google and Yahoo: “How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that.”

From 2005-2010, Google played a significant, though shifting, role in the debate for net neutrality.  At first supportive of an open internet, Google eventually walked away from the fight in 2010. It’s an open secret in DC that today--whatever Google executives may be telling their employees in California--its lobbyists aren’t touching the issue in DC.

At the same time, the cable and phone companies do not accept surrender and are still working smartly to crush Google. The Federal Trade Commission began probing Google for antitrust violations in both search and advertising, with surprising support from Republican Senator Mike Lee, an ally of the telecom industry.  The company spent $25 million to ward off this antitrust investigation, even announced the hiring of 12 separate lobbying firms in one day. It eventually got the FTC to drop its investigation. While Google left the arena of net neutrality, it would spare no expense to protect its search and advertising business.

But this is not the last time the telecoms will go to the government to attack Google. Google’s roll-out of Google Fiber means it is directly taking on telecommunications incumbents - AT&T, Comcast, Verizon, Time Warner cable - on their own turf. These companies won’t be passive. Through their filings, they are pushing for the Federal Communications Commission Chairman Tom Wheeler to go ahead with his plan to get rid of net neutrality. They will once attack Google’s Achilles heel, its unregulated dominance in search supported by its relatively unrestricted appetite for personal data.

Right now, the phone and cable companies are asking the Federal Communications Commission to regulate Google’s search business. Traditionally, the FCC has very little to do with search engines. But that could change.

FCC Chairman Tom Wheeler is faced with a choice on how to regulate internet service providers like AT&T and Comcast. The clearest way to make this happen would be to simply claim, legally, that these internet services providers are telecommunications services. Telecommunications services are regulated under what's called "Title II" of the Communications Act. This legal regime applies common carrier obligations and consumer protections to their services, which the cable and phone companies hate. Title II would make it illegal to charge extra fees to companies like Netflix for access to their customers. The FCC, naturally, is captured by telecom and cable interests, so Wheeler is has proposed not to use Title II. His proposal to regulate internet service providers rests on a different authority, Section 706 of the Communications Act.

Section 706 is a strange way to regulate internet services providers, because it's not really a regulatory regime. It was written to in 1996 to deal with the 'digital divide', to make sure all Americans get broadband. Section 706 is basically a mandate from Congress to the FCC to get everyone in America online. It is not limited to phone and cable companies, but includes web companies. A recent court decision found this authority limited only by “the boundaries of the Commission’s subject matter jurisdiction and the requirement that any regulation be tailored to the specific statutory goal of accelerating broadband deployment.”

And here's where privacy and antitrust concerns begin to come into play. Getting people online might allow the FCC to regulate Google, because the telecoms will argue that a good number of non-internet users have chosen to avoid the internet for fear of privacy violations.

Since that decision, Google’s competitors have pointed to the FCC’s potentially expansive oversight powers to regulate Internet content and websites. For example, Time Warner Cable stated “the Commission has clear authority under Section 706 to adopt rules that prevent edge providers as well as ISPs from interfering with Internet openness.” An edge provider is FCC-talk for something on the internet, like a web site or Youtube. The American Cable Association similarly found that the agency’s “broad authority to protect Internet openness under Section 706 permits, if not compels, the Commission to reach the behavior of Internet edge providers.” The ACA subsequently requested “that the Commission not only explicitly acknowledge that it has as much regulatory authority over Internet edge providers as information service providers under Section 706, but that it exercise such authority in this proceeding.” Given Google’s lack of objections for this approach, the FCC will look to other threats to openness.

Regarding search, AT&T stated “the Commission cannot responsibly address Internet “neutrality” without considering the significant role that search engines play in affecting consumers’ access to online content, applications, and services.” Comcast put it more strongly “If the Commission were to conclude that an interventionist regulatory regime is needed to preserve the ‘neutrality’ of the Internet, it could not defensibly apply that regime to broadband providers but not to Google (or any other provider of Internet-based services).” By relying on its vast Section 706 authority, the FCC now has the capabilities to “adopt carefully tailored rules to address all aspects of the Service and Network Ecosystem, in lieu of imposing obligations on any one component alone.” Essentially AT&T is encouraging the FCC to determine that Google’s control of the search market and search advertising could be a threat to deployment.

Regarding privacy, the FCC recently pointed to a "lack of trust in broadband and Internet content and services, including concerns about inadequate privacy protections” as a potential deterrent to both broadband adoption and deployment.

This is not just theoretical. After Snowden's revelations, certain types of internet usage began to shrink. New America Foundation’s Seeta Ghangadharan has found a correlation between the digital divide and privacy protections. Poor communities historically have been proportionally more subject to surveillance, and the FCC has noted a correlation between worries over privacy and non-adoption of broadband. And why shouldn't they avoid the internet? Internet billionaire Marc Andreessen has already announced that the tech industry will begin constructing credit scores based on "social-network behavior" and "search history." This information will come from companies like Google and Facebook (which Mark Zuckerberg refers to as a 'social utility', utility being a clear buzzword which screams out ‘regulate me!’).

Google’s strategy of laying low on the fight on net neutrality has put it between a rock and a hard place. It may not find itself under attack by the FTC right now for antitrust violations, but if it doesn’t begin standing up for net neutrality, it may find that its privacy and antitrust regulator turns out to be the FCC, a regulator which is known to be far more responsive to the telephone and cable industry. Based on their track record, AT&T and Comcast should enjoy snacking on Google through the political process. If Google doesn’t come out for Title II and Wheeler goes the wrong way, they may yet get their wish.

By Matt Stoller

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