Public interest groups and the media were up in arms Thursday over news reports that Google (GOOG) and Verizon (VZ) have been discussing a tiered-service agreement, which would allow deep-pocketed content providers such as Google, to pay more to broadband providers such as Verizon to give their content priority and faster network speeds on Verizon's networks. But both tech giants are denying the reports.

If such a deal were to take place, Google could pay for one of its YouTube videos to take precedence over, say, a video from a Web start-up that's unable to pay the sort of fees Google can afford. The plan would be in direct opposition to the concept of "net neutrality," a policy supported by the Federal Communications Commission and consumer advocates, which calls for Internet service providers to treat all legal Web traffic equally and to not discriminate against content that originates with a provider's rivals.

Instant Outcry

The news of the talks, which was originally published in The New York Times and then reported in The Wall Street Journal and a litany of media outlets (including DailyFinance), sparked an outcry from supporters of net neutrality. Josh Silver, the president of nonprofit media reform organization Free Press, issued a statement that said, in part, "Such abuse of the open Internet would put to final rest the Google mandate to 'do no evil'."

Another public interest group called Public Knowledge expressed similar alarm. "The point of a network neutrality rule is to prevent big companies from dividing the Internet between them. We do not need rules to protect Google and Verizon, but we need a rule to protect the customers of Google and Verizon and the competitors of Google and Verizon."

Media industry guru Jeff Jarvis a writer for BuzzMachine and the author of What Would Google Do? says Google's deal is the "devil's pact with Verizon for tiered internet service."

What Such a Deal Would Mean

Everyone can calm down, at least for now. Google says that the talk is all bunk. On Twitter, it released a statement that the New York Times article was all wrong and that it remains committed to an open Internet. Verizon, too, now says on its policy blog that the Times article regarding conversations with Google is mistaken. "Our goal is an Internet policy framework that ensures openness and accountability, and incorporates specific FCC authority, while maintaining investment and innovation. To suggest this is a business arrangement between our companies is entirely incorrect."

To many, the retractions are a welcome relief, but the incident brings up some very important points. If such a deal were ever to take place, it would be a clear victory for broadband providers such as Verizon and AT&T (T). It would give them the power to slow down or speed up selected Web traffic. That flies in the face of the premise that the Internet should be free and open to all.

Such power to control the Web would have far-reaching consequences that could hinder economic growth. Net neutrality creates an even playing field that encourages new start-up companies and innovation. Thanks to a largely unregulated Internet, companies such as Google, Facebook and Amazon (AMZN) were able to carve out new businesses and compete against older, more established companies.

Why Not Charge What the Market Will Bear?

Stifle that, and you stifle capitalism. Forget about starting your own Web-based business. Regardless of how good your service is, your website could load more slowly and the transactions could take longer than for a partner of the broadband service provider who's paying more. Right off, your business would be at a distinct disadvantage.

The service providers, of course, would argue that they spend billions of dollars acquiring wireless spectrum and building fiber networks. Shouldn't they be able to charge whatever the market will pay for their service?

Google's and Verizon's net neutrality flip flop has surfaced these issues once again. And we'll be hearing more about net neutrality. The FCC has been recently conducting meetings with broadband providers on the topic. So far, no formal rules have been released. But even if Google and Verizon do come up with their own deal, an FCC ruling would aim to be broad enough to trump their decision.

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candy c

Verizon better not make any deal with google to get more money out of us poor folks, that's all i'm sayin.
that damn butterfly was blue and ugly. aol.

April 28 2011 at 8:16 PM Report abuse rate up rate down Reply
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August 06 2010 at 10:14 AM Report abuse rate up rate down Reply
jtmader

The Obama administration and Justice Department can't comprehend that a "Conspiracy in restraint of trade" is a crime. Eric Holder should be required to read the Sherman Anti-trust Act. I know it's new, having been written in 1890-something, but he ought to find someone who is a competent lawyer to explain it to him. Maybe Verison and Google are buying Democrat politicians including the White House......

August 06 2010 at 8:45 AM Report abuse rate up rate down Reply
KWMJR

What gives with Adobe? Suddenly I cannot download pdf's without paying a monthly fee. Okay Verizon and others can mail me the bills and I will scan them. The post office needs the business.

August 06 2010 at 6:19 AM Report abuse rate up rate down Reply
tbot48

And you all think there is such a thing as corporate consiousness in a verizon or a google???
Only the naive could believe that...

August 06 2010 at 12:00 AM Report abuse +2 rate up rate down Reply
mjcurtis7920

Are these guys getting married?If not at least get a room gee wiz

August 05 2010 at 8:54 PM Report abuse +2 rate up rate down Reply
swirlycar

I hate Verizon!!!

August 05 2010 at 8:37 PM Report abuse +2 rate up rate down Reply
1 reply to swirlycar's comment
evanferrero

People, companies already do this politians already do this look at the economy the bailouts it has nothing to do with the good of the people. It has not been fair buisness practice in decades these talks were real. Not to mention if you know anything about computers it already happens . Our goverment gets huge taxes from these companies believe me its easy to turn a cheek there isnt any money in a constituion or fair buisnes or politics for that matter. It is happening and we only have ourseleves to blame and the suttle nuance of oppression that big buisnees calls helping our economy. How does it suit a goverment or people of that goverment for a company to make insane amounts of money and it going to one ceo or president with no recourse for it not returning back to the finical system. Instead the average person pays more tax for school police etc. which in percentage wise is way more then any company ceo pays in taxes sure they pay a few million but it is next to nothing comapired to what it is taking from your check. I digress from my point big buisness is good for the country when it doesnt take advantage of the system case in point google verison no investigation just a simple deny deny deny and the goverment says ok hammer the companies what will they do take the money they already do

August 05 2010 at 8:14 PM Report abuse +4 rate up rate down Reply
1 reply to evanferrero's comment
bikeneagle

is capitalism great or what? class warfare does not get any better than this.

August 05 2010 at 8:21 PM Report abuse -3 rate up rate down Reply
bikeneagle

when it comes to money the devil is always there to take it. if your verizon bill goes up you know what happend. the pigs are coming.

August 05 2010 at 8:10 PM Report abuse +4 rate up rate down Reply
galtns220

This story brings up an equally important issue of media responsibility and accountability. Any competitor of Google and Verizon can start such a rumor and clog the business machinery while they both must gear up to respond, and the taint of malicious "back-door-deals" never really goes away.
The story by the New York Times and the Wall Street Journal is something you might expect from inexperienced bloggers who might run anything sensational as a way of drawing traffic to their sites. But you expect more accountability from the major news media. If they cannot or will not name your sources, the story should not run. That's accountability the public deserves.

August 05 2010 at 7:37 PM Report abuse +2 rate up rate down Reply