Verizon Communications (NYSE:VZ) and Google (NASDAQ:GOOG) announced a joint policy agreement Monday focusing on the hot-button issue of “net neutrality,” agreeing that they would support the creation of separate services apart from the Internet that could be given dedicated bandwidth.
The seven-part agreement between the telecommunications giant and the search-engine company comes after news reports last week said Google had entered into a business agreement with Verizon to allow the Verizon to create tiered Internet services, something both companies denied.
In a conference call with reporters, Google CEO Eric Schmitt said Google did not make a business agreement with Verizon to allow the development of tiered content and said his company remains committed to the traditional Internet, on which Google does the bulk of its business.
“We would not create anything that isn’t in non-public Internet space,” Schmitt said. “We are going to continue to keep our services in the public Internet.”
The policy pact, which is non-binding and is essentially a gentleman’s agreement between the two companies, would allow Verizon to develop and provide bandwidth for not-yet-implemented services that would need bandwidth but would be separate from what the public generally knows as the Internet.
The most notable current example of such services is Verizon’s FIOS TV, but other potential products the companies referenced in their policy agreement include health care monitoring, smart-grid power technology, educational services or new entertainment or video game services.
The services, if ever implemented, would have to be constructed to be "distinguishable from traditional broadband Internet access services and are not designed to circumvent the [policy agreement]."
Under this agreement, Verizon could develop and provide dedicated bandwidth space to these services as long as an equal amount of bandwidth was provided for general Internet use.
"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," according to policy statement released Monday.
Verizon chairman and CEO Ivan Seidenberg said on the conference call that the negotiations between the two companies, which occurred over the last 12 months, helped him and his company see there was still growing business opportunities in providing open Internet. He also emphasized that the Internet “is not finite” in its nature, and bandwidth will always be added according to consumer preferences.
The agreement between Google and Verizon is only between the two companies and only for wireline-based Internet access, saying that the wireless Internet business is to "nascent" and "heavily competitive" for the need for such an agreement. Executives at both companies said they have shared the points of their proposal with competitors and with the Federal Communications Commission, who told Google and Verizon they would review the proposal.
The issue of “net neutrality” has become a recent hot button issue among consumer and Internet advocates, who expressed worry that companies that provide the infrastructure that makes up the Internet would eventually move into a program to have some content providers or consumers pay more for Internet access for certain services.
Shares of Google were up 0.9% to $504.59 on Monday while Verizon shares gained 1% to $29.87.