Google and Verizon: How the Smartphone Killed Net Neutrality

(MoneyWatch)  No one should be surprised by the New York Times report that Google (GOOG) and Verizon (VZ) have partnered to speed certain web traffic for a fee, violating the principle of Net Neutrality that all data be treated equally.

Yes, Google has historically been a vocal advocate for net neutrality. But the booming business in smartphones and tablets will overwhelm any resistance companies like Google had to a tiered system, if not completely, at least in the mobile internet market.

As Wired points out, both Google and Verizon responded to the NYT story with denials. But the language of their denials carefully skirted the substance of what the NYT reported. Google and Verizon denied that they had arranged a specific business deal to speed traffic for a fee. But the NYT story simply stated that Google had agreed not to oppose Verizon if it decided to institute this kind of pay to play scheme.

You don't have to dig too deep to find evidence that Google was already coming around to Verizon's position on this issue. Back in March their CEOs, Eric Schmidt and Ivan Seidenberg, co-authored an editorial in the Wall Street Journal arguing that minimal government involvement would be best for the future of broadband.

The pair were more direct in a joint statement of principles on the open internet which they submitted to the FCC back in January. As in their WSJ op-ed, the statement praised the broad strokes of the FCC's plans. But they made it clear that, "Network operators must have flexibility to manage their networks to deal with a range of network-impacting issues, including traffic congestion."

CNET made things explicit yesterday. Ina Fried quoted Google CEO Eric Schmidt as saying, "We're trying to find solutions that bridge between sort of the 'hard-core Net neutrality or else' view and the historic telecom view of no such agreement."

Whatever compromise the pair has reached, it doesn't sit well with the FCC, which abruptly ended negotiations it was having with industry players on an overarching framework for broadband. It remains to be seen if the FCC chairman Julius Genachowski will deploy his nuclear option and attempt to reclassify broadband service under the Communications Act.