07-52 06-15-2007 Google Inc. 6519529458

FEDERAL COMMUNICATIONS COMMISSION
Washington, DC 20554
In the Matter of )
)
Broadband Industry Practices ) WC Docket No. 07-52
)
)
COMMENTS OF GOOGLE INC.
Richard S. Whitt, Esq.

Washington Telecom and
Media Counsel
Google Inc.
1001 Pennsylvania Avenue, NW

Suite 600 South
Washington, D.C. 20004
202.742.6536
June 15, 2007

Comments of Google Inc.
WC Docket No. 07-52
June 15, 2007
EXECUTIVE SUMMARY
The FCC should adopt a national broadband policy that seeks to further network neutrality as a
market environment. As part of that policy, the Commission should promptly initiate a
rulemaking proceeding to consider various proposals; these include:
• incremental fixes (more and better broadband data, user transparency mandates)
• structural changes (various forms of network-based competition)
• a ban on most forms of packet discrimination
• an effective enforcement regime.
These policies represent modular, multimodal mechanisms for creating new user options and
disciplining the market behavior of the incumbent broadband providers.
Unfortunately incumbents operating in today’s concentrated broadband market have the

incentives and ability to discriminate against third party applications and content providers.
Economic analysis and real-world experience also challenge the prevailing notion that more
competitive markets invariably lead to open markets.
Within the context of the network neutrality debate, the FCC should endeavor to clarify those
points of agreement between the parties. Most agree that prohibited practices include
blocking/impairing/degrading Internet traffic, and the unilateral imposition of terminating
charges on Web companies. Most also agree that permitted practices include reasonable network
management and differential, but not discriminatory, business practices. Packet prioritization
remains the key point of contention between the parties. Because this practice creates a host of
economic, technical, and policy problems, the Commission should at minimum prohibit its more
discriminatory forms.
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TABLE OF CONTENTS
I. BACKGROUND AND OVERVIEW ...........................................................................1

II. THE COMMISSION’S CHIEF OBJECTIVE SHOULD BE TO CRAFT A
NATIONAL BROADBAND POLICY THAT EMBRACES THE END GOAL OF
NETWORK NEUTRALITY.........................................................................................2
A. “Network Neutrality” Constitutes An Optimal Market Environment...........................2
B. What’s Past At The FCC Is Prologue For The Internet .................................................5
C. Crafting A Tailored Approach To Regulation ................................................................8
III. BROADBAND PROVIDERS HAVE THE MARKET INCENTIVES AND THE
ABILITY TO DISCRIMINATE AGAINST CONTENT PROVIDERS...................10
A. The Consumer Broadband Market Is Highly Concentrated, With Extensive Barriers
to Entry, High Consumer Switching Costs, and No Near-Term Competition.............10
1. A Highly Concentrated Market ..............................................................................10
2. Barriers to Entry .....................................................................................................14
3. Switching Costs........................................................................................................15
4. No Near-Term Competition ...................................................................................15
B. Any Future Competition May Not Be Sufficient to Discourage Certain
Anticompetitive Behavior That Harms Consumers......................................................16
1. Vertically-Integrated Broadband Providers ..........................................................17
2. LEC Terminating Access Fees and Wireless Carrier Practices.............................19
IV. THE COMMISSION SHOULD CLARIFY THOSE AREAS OF GENERAL
AGREEMENT AMONG THE PARTIES..................................................................21
A. The Broadband Providers Already Agree That They Should Not Be Allowed To
Block, Impair, Or Degrade Internet Traffic .................................................................21
B. Broadband Providers Should Be Free To Engage In Reasonable Network
Management Practices and Adopt Myriad Business Models .......................................22
C. Broadband Providers Can Collect Fees From Their End User Customers, But Should
Not Impose Access Fees Unilaterally On Non-Customer Web Companies, Which
Already Pay Their Full Fair Share for Network Connectivity.....................................23
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V. MOST FORMS OF PACKET PRIORITIZATION ARE NOT JUSTIFIED BY

SOUND ECONOMIC, TECHNICAL, OR PUBLIC POLICY THINKING ............26
A. Packet Prioritization Creates A Host of Serious Problems Without Adding Real
Benefits ...........................................................................................................................26
1. Unwanted Gatekeepers ...........................................................................................27
2. Reduced Incentives to Invest...................................................................................27
3. A Zero-Sum Game...................................................................................................28
4. A Solution in Search of a Problem..........................................................................28
5. A Promise Without Substance ................................................................................29
6. The Two-Tiered Internet.........................................................................................29
B. The Broadband Providers Get Enhanced Incentives To Invest In Facilities In A
Neutral, Non-Prioritized Environment .........................................................................30
VI. THE COMMISSION SHOULD PROMPTLY INITIATE A RULEMAKING
PROCEEDING TO CONSIDER AND ADOPT CONCRETE PROPOSALS
DESIGNED TO PRESERVE A NETWORK NEUTRAL ENVIRONMENT ..........33
A. The Broadband Companies Should Provide Detailed Information About Their
Service Offerings, Network Practices, and User Pricing ..............................................34
B. The Commission Should Consider Various Structural Fixes.......................................35
C. The Skype Petition Should Play A Separate But Complementary Role in the Network
Neutrality Debate ...........................................................................................................36
VII. IN THE ABSENCE OF (OR PERHAPS IN SPITE OF) ROBUST COMPETITION,
THE COMMISSION SHOULD PROPOSE ADOPTING A PACKET
NONDISCRIMINATION SAFEGUARD ..................................................................37
A. The Commission Should Adopt a Tailored Packet Nondiscrimination Safeguard......38
B. The Commission Should Adopt An Effective Enforcement Regime ............................40
VIII. CONCLUSION ...........................................................................................................43
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WC Docket No. 07-52
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Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, DC 20554
In the Matter of )
)
Broadband Industry Practices ) WC Docket No. 07-52
)
)
COMMENTS OF GOOGLE INC.
Google Inc. (“Google”), by its attorneys, and pursuant to the Federal Communications
Commission (“FCC” or “Commission”) Notice of Inquiry,1 files these comments in the above-
referenced proceeding. Google welcomes the Commission’s decision to initiate this inquiry.
Armed with the relevant information produced here, the Commission should move promptly to
launch a formal rulemaking proceeding to consider and adopt concrete, market-oriented
proposals designed to preserve open on-ramps to the Internet for users and providers alike.
I. BACKGROUND AND OVERVIEW
Google is a leading provider of Web-enabled software applications, content, and services,
and is based in Mountain View, California. Our self-defined mission statement is
straightforward, if not daunting: to organize all of the world’s information and to make it
universally accessible and easy to use. In many ways, the organizing and usefulness components
of that far-reaching corporate goal are largely within the purview of the 13,000 men and women
who work for Google, along with hundreds of thousands of small business partners, vendors, and
of course our customers. The greater challenge is the central component: universal accessibility.
Like other Internet-based companies, Google relies on the communications infrastructure
1
In the Matter of Broadband Industry Practices, Federal Communications Commission, WC Docket No. 07-52,
FCC 07-31, released April 16, 2007 (“Notice of Inquiry” or NOI”).
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provided by underlying carriers in order to reach our ultimate end users. In particular, in the
United States, the telephone companies and cable companies control the only means of
broadband access by Google’s U.S. customers.
The FCC should adopt a national broadband policy that seeks to further network
neutrality as a market environment. As part of that policy, the Commission should promptly
initiate a rulemaking proceeding to consider various incremental fixes, structural changes, a ban
on most forms of packet discrimination, and an effective enforcement regime.
II. THE COMMISSION’S CHIEF OBJECTIVE SHOULD BE TO CRAFT A

NATIONAL BROADBAND POLICY THAT EMBRACES THE END GOAL OF
NETWORK NEUTRALITY
A. “Network Neutrality” Constitutes An Optimal Market Environment
From the beginning, the struggle to preserve an environment of network neutrality has
been miscast or misunderstood by many. Much of what has passed for dialogue between the
interested parties unfortunately has been fueled by excessive rhetoric, confusion, and occasional
misrepresentation. The verbal battles have obscured several areas of common interest, as well as
the precise outlines of disagreement. If nothing else, this proceeding should help clear away
some of the fog.
Moreover, it is clear that, in a very real sense, the two supposed warring factions need
each other. Both the Web companies and their users pay the infrastructure companies to gain
access to the Internet from their respective end points, while the infrastructure companies rely on
the Web companies to generate consumer and business demand for usage of applications and
content. Of course the consumer relies on both sectors to supply the connectivity and content
they desire. Unfortunately, mutual dependency can lead to mutual distrust, and sometimes open
hostilities.
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When advocates of network neutrality describe what they want to see in the broadband
marketplace, they generally speak from a common vision of the ultimate outcome: an open,
transparent, and neutral Internet environment, in which users decide where their packets go, and
the application intelligence resides largely at the “edges” of the network. Such an environment
would optimally extend across all communications platforms and providers. No mere whim or
historical accident, the model of neutral networks reflects the deliberate design decisions built
into the Internet by its creators. 2 As Vint Cerf, Google’s Chief Internet Evangelist, has put it:
The Internet’s open, neutral architecture has provided an enormous

engine for market innovation, economic growth, social discourse,
and the free flow of ideas. The remarkable success of the Internet
can be traced to a few simple network principles – end-to-end
design, layered architecture, and open standards -- which together
give consumers choice and control over their online activities. 3
As Dr. Cerf has explained, the layered nature of the Internet describes its “what,” the end-
to-end design principle describes its “where,” and the Internet Protocol (IP) describes its “how.”
The overarching rationale, or the “why,” is the revolutionary intention not to have an uninvited
gatekeeper anywhere in the network, but instead to give ordinary end users ultimate control over
what to do, where to go, and whom to communicate with.4 For American entrepreneurs,
inventors, and creators, the neutrality of the Internet has ushered in an era of innovation without
permission, in which new applications – from the revolutionary to the merely useful – can be
deployed and embraced by millions of individual users worldwide without need of approval from
bureaucrats, gatekeepers, or incumbents’ central offices.
2
See Prepared Statement of Vinton Cerf, Vice President and Chief Internet Evangelist, Google Inc., U.S. Senate
Committee on Commerce, Science, and Transportation, Hearing on Network Neutrality, February 7, 2007. See also
Prepared Statement of Vinton Cerf, Vice President and Chief Internet Evangelist, Google Inc., U.S. Senate
Committee on the Judiciary, Hearing on Reconsidering Our Communications Laws, June 14, 2006; Comments of
It’s Our Net Coalition, WC Docket No. 06-74, filed on October 24, 2006.
3
Cerf Senate Commerce Testimony at 1.
4
Id. at 2-3.
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No one reasonably can dispute the vast array of benefits that have flowed from the
neutral marketplace enabled by the neutral network. The vibrant ecosystem of innovation that
lies at the heart of the Internet has fueled unimagined economic, social, and personal growth,
creating new wealth and opportunity for millions of Americans.5 That ecosystem – based upon a
neutral, open network – should be nourished and promoted.
Moreover, as will be seen, neutrality actually is an indispensable component to
accelerating broadband deployment. Broadband providers actually can make considerable
money from putting improvements into the network itself, rather than merely profiting from
traffic congestion. Further, countries that enjoy an open environment, such as the United
Kingdom and Japan, tend to provide more bandwidth at lower prices.
If an open Internet environment is the optimal outcome,6 the critical task is to determine
the appropriate legal, regulatory, and/or market mechanisms to achieve that result – the means to
the ends. In Google’s view, the issue comes down to whether and how broadband connectivity
providers should be subject to incentives that effectively steer those providers to adopt neutral-
network-friendly business practices. Some argue for ex ante regulation, or ex post remedies, or
5
In his recent testimony to Congress, FCC Chairman Kevin Martin noted the tremendous economic and social
benefits of a broadband-enabled Internet. "Broadband technology is a key driver of economic growth and enables
almost all of today's innovations. The ability to share increasing amounts of information, at greater and greater
speeds, increases productivity, facilitates interstate commerce, and helps drive innovation. But perhaps most
important, broadband has the potential to affect almost every aspect of our lives. It is changing how we
communicate with each other, how and where we work, how we educate our children, and how we entertain
ourselves." Written Statement, The Honorable Kevin J. Martin, Chairman, Federal Communications Commission
Before the Committee on Energy and Commerce, U.S. House of Representatives, March 14, 2007, Available at:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-271486A1.pdf.
6
In a sense it is true that the Internet today is not an absolutely “neutral” place, in that the various servers, routers,
and content delivery networks that comprise it can and do distinguish routinely between various forms of traffic.
The key differences are that these commercial arrangements are (a) fashioned in ways that respect the principle of
non-discrimination due to source or destination of communication. and (b) struck in a robustly competitive
environment, with no single decision-maker able to impose its will on others. The current debate over network
neutrality is focused only on last-mile broadband connectivity, where the threat of unilateral gatekeeping is
dramatically more significant and tangible.
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no government role at all. Whatever the path taken, our policymakers should view an open
Internet environment as the preferred outcome.
B. What’s Past At The FCC Is Prologue For The Internet
Of course, network neutrality is not some newfangled concept, crafted as a clever way for
customers or competitors to constrain the business activities of the broadband providers. For
nearly thirty years, the FCC has presided over a regulatory framework that resulted in a network-
neutral market environment. The antecedent to the current debate over network neutrality lies in
the narrowband world of dial-up online services, which began in the late 1970s. To a large
extent, where we are now, and where we are going, is based on where we have been.
Beginning in the 1970s, the FCC’s Computer Inquiry safeguards governed consumer
access to the ILECs’ last-mile on-ramps to online services, forming a legal framework that
buttressed the Internet’s own open and neutral design principles.7 The Computer Inquiry rules
did several important things. First, the world was divided into basic communications services
(regulated as common carriage) and enhanced information services (left unregulated). Second,
Internet service providers (ISPs) gained the right to access basic services, on a nondiscriminatory
basis, using the ILECs’ commercial rates and terms. This end user right eventually became
known as ISP open access. Third, ISPs and others had the concomitant right to attach lawful
devices, such as computer modems, to the ILECs’ last-mile networks. The end result was a
modular regulatory framework, with targeted common carriage regulation of the lower
7
Robert Cannon, The Legacy of the Computer Inquiries, 55 FED COMM. L. J. 167 (2003) (“Cannon Computer
Inquiries Paper”).
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infrastructure layers, and an “unregulation” regime applicable to the upper applications and
content layers.8
In the Computer Inquiry era, our nation’s laws, regulations, and policies contained no
explicit network neutrality mandate. Instead, we had an open communications platform by
design (the Internet) that was married by regulation to open end points (the local telephone
network), which together led to a neutral Internet environment. While the Internet itself was
built on common “no gatekeeper” design principles, the on-ramps were protected by the
Computer Inquiry safeguards, especially ISP open access. With some 8,000 online ISPs
competing in the dial-up market, consumer choice became the ultimate bulwark against potential
discriminatory practices by the underlying telecommunications carriers. The resulting end-to-
end market environment spawned, among other tangible benefits, what Vint Cerf has dubbed
“innovation without permission.”9
Professor Jonathan Zittrain of the Oxford Internet Institute characterizes this remarkably
productive environment as being "generative," meaning that it has great “capacity for leverage
across a range of tasks, adaptability to a range of different tasks, ease of mastery, and
accessibility."10 The important feature of generative systems, such as the Internet, is that users
can easily do numerous things with them, many of which may not have been envisioned by the
designers. If, for example, the Internet had been built solely as a platform for sending email, and
required retooling to do anything else, most applications and business models never would have
8
Today, as a supreme irony, the FCC has adopted a regulatory regime premised on what can only be described as a
“contra layers” approach: regulate the competitive top layers (VoIP applications), and deregulate the concentrated
bottom layers (broadband connectivity).
9
Cerf Senate Commerce Testimony, at 4. Businesses typically also had unconstrained commercial access to the
Internet via the use of ISPs and dedicated circuits supplied by the telephone companies.
10
Jonathan L. Zittrain, The Generative Internet, 119 HARV. L. REV. 1974 (2006). Available at:
http://www.harvardlawreview.org/issues/119/may06/zittrain.pdf.
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developed. For years, the generative Internet had a regulatory parallel – the Computer Inquiry
safeguards – that enabled it to flourish beyond all expectations.
Regulatory actions invariably have practical consequences. In September 2005, the FCC
culminated its half-decade of rolling back regulation of the ILECs by eliminating its Computer
Inquiry requirements.11 In response, few should be surprised that the network neutrality issue
arose in dramatic and impressive fashion as a true grassroots phenomenon. In letters, emails,
blogs, documentaries, videos, songs, and radio shows, ordinary Americans utilized every means
of modern communication (including the Internet itself) to convey their deep concern over the
loss of safeguards that previously had protected an open platform. This national debate over
network neutrality was a reasonable, and likely inevitable, reaction to the culmination of the
deregulatory policies pursued by the FCC over the last five years. Faced with the loss of
hundreds of CLECs and thousands of independent dial-up ISPs, the empty promises of
intermodal competition, and the growing chorus of threats from broadband executives, the
Internet community responded with a single request: restore network neutrality.
The challenge now before us is to preserve both the open Internet environment, and
reasonable broadband market practices, while reducing the pressing need for explicit network
neutrality safeguards. This Commission to date has decided that no regulatory rules are
necessary to address concerns about packet discrimination. Instead, the agency promises to
stand watch, and react only when provoked by “bad acts.”12 Of course, without knowing what
11
In the Matters of Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, CC
Docket No. 02-33, FCC 05-150, released Sept. 23, 2005. In 2002, the FCC declined to subject the cable companies
to the Computer Inquiry rules, but at that point raised the possibility of imposing them in the future should the cable
companies engage in discriminatory conduct. Internet Over Cable Declaratory Ruling Appropriate Regulatory
Treatment for Broadband Access to the Internet Over Cable Facilities, CS Docket No. 02-52, Declaratory Ruling
and Notice Of Proposed Rulemaking, FCC 02-77, released March 15, 2002.
12
“…I do not think requirements are necessary at this time without evidence of actual harm to consumers or internet
users. The Commission has, and will continue to, monitor the situation and will not hesitate to take action to protect
consumers when necessary." Statement of Chairman Kevin J. Martin, Re: Applications for Consent to the
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kinds of market behavior would trigger the FCC’s involvement – or whether the FCC even
possesses the requisite legal authority to remedy the situation – the rest of us are left with serious
misgivings that this approach will prove effective at preserving an open and generative Internet.
Among other downsides, broad “principles” without consistent, enforceable rules risk a
significant chilling effect on innovators who rely upon regulatory clarity to assure the existence
of Internet platforms without artificial barriers.
C. Crafting A Tailored Approach To Regulation
It should go without saying that Google is a confirmed believer in the free market.
Unlike some who publicly tout the virtues of open markets while endeavoring behind the scenes
to keep them closed, Google genuinely trusts that the marketplace will provide consumers, users,
and providers alike with maximum benefits. Indeed, Google would not exist today but for the
free market, and in particular an open and neutral Internet that allowed the introduction and
flourishing of innovation without permission. Where the market demonstrably has failed,
however, policymakers must determine, thoughtfully and carefully, how to set things aright.
Over the last eighteen months, proponents of network neutrality have sought an
enforceable prohibition on “packet discrimination” as the specific remedy necessary to counter a
highly concentrated broadband marketplace. While the need for such a remedy remains (as
explained in Section III below), we believe there is a compelling case for a parallel,
complementary policy to root out the proximate cause of the illness itself. Section VI provides a
potential set of such solutions, including concrete ways to expand the competitive broadband
Assignment and/or Transfer of Control of Licenses from Adelphia Communications Corporation, et al, MB Docket
No. 05-192, released July 13, 2006, at 1.
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offerings available to consumers. Individually and collectively, these policies are designed to
alter for the better the current marketplace incentives of the broadband providers.
Optimally, all players in the broadband markets would embrace network neutrality.
Indeed, a number of broadband companies have indicated that they do not intend to block legal
Internet applications or content.13 Several providers have gone further to clarify that they will
not actively degrade Internet traffic.14 These statements should be viewed as positive steps, and
applauded for their recognition of the benefits of untrammeled access to the Net. Now the
remaining challenge is to achieve consensus on the particular means that will best lead to the
desired outcome.
To be clear, this is not a fight that Google or other Web-based companies and users
sought; indeed, it should not even be a fight at all.15 All sides benefit materially from
maintaining neutral broadband access to the economic, social, political, and personal riches of
the Internet.16 Nonetheless, after years of extensive deregulation, and too few questions asked,
Google now sees the need for a course correction. Our nation deserves a more balanced and
tailored approach to broadband regulation, one that incorporates the nondiscrimination lessons of
the past with the competitive hopes of the future. In the meantime, tailored safeguards against
discrimination by dominant broadband carriers may well be the only viable proxy for the
broadband competition that has proven so unshakably elusive.
13
Marguerite Reardon, AT&T chief, FCC Chair Clarify on Net Neutrality, CNET News, March 21, 2006. Available
at: http://news.com.com/AT38T+chief,+FCC+chair+clarify+on+Net+neutrality/2100-1034_3-
6052239.html?tag=html.alert (“AT&T Clarifies on Net Neutrality”).
14
Id.
15
Indeed, in countries outside the US, governments are acting decisively to obviate the need for a fight over network
neutrality by implementing structural separation between incumbents’ physical network infrastructure and
application-layer services.
16
As one example, a recent study by the University of Florida found that the cable and telecom companies providing
broadband are more likely to develop their infrastructure, resulting in higher data speeds, if they don’t charge
content and web companies for preferential treatment. Hsing Kenneth Cheng, Subhajyoti Bandyopadhyay, and
Hong Guo, The Debate on Net Neutrality: A Policy Perspective, University of Florida (2007). Available at:
http://www.hearusnow.org/fileadmin/sitecontent/TheDebateonNetNeutrality.pdf.
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III. BROADBAND PROVIDERS HAVE THE MARKET INCENTIVES AND THE

ABILITY TO DISCRIMINATE AGAINST CONTENT PROVIDERS
The Notice of Inquiry characterizes the broadband market as showing “ever increasing
intermodal competition among broadband providers,” and asks whether such competition can
prevent “particular market failures or other specific problems … from developing in the first
place.”17 These two separate but related questions are at the heart of the network neutrality
debate.
In Google’s view, the lack of robust competition – along with considerable barriers to
entry and consumer switching costs – enables and even invites discriminatory conduct. It is also
a fair question whether the further development of future competition, which in itself is not a
given, would prove sufficient to deter such conduct. Importantly, the problem to be solved is
inherent in the concentrated nature of the broadband market itself, rather than in a roster of actual
and potential “bad acts.” In other words, the flaw is structural, not behavioral.
A. The Consumer Broadband Market Is Highly Concentrated, With Extensive

Barriers to Entry, High Consumer Switching Costs, and No Near-Term
Competition
1. A Highly Concentrated Market
The broadband market suffers from a pronounced and intractable lack of competition,
offering consumers, at best, a choice between a telephone or cable company. No less an authority
than the Congressional Research Service (CRS) has described the current market as a
“broadband duopoly,” where telephone and cable companies face little real competition.18 While
emerging technologies may eventually enable viable competitors, such channels currently do not
compete in terms of speed, price, availability, or technological maturity.
17
NOI at 11.
18
Access to Broadband Networks, CRS Report for Congress, RL33496, updated Aug. 31, 2006, at 17.
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Further complicating this absence of real competition is a disappointing lack of
information about key parameters of the broadband market. While Congress and the FCC have
acknowledged flaws in the agency’s existing reporting mechanisms, all we can say now with
certainty is that there is an imperfect duopoly in the market. Unfortunately the Commission’s
current broadband deployment data collection and reporting methodology inherently
overestimates high-speed Internet availability and competition. For example, the FCC considers
an entire five-digit zip code to have broadband even if only one resident or business is served
within that zip code.19 The Commission also defines “high-speed” service as requiring only 200
kbps in at least one direction, while many experts argue that this classification fails to set a high
enough bar for many common Internet services.20
It may be more useful initially to look to the tools of traditional antitrust analysis,
particularly the Herfindahl-Hirschman Index (HHI). The HHI is a commonly accepted measure
of market concentration, which is calculated by squaring the market share of each firm
competing in the market and then summing the resulting numbers.21 As the Commission itself
has noted, “under the DOJ/FTC Guidelines, a market with a [HHI] ... that exceeds 1800 is
considered highly concentrated."22 In 2003, the FCC calculated the HHI for a variety of
19
"Broadband Deployment is Extensive Throughout the United States, but it is Difficult to Assess the Extent of
Deployment Gaps in Rural Areas," GAO Report 06-426, May 2006, http://www.gao/cgi-bin/getrpt?GAO-06-426
When comparing more fine-grained data collected in the “ConnectKentucky” project to the Form 477 equivalent for
Kentucky, for example, GAO found that the FCC methodology over-counted by some 19 percent. Id.
20
In the Matter of Development of Nationwide Broadband Data to Evaluate Reasonable and Timely Deployment of
Advanced Services to All Americans, Improvement of Wireless Broadband Subscribership Data, and Development of
Data on Interconnected Voice over Internet Protocol (VoIP) Subscribership, WC Docket No. 07-38, Notice of
Proposed Rulemaking, FCC 07-17, released April 16, 2007 (“Broadband Data NPRM”). See also “Connect the
Nation Act,” S.1190, 109th CONG. (2007); “Broadband Census of America Act of 2007,” 109th CONG. (2007);
“Broadband Data Improvement Act,” S. 1492, 109th CONG. (2007).
21
The Herfindahl-Hirschman Index, Department of Justice. Available at:
http://www.usdoj.gov/atr/public/testimony/hhi.htm.
22
Application of EchoStar Communications Corp., Hearing Designation Order, 17 F.C.C.R. 20,559 (2002), at para.
134.
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broadband market scenarios; those figures ranged from 5200-6000.23 Others have used these
numbers to conduct their own analysis and have determined that broadband Internet markets are
quite “highly concentrated.”24
Until its most recent report, the FCC’s own skewed July 2006 figures still showed an
overwhelmingly concentrated broadband market, with telephone companies and cable companies
controlling access to 99.6 percent of all U.S. consumers.25 The share of alternative broadband
platforms also has been decreasing steadily over time, from a less-than-impressive 2.9 percent in
1999 to an anemic 0.4 percent today.26 The GAO further found that only about 28 percent of all
US households subscribed to broadband service in 2005, and noted that DSL and cable modem
service together constitute the only broadband technologies actually available to consumers. 27
Further, each of the supposed technology alternatives – such as Broadband over Powerline (BPL)
and Satellite Internet – provide no real competitive option.28
23
In the Matter of Amendment of Parts 1, 21, 73, 74 and 101 of the Commission's Rules to Facilitate the Provision
of Fixed and Mobile Broadband Access, Educational and Other Advanced Services in the 2150-2162 and 2500-2690
MHz Bands, WT Docket No. 03-66; RM-10586; WT Docket No. 03-67; MM Docket No. 97-217; WT Docket No.
02-68; RM-9718, Notice of Proposed Rulemaking and Memorandum Opinion and Order, 18 FCC Rcd 6722 (2003).
A residential market with one ILEC provider, one cable provider, and one other non-ILEC yields an HHI of
approximately 5200. The HHI is between 5500 and 5800 if an additional non-ILEC is removed, assuming that the
national numbers of ILEC/RBOC and cable non-ILEC can be used to calculate market shares representative of a
typical local broadband market. The HHI reaches 6000 if a typical business market consists of the incumbent service
provider and one other non-ILEC. Id.
24
Bill D. Herman, Opening Bottlenecks: On Behalf of Mandated Network Neutrality, 59 FED. COMM. L. J. 1, 107-
159, 2006.
25
High-Speed Services for Internet Access: Status as of December 31, 2005, Federal Communications Commission,
Industry Analysis and Technology Division, Wireline Competition Bureau (July 2006), at 9, Table 6. (“July 2006
Report”).
26
July 2006 Report; see also Broadband Reality Check II, S. Derek Turner, Research Director, Free Press (August
2006), at 24-25.
27
U.S. General Accounting Office, Broadband Deployment, GAO 06-426, May 2006, at 10-12.
28
See, e.g., Comments of Consumers Union, CFA, and Free Press, Broadband Data NPRM, filed on May 31, 2007,
at 3-8.
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The Commission’s most recent market share figures now include 3G Wireless service as
part of the nationwide totals for “high speed services.”29 3G Wireless fails to offer a true
competitive alternative because, among other drawbacks:
(1) the newest generation cards enable speeds that can only reach the low end of what
qualifies as “high speed” under the FCC’s current definitions;30
(2) the price of these data plans is often more than double what consumers would pay for
cable or DSL service, making them viable only for the higher-end business market;31
(3) wireless providers block many common Internet applications and services outright,32
frequently do not allow network attachment of any device but their own,33 and reserve the
right to terminate service arbitrarily for using other services that do not conform to a
short and vaguely-defined list;34
(4) very few consumers have substituted wireless broadband service for wireline
broadband service; and
(5) the FCC’s figures include all owners of a “high speed”-capable phone, regardless of
whether they bought it with the intention to use that service, or even have a data plan that
supports it.35
Perhaps most significantly, the largest national wireless high speed Internet providers
represent two incumbents from the wireline market and two longstanding telecommunications
29
High-Speed Services for Internet Access: Status as of June 30, 2006, Federal Communications Commission,
Industry Analysis and Technology Division, Wireline Competition Bureau (January 2007).
30
Id. According to FCC data, only 19.75% of wireless end users can achieve 200 kbps in both directions. (Tables
1, 2). More detailed information was withheld from the FCC's report (Table 5). Id.
31
Id. According to FCC data, 87.19% of mobile wireless connections are business subscriptions. (Tables 1, 3) Id.
32
Tim Wu, Wireless Net Neutrality: Cellular Carterphone and Consumer Choice in Mobile Broadband, New
America Foundation Wireless Future Program, Working Paper #17 (February 2007) (“Wu Wireless Net
Neutrality”). Available at: http://www.newamerica.net/files/WorkingPaper17_WirelessNetNeutrality_Wu.pdf.
33
Id. at 7-8.
34
Id. at 13-14.
35
The FCC states that "terrestrial wireless broadband providers should report the number of end users whose mobile
devices, such as wireless modem laptop cards, smartphones, or handsets, are capable of sending or receiving data at
speeds in excess of 200 kbps and whose billing addresses are within the areas of terrestrial mobile wireless
broadband availability as reported in Part V." Local Telephone Competition and Broadband Reporting, Report and
Order, WC Docket No. 04-141, 19 FCC Rcd 22340 (2004) (instructions for Line A.I-8). In addition, “the
Commission finds that it is currently unable to determine from the reported data the number of subscribers who
make regular use of a broadband Internet access service as part of their mobile service package. Moreover, the
Commission believes the current instructions make it likely that more and more mobile voice service subscribers
will be reported as mobile broadband subscribers merely by virtue of purchasing a broadband-capable handset,
rather than a specific Internet plan.” Broadband Data NPRM, at para 12.
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provider. The appropriate way to add up the available consumer options is not by simply
counting individual broadband technology platforms, but rather independent platforms.
Where the broadband incumbents do compete against each other in the market, they do so
primarily based on qualities such as price and speed. Within the larger context of market
dynamics, such competition, while beneficial to consumers, appropriately should be seen as
relatively shallow in nature. In contrast, a deeper form of competition would occur if
competitors adopted different business models and service packages. In the wireless space, for
example, Skype has found that “While competition among wireless carriers may be sufficient to
act as a check on the pricing of services, the four large national wireless carriers have the same
incentive to avoid commoditizing their voice service; and thus the same need to control
subscribers’ handsets and the applications and software that run on them.”36 While the wireless
market is rather different from the wireline broadband market, the analogy appears to be apt.
2. Barriers to Entry
In addition to excessive market concentration, considerable and insurmountable barriers
to entry also limit the possibility of new competition. To build and operate a nationwide
broadband system capable of competing head-on with the incumbents, would-be market entrants
must (among other things) pour tens of billions of dollars into constructing local, regional, and
national communications infrastructure, pay for backhaul, access rights of way (ROW),
interconnect with hundreds of other US carriers, and create a retail offering. For decades, many
economists believed that the communications market constituted a natural monopoly. While that
thinking may no longer be applicable, these significant barriers to entry suggest that the market
should be seen as one featuring highly unnatural competition.
36
Skype Petition to Confirm A Consumer’s Right to Use Internet Communications Software and Attach Devices To
Wireless Networks, RM-11361, filed Feb. 20, 2007, at 24 (“Skype Petition”).
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3. Switching Costs
Even assuming the ability to choose another broadband provider in a particular area,
consumers endure a lengthy list of switching costs. Providers typically bind their customers with
multi-year contracts, bolstered by substantial early termination penalties. The prevalence of
bundling together different services also helps providers reduce “churn” (i.e., the use of
competitive offerings). Equipment costs, truck rolls, and even legacy email accounts also create
disincentives for consumers to move to another service provider.
4. No Near-Term Competition
Further, it is worth pointing out that broadband cannot reasonably be viewed as just
another service offering in a consumer’s marketplace. Broadband increasingly is becoming a
critical communications input, and consumers eventually will experience it as the dialtone of the
21st century. Whether or not broadband is viewed correctly as an “essential facility” in the
classic antitrust sense, as POTS and narrowband data services continue to fade away, consumers
uniformly will view broadband as essential to their daily lives.
***********
Together, these salient factors – excessive market concentration, no viable competitors,
considerable consumer switching costs, and substantial barriers to entry – should lead any
rational policymaker to conclude that there is a major competition problem in the broadband
market. Thus, the suggestion in the NOI that intermodal competition is “ever increasing,” and
capable of preventing market failures, simply is not an accurate representation of reality. More
troubling, though, is the real possibility that even the arrival of additional competition may not
be sufficient to rein in the potential for discriminatory practices.
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B. Any Future Competition May Not Be Sufficient to Discourage Certain

Anticompetitive Behavior That Harms Consumers
Proponents and opponents alike of network neutrality appear to agree on one fundamental
point: the presence of sufficient competition should discipline the market behavior of the
incumbents, and make regulatory safeguards unnecessary. Of course, the two sides disagree
over the state of broadband competition today, and its prevalence tomorrow, so the argument
usually does not advance beyond that point. However, there are troubling signs that the addition
of several other broadband competitors may not be sufficient to constrain anticompetitive or
discriminatory practices in a vertically-integrated market.
Assuming projected or even optimistic levels of competition in the market for high-speed
broadband, there is now reason to believe that such competition alone will not adequately protect
consumers. According to some economic experts, competition may even increase the likelihood
that existing broadband providers will exercise market power to exclude or discriminate against
competitors in the complementary market of Internet services. 37 A single monopolist may
refrain from such tactics due to the so-called “one monopoly rent” rule. On the other hand, a
highly competitive marketplace with dozens of competitors may well discourage such behavior,
as with the initial online dial-up ISP market (bolstered by common carriage rules).
Unfortunately, neither scenario applies in the context of today’s broadband market. Recent
examples in the related terminating LEC and wireless markets also demonstrate that the presence
of multiple competitors often is insufficient to discourage exclusion, discrimination, and other
anticompetitive behavior.
37
Barbara van Schewick. Towards an Economic Framework for Network Neutrality Regulation, J. TELECOMM. AND
HIGH TECH L 5 (2007). Available at SSRN: http://ssrn.com/abstract=812991
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1. Vertically-Integrated Broadband Providers
Economic theory demonstrates that broadband connectivity providers retain the ability
and incentive to discriminate even in a relatively competitive market. In the Internet context, the
ability of network providers to exclude competitors from a complementary market does not
depend on a monopoly position in the primary market, but instead is enabled by network
management technologies.
According to noted scholar Barbara van Schewick of Stanford University,38 a variety of
exceptions to the “one monopoly rent” rule apply in the high speed Internet market. These
exceptions include the ability to generate “more outside revenue,” and the desire to “preserve
competitive position in the primary market.”39 In the first exception, the broadband provider
seeks to exclude or discourage access to complementary products in an effort to capture higher
profits by selling directly to its consumers. In the second exception, the broadband provider
seeks to preserve a competitive position in the primary market by differentiating itself through
exclusive content and applications, and by degrading or blocking competitive services that
reduce the differentiation of the provider’s applications. The costs of exclusion actually are
considerably diminished when the provider competes with at least one other network provider.
Specifically, exclusionary conduct can serve to strengthen market power by driving
competitors from the adjacent market (witness current battles over VoIP and other applications).
It can also increase switching costs by making it difficult to migrate data and hardware from one
platform to another. Most importantly, discriminatory practices rather than direct blocking can
give the customer a falsely negative perception of the quality of a rival’s offering.40 As the high-
speed ISP market moves from monopoly to competition, the “one monopoly rent” rule becomes
38 Id.
39
Id. at 31-32
40
Id. at 34.
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less relevant, and the exceptions become more applicable. While competition brings significant
benefits, the presence of these exceptions makes it unlikely that harmful exclusionary practices
will be successfully discouraged. In particular, the ability and incentive to exclude rivals through
outright blocking or discrimination could have a significant impact on application-level
innovation by Web companies, and could lead to an overall decrease in social welfare.
Application providers will have less confidence that they will be able to adequately reach
customers and efficiently access the market, while consumers will lose the network effects of an
open Internet.41
Joe Farrell and Phil Weiser explored a related concept in their so-called “ICE” paper. 42
“Internalizing complementary efficiencies” takes the “one monopoly rent” concept a step further,
emphasizing that the network provider typically benefits from an efficient complementary
market. In most concentrated markets, this would argue generally for laissez-faire vertical
policies. However, there are several important exceptions in which incumbents are likely to act
in anticompetitive or inefficient fashion, many of which clearly apply in the high-speed
broadband market:
• Platform monopolists may practice price discrimination on both ends of this two-sided
market. For example, a cable provider may block VoIP calls made by consumers in order
to charge a premium on their own voice service, or a telco may wish to extract more
profits from a particular applications/content provider at the expense of overall market
efficiency.
• Incumbents may engage in exclusionary practices because their competitors in the

secondary market threaten the primary monopoly. Such threats are by their nature
speculative, meaning incumbents are likely to behave irrationally or inefficiently to
exclude secondary market competitors.
41
Id. at 46. From an antitrust perspective, it is also difficult to justify exclusionary practices simply because firms
claim that they are necessary in order to obtain more profit to build out their networks. Id.
42
Joseph Farrell & Philip J. Weiser, Modularity, Vertical Integration, and Open Access Policies: Towards A
Convergence of Antitrust And Regulation In The Internet Age, 17 H ARVARD J. L. & TECH. 1, Fall 2003.
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• Bargaining problems can discourage innovation “if the platform provider threatens to
withhold access to the platform unless the application inventor licenses its new
application very cheaply.”43 In the broadband context, platform providers not only avoid
paying any such “license fee” altogether, but also have the ability and incentive to
leverage innovation-stifling fees on a discriminatory basis.
• Incumbents simply may not understand the financial benefits of ICE and behave
irrationally for a variety of other reasons. Weiser and Farrell note that “the less we can
count on a monopolist to be efficient even on its own terms, the more we should value
platform-level competition, perhaps especially diverse competition.”44 Endorsing such
diverse forms of platform competition echoes our own suggestion of favoring “deep”
(business model) competition over more “shallow” (price and speed) competition.
Thus, sound economic theory predicts that vertically-integrated broadband companies,
whether in a concentrated or a more competitive space, face market signals that may not lead
them to embrace open on-ramps to the Internet. As we will discuss briefly below, there are
several troubling real-world examples that bolster that view.
2. LEC Terminating Access Fees and Wireless Carrier Practices
In addition to van Schewick’s work related to vertically-integrated broadband providers,
and the Farrell/Weiser work on internalizing complementary efficiencies, there are actual
industry examples illustrating the apparent insufficiency of competition to discourage
anticompetitive practices. Two of these relate to LEC access charges and wireless carrier
practices.
By 2001, many CLECs began to charge inflated terminating access charges to connect
their customers’ calls to non-customers. This problem arose because the intercarrier
compensation regime is a two-sided market that provides incentives for LECs to charge for
terminating access service in excess of what a competitive market ordinarily would indicate. In
this case, as one author puts it, “A CLEC can act as a monopolist because it controls an essential
component of the telephone network that provides long distance calls. Once a customer has
43
Id. at 113.
44
Id. at 116.
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chosen a LEC, calls to or from that customer cannot be completed without that LEC’s
involvement.”45 The consumer’s choice of a LEC in this case was not affected by terminating
access fees because such fees were charged to the calling party. Because of this, each individual
consumer was motivated to choose the cheapest LEC, which may have kept prices low via
inflated access termination charges, in turn driving up the prices of all of those who called them.
The problem worsened until the FCC eventually compelled the CLECs to price at
published rates. At that juncture the Commission was forced to “now acknowledge that the
market for access services does not appear to be structured in a manner that allows competition
to discipline rates.”46 A variation on this terminating LEC access bottleneck situation is playing
out now in Iowa. 47
In addition, the wireless sector provides an example of a relatively competitive market
coexisting with exclusionary tactics. As scholar Timothy Wu has catalogued, wireless carriers
routinely block access to a range of applications, services, and content, and attempt to lock
handheld devices to the carriers’ wireless networks.48 These practices are prevalent despite the
fact that the wireless market is characterized by four national facilities-based providers, a host of
smaller facilities-based providers, and numerous resellers. The discrepancy between the
relatively large number of players in the wireless market, and the restricted business models
actively condoned and practiced there, casts additional doubt on the prevailing notion that
45
Noel D. Uri, Monopoly Power and The Problem of CLEC Access Charges, 25 TELECOMMUNICATIONS POLICY 8
(2001).
46
Access Charge Reform, Seventh Report and Order and Further Notice of Proposed Rulemaking, 16 FCC Rcd 9923
(2001). Available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-01-146A1.pdf.
47
In December 2006, AT&T/AT&T Wireless decided to stop paying termination access fees to Great Lakes
Communications Corporation (GLLC), an Iowa company, because the company allowed access to conference
calling services which pulled customers away from AT&T. The FCC ordered large telcos to stop blocking calls into
numbers such as Free Conference Call, and threatened punitive actions if the carriers didn’t comply. The FCC
explicitly stated that carriers were violating rules which prohibit blocking consumers’ access. Several days later
after reports of continued abuse, the FCC clarified that service degradation also would not be tolerated. Paul
Kapustka, FCC Chairman Martin to Telcos: No Blocking Iowa Calls, GigaOm, May 3, 2007. Available at:
http://gigaom.com/2007/05/03/fcc-commish-martin-to-telcos-no-blocking-iowa-calls/.
48
Wu Wireless Net Neutrality Paper, at 5-14.
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incrementally greater degrees of competition is all that is necessary to eliminate discriminatory
practices adversely affecting the open Internet environment.
IV. THE COMMISSION SHOULD CLARIFY THOSE AREAS OF GENERAL

AGREEMENT AMONG THE PARTIES
At this particular moment in the network neutrality debates, it behooves all market
players to clear aside the rhetoric and confusion. The Commission should take this opportunity
to drill down and uncover the areas of agreement between the parties, and those relatively few
but important areas of disagreement.
Initially, it would be useful for opponents of network neutrality to at least acknowledge
the legitimate concerns of Web companies about market concentration issues. Without budging
on that point, productive dialogue effectively ceases. It may be an intellectually defensible (if
unsupported) position to say that policymakers need not craft regulatory safeguards in response
to a concentrated market; it does little good not even to admit the concentration exists in the first
place.
It also would be helpful if our opponents were to agree that it would be desirable to
preserve the Internet as an open platform for edge-powered innovation without permission.
When some dismiss that objective as naïve, or even wrong-headed, productive discussions again
come to an end.
A. The Broadband Providers Already Agree That They Should Not Be Allowed To
Block, Impair, Or Degrade Internet Traffic
In numerous public statements, the incumbent broadband providers have agreed with
network neutrality proponents that there are certain market practices that are discriminatory and
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should not be tolerated. These practices include blocking, impairing, and/or degrading Internet
traffic.49 These public concessions are important and should not be ignored or downplayed.
Of course, the disagreement with regard to blocking and impairment activities is not that
they should not occur, but whether enforceable federal regulations are necessary to police these
public pledges. Google continues to believe that actual rules with actual remedies will have a far
greater deterrent effect on the broadband providers than unenforceable proclamations.
B. Broadband Providers Should Be Free To Engage In Reasonable Network

Management Practices and Adopt Myriad Business Models
Google does not dispute that the broadband providers should have the ability to manage
their networks, as well as engage in a broad array of business practices. The real question comes
down to what kinds of business models and network management techniques rely on unilateral
control over last-mile broadband facilities, as opposed to other physical layer facilities (“middle
mile” and Internet backbone infrastructure) and applications and content layer activities.
Most known network management techniques will create few if any competitive and
discrimination issues. So, for example, it is entirely reasonable for a broadband provider to
utilize legitimate application and content-neutral practices – such as halting harmful denial of
service (DOS) attacks, or prioritizing all packets of a certain application type, such as streaming
video. Blocking some traffic based on IP address source because of the prevalence of objective
network harms, such as viruses or worms, also is a reasonable practice. If, on the other hand,
network management is used to promulgate discriminatory practices – such as blocking,
49
Reardon, “AT&T Chief Clarifies Net Neutrality.” See also Testimony of David L. Cohen, Executive Vice
President, Comcast Corporation, Hearing before the Committee on the Judiciary, U.S. Senate, June 14, 2006.
“Reconsidering Our Communications Laws: Ensuring Competition and Innovation.” Cohen states that “we have
never blocked our customers’ access to lawful content and we repeatedly have commited that we will not block our
customer’s ability to access any lawful content, application, or service available over the Internet.” Id. at 10.
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degrading, or prioritizing certain applications or content, based on an intention to impair the
offerings of competitors – such practices should be prohibited as unreasonable.
Nothing in the concept of network neutrality would prevent the broadband providers from
managing the security and bandwidth-usage aspects of their own applications and content. Tim
Wu refers to this as the “police what you own” concept.50
There is also broad agreement that broadband carriers should be free to deploy network
management upgrades, such as the use of local caching or private network backbone links.
Again, these practices are reasonable because they do not involve discriminatory conduct
stemming from the carriers’ control over last-mile facilities.
A wide array of business models also can and should be accommodated. For example,
the broadband providers should be free to provide managed IP services and proprietary content
(IPTV), which do not involve Internet-derived content. Moreover the broadband providers can
create and sell a full range of software applications, content, devices, and services. In each
instance, these business models do not depend on unilateral control over the on-ramps to the
Internet.
C. Broadband Providers Can Collect Fees From Their End User Customers,
But Should Not Impose Access Fees Unilaterally On Non-Customer Web
Companies, Which Already Pay Their Full Fair Share for Network
Connectivity
SBC CEO Ed Whitacre, Business Week (Nov. 7, 2005): "Now what they [Google, Yahoo, MSN]
would like to do is use my pipes free, but I ain't going to let them do that because we have spent
this capital and we have to have a return on it. So there's going to have to be some mechanism
for these people who use these pipes to pay for the portion they're using."
50
Tim Wu, Network Neutrality, Broadband Discrimination, 2 J. ON TELECOMM. & HIGH TECH. L. 141, 167-71.
2003.
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Verizon’s Senior Vice President and Deputy General John Thorne, Washington Post (February 8,
2006): “[Google] is enjoying a free lunch that should, by any rational account, be the lunch of
the facilities providers.”
The Bell Companies have expressed an intention to levy surcharges on companies that
are not their own retail customers. These surcharges would be above and beyond the billions of
dollars that Google and other Web companies already spend for network access and
infrastructure to provide their content and applications to the Internet. Such surcharges would
constitute discriminatory leveraging of market power and control of underlying transmission
facilities, which would have been expressly prohibited under the FCC’s now-expired
nondiscrimination safeguards.51
Broadband providers are permitted to collect charges from the end user for providing
broadband transmission and Internet access service that allow the consumer to connect to the
Internet. These charges can vary with the amount of bandwidth speed or capacity. These
charges do not violate nondiscrimination principles because the end user can choose whether or
not to purchase that capacity, and the broadband provider is not leveraging its control over last-
mile facilities to dictate which content or applications receive special treatment.
Under the Internet’s longstanding charging arrangements, each party pays for its own
connection to the Internet, and then is free to utilize that connection in whatever ways are
desired. Google believes that consumers should be able to acquire higher speed or performance
capacity from the broadband providers, and then use this capability to reach any service they
wish on the Internet. In particular, consumers should be able to purchase tiered pricing
arrangements, based on the use of bandwidth, latency requirements, or other objective measures.
Such arrangements would constitute an appropriate, cost-based practice that compensates the
broadband provider for the additional capabilities provided.

51
Cannon, Legacy of Computer Inquiries, at 22.
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Internet-based companies spend billions of dollars annually on R&D to create and deploy
compelling content, applications, and services for American consumers, including news, data,
video, music, gaming, and ecommerce services. This massive amount of material typically is
deployed on millions of Web servers located around the country. In order for the content and
applications to be delivered into the Internet, so it then can be made available to consumers, Web
companies must arrange with network operators to: (1) carry the data traffic from company
facilities to their Web servers over local telecom lines (the “last mile”); (2) carry the data traffic
from the Web servers into the Internet over high-speed, high-capacity data lines (“special
access”); and (3) carry the data traffic over the numerous interconnected networks that make up
the Internet (the “Internet backbone”). To accomplish these important connectivity and transport
functions in a fast and effective manner, Internet companies collectively pay billions of dollars
per year to network operators, which fully compensates them for their network investment.52
A prohibition on certain forms of packet prioritization would preclude broadband
providers from charging content providers for terminating traffic to a particular end user.
Allowing broadband providers to leverage their “situational monopoly” over terminating traffic
(as discussed above in the CLEC and ILEC examples) would allow them to choose which
content providers receive preferential treatment over others, thereby distorting the marketplace.
Allowing terminating charges could also lead to the “balkanization” of the Internet, in which
each of the hundreds of local telephone and cable operators around the country – and around the
world – would assess its own set of fees for terminating traffic on its network.
52
Overall, the four Bell companies alone receive some $15 billion annually in special access revenues from hauling
data traffic for Internet content and applications companies, Internet service providers, and other corporate and
institutional users of the local network. The sums that Internet companies pay for connectivity and transport of data
to and from their servers, and over the Internet backbone networks, are in addition to the $20 billion a year in fees
that subscribers pay broadband providers for access to the Internet.
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V. MOST FORMS OF PACKET PRIORITIZATION ARE NOT JUSTIFIED BY

SOUND ECONOMIC, TECHNICAL, OR PUBLIC POLICY THINKING
A. Packet Prioritization Creates A Host of Serious Problems Without Adding

Real Benefits
Putting aside the question of blocking, impairing, or degrading Internet traffic, the sole
remaining issue is traffic prioritization. In Google’s view, there are two distinct methods of
prioritizing data packets using QoS or other measures: reasonable differentiation and
unreasonable discrimination.
Some forms of packet prioritization constitute reasonable business practices, because
they utilize objective criteria, and/or do not merely leverage unilateral control over last-mile
connectivity. These practices include differentiating based on the type of applications and/or the
quantity of bandwidth purchased by the consumer. Other forms amount to unreasonable
discrimination; these include differentiation based on the ownership or affiliation of the content
(who), or the source or destination of the content (the where). The difference between the two is
straightforward in concept, but determining which is actually occurring in the network is a far
different matter. Together with the public declarations of broadband executives, the lack of real-
time information about network activity feeds a lack of trust that the broadband provider will
employ packet prioritization over last-mile networks in a manner that still preserves an open
Internet environment and does not facilitate the introduction of anticompetitive practices.
There are important economic, technical, and public policy reasons why the FCC should
be concerned about allowing the broadband providers to prioritize various forms of Internet
traffic traversing their broadband networks. These concerns become more manifest when the
prioritization is in service of discriminatory aims.
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1. Unwanted Gatekeepers
Traffic prioritization allows the broadband provider to become an unwanted gatekeeper
in the middle of the Internet. Because of the market power they currently employ, broadband
providers have the technical ability and economic incentives to determine which packets of
Internet traffic get delivered to which consumers under what conditions. The end result is that
the Internet becomes shaped in ways that serve the interests of the broadband providers, and not
consumers or innovative Web entrepreneurs. As Craig Newmark of Craiglist puts it, “Imagine
if you tried to order a pizza and the phone company said AT&T's preferred pizza vendor is
Domino's. Press one to connect to Domino's now. If you would still like to order from your
neighborhood pizzeria, please hold for three minutes while Domino's guaranteed orders are
placed.”53
2. Reduced Incentives to Invest
QoS robs broadband providers of their incentives to build out greater broadband capacity.
QoS originally was conceived as a software-based technical response to limited capacity. Once
QoS becomes a profit center for the broadband provider, however, that provider no longer has an
incentive to remove the bottlenecks that generate QoS revenues. Instead, the provider has every
incentive to maintain capacity constraints in order to justify the QoS fees to customers.
If the broadband providers are able to prioritize packets flowing over their network to the
benefit of themselves and their chosen few, they will come to rely on QoS as a revenue-
generating crutch that deters them from building bigger, faster broadband pipes that actually
serve everyone. Indeed, QoS quickly can become an unspoken rationale to maintain artificial
53 Big Cable's Ridiculous Net Neutrality Smear Video, BoingBoing, Oct. 27, 2006. Available at:
http://www.boingboing.net/2006/10/27/big_cables_ridiculou.html.
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broadband scarcity, which also artificially extends the market gap between broadband haves and
have nots.
Of course, it is ironic that broadband providers seek the ability to deliver QoS-based
services as an incentive to deploy broadband networks, when in fact the opposite is true.
3. A Zero-Sum Game
In a network capacity-constrained environment, prioritization inevitably becomes a zero-
sum game. By definition, favoring one class of traffic disfavors other classes. An Internet
packet moved from the back of the line at a router to the front pushes back every other packet in
the queue. This practice may be perfectly acceptable if done to manage different traffic flows in
the network in an even-handed manner. However, intent becomes the key difference maker.
Some have labeled this practice “passive discrimination,” but the impact on other non-prioritized
services can be just as insidious as would be in a more “active” stance.
4. A Solution in Search of a Problem
Simply put, QoS appears to be unnecessary, the proverbial solution in search of a
problem. As expert researchers and engineers have determined after years of analysis, there is
no network problem allegedly solved by prioritization that cannot also be solved by additional
bandwidth.
As one example, the engineers at Internet2 conducted a detailed technical analysis of QoS
in broadband networks.54 Their conclusion is that QoS is a relatively poor proxy for additional
bandwidth:
In most bandwidth markets important to network-based research, it is cheaper to buy

more capacity and to provide everybody with excellent service than it is to mess with
QoS. In those few places where network upgrades are not practical, QoS deployment is
54
B. Teitelbaum, S. Shalunov, Why Premium IP Service Has Not Deployed (and Probably Never Will), Internet2
QoS Working Group Informational Document, May 3, 2002. Available at: http://qos.internet2.edu/wg/documents-
informational/20020503-premium-problems-non-architectural.html.
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usually even harder (due to the high cost of QoS-capable routers and clueful network
engineers).55
5. A Promise Without Substance
QoS may not even provide the supposed benefits that its supporters suggest. In order for
prioritization to have any material impact on a stream of Internet traffic, it must be activated all
the way through the Internet, from the content provider’s side of the Internet “cloud” through the
backbone networks and finally to the end user. Because any one network operator does not own
and control every potential route through the public Internet, numerous multi-party business
agreements and/or uniform standards would be required among all Internet service providers to
achieve end-to-end QoS. Such arrangements have eluded the parties to date. For example,
British Telecom apparently will not employ a QoS-based scheme in its network.56
6. The Two-Tiered Internet
Finally, broadband providers employing QoS have the incentives and the means to create
a closed private network that consigns Internet content and applications to a relatively slow,
bandwidth-starved portion of the broadband connection. Obviously it will be increasingly
difficult for providers of Internet-based applications such as video content to compete effectively
against the broadband providers in this kind of “two-tiered” broadband network. Creating a new
“fast lane” is effectively a method of discrimination, where today’s fast lane becomes
tomorrow’s minimum bar.57
55
Id.
56
David Meyer, BT Says No to Traffic Shaping, ZDNet UK, April 12, 2007. Available at:
http://news.zdnet.co.uk/communications/0,1000000085,39286687,00.htm?r=12.
57
In recent comments to the Japanese Ministry of Information and Communications, Google suggested that one way
to combat this “two-tiered” Internet is to adopt a “reserved user capacity” requirement, whereby consumers are
guaranteed the ability to use for Internet access a certain discrete portion of the total bandwidth capacity available
via the broadband connection. Public Comments of Google Concerning Japan’s MIC Framework for Competition
Rules to Address Progress in the Move to IP, filed May 10, 2006.
29
WC Docket No. 07-52
June 15, 2007
B. The Broadband Providers Get Enhanced Incentives To Invest In Facilities In

A Neutral, Non-Prioritized Environment
The broadband providers appear to have fallen for (or fashioned) a false link between
open on-ramps to the Internet and negative incentives to invest in broadband facilities.
Broadband providers are economic actors, following what they perceive to be the rational
business imperatives of the markets to the ultimate benefit of shareholders and customers. What
we need most is a change in mindset, a recognition that open markets can be hugely profitable
markets.
There are both academic and real-world illustrations of how an open Internet actually
creates enhanced incentives to invest in broadband facilities. For example, a recent econometric
study at the University of Florida found that the cable and telephone companies providing
broadband services are more likely to further develop their infrastructure, resulting in higher data
speeds, if they do not charge Web-based content companies for preferential treatment.58 As the
authors concluded, based on detailed economic analysis, “the incentive for the broadband service
provider to expand under net neutrality is unambiguously higher than under the no net neutrality
regime.”59 Obviously this outcome “goes against the assertion of the broadband service
providers that under net neutrality, they have limited incentive to expand.”60
The best current example of an incumbent provider that embraces open on-ramps to the
Internet is British Telecom (BT), which has embarked on a fundamental restructuring effort. Its
new wholesale arm, Openreach, was launched in early 2006 to provide local communications
infrastructure on an open and nondiscriminatory basis to third parties. Under the watchful eye of
58
Hsing Kenneth Cheng, Subhajyoti Bandyopadhyay, and Hong Guo, The Debate on Net Neutrality: A Policy
Perspective, University of Florida (2007). Available at:
http://www.hearusnow.org/fileadmin/sitecontent/TheDebateonNetNeutrality.pdf.
59
Id.
60
Id. at 30.
30
WC Docket No. 07-52
June 15, 2007
OFCOM, the British telecoms regulator, Openreach is designed to ensure that other
communications providers face the same operational conditions as do BT’s own retail arms. The
key point is that BT’s management has wholeheartedly accepted the wholesale/retail structural
split, and point to improved profits and better services that have resulted.61
Further, those same broadband providers arguing to policymakers that paid QoS from
Internet and technology companies will help finance broadband build-outs, have been telling a
very different story to Wall Street investors. There, the providers present well-documented
claims that fiber facilities actually pay for themselves, and that proprietary video services – not
prioritization-based fees – will be the primary revenue generator for fiber networks.
Verizon has made clear statements to the investor community that deploying fiber
actually pays for itself.62 Importantly, fiber deployment continues to reduce network costs and
generate significant, ongoing savings in operating expenses. Verizon and analysts anticipate that
FiOS will generate a positive operating income beginning in 2009, based on both growing
revenues from FiOS services and the declining operational costs, resulting from fiber network
efficiencies. Verizon’s total fiber investment is expected to be EBITDA-positive in 2008.63 The
costs to pass and connect homes have declined, and continue to decline, resulting in improved
61
Statement issued by the Director General of Telecommunications, Effective Competition Review: Mobile.
Released Sept. 26, 2001. Available at:
http://www.ofcom.org.uk/static/archive/Oftel/publications/mobile/mmr0901.pdf.
62
Verizon’s Ivan Seidenberg claims that as Verizon builds FiOS networks over a period of four to five years, the
company expects first to see positive cash flow, then to reach EBITDA positive, and finally to reach net income
positive. Arshad Mohammed, Ivan G. Seidenberg Interview Excerpts, Washington Post, Jan. 31, 2006. Available
at: http://www.washingtonpost.com/wp-dyn/content/article/2006/01/31/AR2006013101647_2.html.
63
Earnings before interest, taxes, depreciation, and amortization.
31
WC Docket No. 07-52
June 15, 2007
operational efficiency.64 Analysts have observed FiOS will serve as a positive revenue source,
where “it finally has reached the point where it will pay for itself in three-year payback.”65
Analysts also point to video service as the primary revenue generator in the broadband
world. “Video at this point has got to be the top transformational agent in the telecom industry
worldwide. Maybe voice revenue still is growing at 5% a year, but it really doesn't matter
whether voice revenue is growing or declining. Video is where the real money is: new money —
and lots of it."66 Ovum predicts that “video on demand” revenues will reach $12.7 billion
worldwide in 2011, making it one of the fastest-growing digital content services over the forecast
period. While "VoD is not a revenue generator at the moment," it is a "must have vision of the
future in terms of both cash flow and telcos' content business survival."67 AT&T’s latest Annual
Report suggests that the video market offers huge revenue potential.68
Thus, contrary to the received wisdom, prioritization creates disincentives to the
deployment of broadband infrastructure, and open platforms actually enhance incentives to
invest in such networks. As detailed in the next sections, the Commission should take concrete
steps to ensure the broadband providers face the proper market incentives.
64
Verizon Provides New Financial Data and Operational Details on its Fiber Network as Deployment Gains
Momentum; Company Sees Positive Economic Returns; Customer Demand Proves Strong for FiOS Internet and TV
Services, and Network Provides Platform for Innovation, PR Newswire, Sept. 27, 2006.
65
Sam Greenholtz and Mark Lutkowitz, Verizon’s Clever Corrdiro Play, IT Business Edge, March, 21, 2006.
Available at: http://www.itbusinessedge.com/item/?ci=13778. Fiber costs continue to decline, and now are at $845
per household as of September 2006, which is already lower than the company’s year end-target.
66
Dan O’Shea, Watch and Learn, Telephony Online, May 7, 2007. Available at:
http://telephonyonline.com/mag/telecom_watch_learn/.
67
Video on Demand will be a 'Must Have' for Telcos, May 16, 2007. Available at:
http://www.ovum.com/go/content/c,377,70485.
68
AT&T 2007 Annual Report. Available at:
http://www.att.com/Investor/ATT_Annual/downloads/ATT_2006_Annual_Report.pdf.
32
WC Docket No. 07-52
June 15, 2007
VI. THE COMMISSION SHOULD PROMPTLY INITIATE A RULEMAKING

PROCEEDING TO CONSIDER AND ADOPT CONCRETE PROPOSALS
DESIGNED TO PRESERVE A NETWORK NEUTRAL ENVIRONMENT
The Commission asks whether regulations would further its mandate to “encourage the
deployment on a reasonable and timely basis of advanced telecommunications capability to all
Americans.”69 Google would put the question somewhat differently, namely: can a series of pro-
competitive, pro-innovation broadband policies bring us a network neutral environment, where
traffic prioritization by necessity does not take discriminatory, anticompetitive paths?
Google strongly supports the adoption of a national broadband strategy. Such a strategy
should include some incremental fixes (more and better broadband data, and user transparency
mandates), structural changes (varying forms of network-based competition), and a ban on most
forms of packet discrimination. Importantly, these policies represent modular, multimodal
mechanisms for disciplining the market behavior of the incumbent broadband providers. Should
they prove successful, packet nondiscrimination safeguards eventually should become
superfluous. Here, competition is not merely an economic good in its own right, but is valued
for the numerous consumer welfare benefits that it bestows.
In the broadband space, we must test the thesis that competitive markets invariably lead
to open markets. Thus, following the completion of the comment cycle in this NOI proceeding,
the Commission should move immediately to institute a formal rulemaking proceeding to
consider these and other forward-looking proposals.
69
NOI at para. 11; see 47 U.S.C. §157 (2006).
33
WC Docket No. 07-52
June 15, 2007
A. The Broadband Companies Should Provide Detailed Information About

Their Service Offerings, Network Practices, and User Pricing
Google welcomes the Commission’s long-overdue inquiry into the broadband providers’
“packet management practices” and pricing policies.70 In order for policymakers to be able to
properly assess the actual state of the broadband market, they must have the necessary granular
information, including whether, where, and how consumers are being served.
We are pleased that the Commission requests that broadband providers supply “specific
examples” of beneficial or harmful behavior, complete with “supporting documentation.”71
Much of that information obviously is in the exclusive possession of the broadband providers.
Given the difficulty faced by third parties in gathering and presenting information about
network-based practices of broadband companies, Google looks forward to a detailed explication
of the broadband providers’ packet management and pricing techniques.
By their very nature, discriminatory practices occurring within the broadband carriers’
physical and logical networks often can be extremely difficult to detect and report to government
authorities. Outside of more overt actions, like blocking all access to a particular website or
application, other forms of traffic degradation may have significant negative impact, even as
victims are largely unaware of the resulting damage, or blame third parties instead. Thus, it may
well be that discriminatory behavior is taking place right now, but outside the scrutiny of the
marketplace and would-be regulators.
In order to facilitate the collection and dissemination of relevant and timely broadband
data, Google urges the Commission to require all broadband providers to begin submitting semi-
annual reports that provide accurate, timely, and comprehensive data about broadband
70
NOI at paras. 8-9.
71
Id. at paras. 1, 8.
34
WC Docket No. 07-52
June 15, 2007
deployment and uptake. As part of this requirement, the Commission should also investigate the
promising user-mapping database suggested recently by ITIF.72
Further, consumers themselves must have access to relevant information in order to make
intelligent decisions about the limited choices available to them. As a result, the broadband
companies should be required to provide clear and conspicuous terms of service to all users,
including their own retail customers.73 This transparency requirement should cover all pertinent
terms of their service offerings, including rates, terms, and conditions of service. Providers also
should supply claims about features, including the speed, bandwidth, and availability of service,
in clear and conspicuous language. In particular, the broadband provider should state
unequivocally whether and how its network affects any particular applications or content,
including promoting, enhancing, or prioritizing network traffic. In addition, should a broadband
provider fail to comply with any aspects of their posted statements, they should be held liable
(perhaps to the Federal Trade Commission) for committing fraudulent commercial practices.
B. The Commission Should Consider Various Structural Fixes
While the Commission’s primary focus should be on developing robust broadband
competition, an inordinate emphasis on intermodal competition alone is misplaced. As discussed
above, the prospects for additional market entry remain speculative and uncertain. Instead, the
Commission should adopt a more broad-based, fulsome “multimodal” approach, which seeks to
promote competitive forces at different layers of the network.
72
Comments of ITIF, Broadband Data NPRM, filed on May 25, 2007, at 5-9.
73
One possible way to bring this about is to reinstate the FCC’s original fourth policy principle that required the
broadband providers to offer clear and conspicuous terms. See Remarks of Chairman Michael K. Powell, Federal
Communications Commission, Silicon Flatirons Symposium, “The Digital Broadband Migration: Toward A
Regulatory Regime for the Internet Age,” University Of Colorado School Of Law, Feb 8, 2004.
35
WC Docket No. 07-52
June 15, 2007
The Commission has various tools at its disposal to accomplish this objective. At
minimum, the Commission should open rulemaking proceedings to consider adopting some or
all of the following options:
• Interconnection – all broadband providers should possess the right to interconnect with
each other on a reasonable and nondiscriminatory basis;
• Standalone broadband access capability – incumbent broadband providers should offer

customers standalone or “naked” broadband Internet access, separated from any voice or
video applications;
• Open access – incumbent broadband providers should sell a commercial “bitstream”

access service to third parties, including ISPs, at commercial (but reasonably
nondiscriminatory) rates;
• Municipal networks – municipalities should be allowed to determine whether or not to

provide broadband Internet access service to their citizens;
• Spectrum-based platforms – new players should be encouraged to enter the market via
wireless platforms, using licensed spectrum (such as in the upcoming 700 MHz auction)
and unlicensed platforms (such as in the TV “white spaces” proceeding); and
• Targeted support – the federal universal service fund (FUSF) should be reformed, and
include a separate broadband support mechanism.
C. The Skype Petition Should Play A Separate But Complementary Role in the
Network Neutrality Debate
In February 2007, Skype Communications submitted a petition at the FCC seeking
confirmation that a consumer possesses the right to (1) use Internet communications software
and (2) attach devices to wireless networks.74 Skype, with evidentiary backing from a separate
white paper prepared by Professor Timothy Wu,75 provided substantial empirical evidence that
players in the U.S. wireless market actively limited consumer choice by “blocking” access to
third party applications and “locking” handsets to carrier networks.
74
Skype Petition at 1.
75
Wu Wireless Net Neutrality at 5-14.
36
WC Docket No. 07-52
June 15, 2007
Google was a signatory to formal comments submitted by the VON Coalition.76 In
support of technologically neutral and consistent regulatory policies, VON asked the FCC to
affirm that the four principles from the Commission’s Policy Statement – including in particular
the right to attach non-harmful devices and the right to run applications of one’s choice – apply
to wireless networks.77 VON urged the FCC to carefully monitor the wireless market, and be
prepared to take appropriate regulatory action should market failure be found to exist.
While the concept of “wireless network neutrality” is something of a misnomer when
applied to the Skype petition, Google sees that filing as playing a highly relevant role in federal
broadband policy. By focusing on the modular interfaces between the handset and software
applications, and between the handset and the underlying network, Skype’s petition presents an
intriguing way for the Commission to deal with market discrimination issues, without subjecting
the wireless carriers’ business plans to undue regulatory scrutiny. In other words, a structural fix
at the interface level can help resolve concerns about the carriers’ market behavior. Google
believes the Commission should include the modular approach suggested by Skype as part of a
larger package of structural solutions in a national broadband strategy.
VII. IN THE ABSENCE OF (OR PERHAPS IN SPITE OF) ROBUST COMPETITION,

THE COMMISSION SHOULD PROPOSE ADOPTING A PACKET
NONDISCRIMINATION SAFEGUARD
The Public Notice next asks whether the FCC’s Policy Statement should be amended, to
include a so-called “fifth principle” of nondiscrimination. The Commission also seeks views on
possible enforcement options.78
76
Comments of VON Coalition, RM 11361, filed on April 30, 2007.
77
Id. at 7.
78
NOI at para. 10.
37
WC Docket No. 07-52
June 15, 2007
A. The Commission Should Adopt a Tailored Packet Nondiscrimination

Safeguard
The concept of packet nondiscrimination is straightforward: broadband providers should
not be able to discriminate over their last-mile facilities, based on the source or ownership of
lawful Internet applications or content. As we have demonstrated, the underlying rationale for a
packet nondiscrimination requirement is to promote consumer choice in a highly concentrated
broadband Internet access market. Obviously this fundamental concept, like many others, can be
expressed by parties in different ways, using different terminology. This has led some to claim
that the concept of net neutrality is vague, and even indefinable. Google believes this claim is
disingenuous.
In point of fact, the FCC’s own Policy Statement principles are less than clear. As the
Congressional Research Service observes:
These principles are quite general and susceptible to alternative interpretations.

They would prohibit a broadband network provider from entirely blocking a
particular application, such as a competitor’s VoIP service. They do not explicitly
prohibit a broadband network provider from prioritizing packets or reserving
significant portions of bandwidth for its own applications or for the applications
of a preferred independent provider, even if such behavior harmed the quality of
service of one or more independent applications providers or effectively
precluded independent applications providers from the market.79
Google seeks a tailored, minimally-intrusive safeguard to promote a network neutral
environment. Perhaps the best one-sentence definition was contained in the Snowe-Dorgan
amendment that was offered in the Senate Commerce Committee markup on June 28, 2006.
That amendment reads that “end users are entitled to services from each broadband Internet
79
Access to Broadband Networks, CRS Report for Congress, RL33496, Updated Aug. 31, 2006, at 20.
38
WC Docket No. 07-52
June 15, 2007
access provider that shall not discriminate in their carriage and treatment of Internet traffic based
on the source, destination or ownership of such traffic."80
AT&T also has volunteered its own definition, which closely mirrors the Snowe-Dorgan
formulation.81 AT&T has committed to the FCC that for twenty-four months it will “maintain a
neutral network and neutral routing in its wireline broadband Internet access service.” This
commitment will be satisfied by AT&T’s agreement:
not to provide or to sell to Internet content, application, or service providers,

including those affiliated with AT&T/BellSouth, any service that privileges,
degrades or prioritizes any packet transmitted over AT&T/BellSouth's wireline
broadband Internet access service based on its source, ownership or destination.82
In essence, AT&T agreed not to discriminate, by not providing packet prioritization
services to any entity, including itself.
Beyond this straightforward language, a few additional points must be made.
First, the ban on blocking, impairing, or degrading must be codified and made
enforceable. If the broadband providers insist they will never engage in such activities, they will
not be harmed by compliance requirements with actual remedies.
Second, as explained above, prioritization can be reasonably divided into two different
categories: differentiation (acceptable) and discrimination (unacceptable). The Commission
should clarify those differentiation activities that would be allowed, as well as those few
discriminatory practices that would not.
Third, Google has significant concerns that not including a ban based on “type” of traffic
could lead to anticompetitive acts. The broadband providers may have too much leeway to
create and enforce type-based classifications whose sole purpose is to hinder competitors. For
80
Internet Freedom Preservation Act, S.2197, June 28, 2006 (“Snowe-Dorgan Amendment”).
81
Letter from Robert Quinn, AT&T to Marlene H. Dortch, Secretary, FCC, filed on Dec. 28, 2006, at 8-9 (“AT&T
Letter”).
82
Id. at 8.
39
WC Docket No. 07-52
June 15, 2007
example, an ILEC could seek to treat all “over-the-top” VoIP applications in a manner that puts
them at a disadvantage vis-à-vis the ILEC’s own “managed” VoIP service. Similarly, a cable
company could adopt limitations on “streaming video” or “peer-to-peer” traffic that in essence
penalizes competitors seeking to provide Internet-based video offerings. Ideally such “flexibility
to discriminate” should not be countenanced. However, should the Commission ultimately
sanction type-based differentiation, the general principle should be that the same set of rules
(whatever they are) should apply to all packets within that category.
B. The Commission Should Adopt An Effective Enforcement Regime
Google prefers protective rules of general applicability, buttressed by effective
enforcement measures, to create a framework within which to consider the many competitive
issues that arise in the market for broadband Internet access service. Ideally there should be two
complementary enforcement regimes to govern the activities of broadband providers: (1)
regulatory safeguards and enforcement mechanisms, overseen by the FCC; and (2) antitrust
standards and enforcement mechanisms, policed by the Federal Trade Commission (FTC) and/or
the Department of Justice (DoJ). Regulatory safeguards would curtail certain market practices
by the broadband providers, while antitrust standards would govern the exercise of pervasive
market power by the broadband carriers. The two roles together should effectively protect
consumers and competition from harmful practices.
The FCC employs a notice-and comment rulemaking process, pursuant to the dictates of
the Administrative Procedures Act (APA). Over the years this APA process has been an
extremely useful tool that allows interested parties to participate actively, either individually or
through associations or coalitions, in an open, public process. In particular, the APA rulemaking
40
WC Docket No. 07-52
June 15, 2007
process tends to create clear criteria to govern future commercial activity. Overall, the
rulemaking process is an efficient and transparent way for a governmental agency to provide
direction to industry.
An adjudication process without specific guidelines could be problematic as the exclusive
means for dealing with alleged marketplace abuses. First, the adjudicatory process typically is
limited to the two parties involved, and occurs without public knowledge or participation, which
precludes the introduction and use of additional viewpoints or evidence. Second, the resulting
record reflects one or a few particular alleged acts, which yields a decision of relatively narrow
scope and future applicability. Third, some agencies do not publish written complaint decisions
for industry to review and incorporate into future market behavior. Fourth, some complaints
cannot be appealed to federal court, which limits the ability to correct faulty reasoning or use of
evidence. Fifth, and perhaps most important, the adjudicatory process tends to provide little
forward guidance to entities unsure about the demarcation between acceptable and unacceptable
business practices.
An adjudicatory process can be particularly problematic for potential complainants from
the high-technology industry. This market typically comprises a large number of small
businesses and entrepreneurs working in a fast-paced, ever-changing environment. Such
companies usually do not employ regulatory counsel, or consistently review notices in the
Federal Register. In a purely adjudicatory environment, these entities would not be able to rely
on associations or coalitions to represent their interests, but instead would need to police market
behavior and consider the pros and cons of filing complaints on their own. This process is made
more difficult by the fact that by their nature, network-based harms can be difficult to detect, and
harder to prove. Complaints also can be quite expensive to pursue, particularly if the alleged
41
WC Docket No. 07-52
June 15, 2007
violator takes full advantage of motions and discovery procedures. The case-by-case approach
also can create considerable marketplace uncertainty, as individual industry participants await
guidance from germane cases. Further, the adjudicatory process inherently is not well suited to
protect the economic interests of future innovators. How can an inventor assert his or her rights
in any situation, if a violation of those rights took away the market opportunity in the first place?
This uncertainty over whether one’s inventions will be protected after-the-fact in an adjudicatory
setting could discourage innovation, especially innovation disruptive to powerful, well-financed
companies.
With regard to FCC enforcement processes, the Commission should ensure that
competitors and end users have a reasonable opportunity to present their case. In any complaint
brought against a broadband provider, once a prima facie case has been presented, the burden of
proof should shift to the provider to justify its actions or policies as consistent with the FCC’s
rules. In addition, there should be a rebuttable presumption that any use of a broadband
connection to the Internet is legitimate, and not harmful. The complaint process itself should be
expedited, with opportunity for appeal to the full Commission, and then to federal appellate
court.
Finally, the range of remedies for a breach of network neutrality requirements should
mirror the existing remedies available under the Communications Act (such as financial
penalties, damages, and cease-and-desist orders), and the antitrust laws (such as various civil
penalties, equitable relief, and structural remedies). The FCC should assert, and not shrink away
from, its existing authority to adopt and enforce regulatory safeguards as part of its general
notice-and-comment rulemaking authority.
42
WC Docket No. 07-52
June 15, 2007
VIII. CONCLUSION
For the foregoing reasons, the Commission should adopt a national broadband policy that
seeks to further network neutrality as a market environment. As part of that policy, the
Commission should promptly initiate a rulemaking proceeding to consider various incremental
fixes, structural changes, a ban on most forms of packet discrimination, and an effective
enforcement regime.
Respectfully submitted,
Google Inc.
___________________________________
Richard S. Whitt, Esq.
Washington Telecom and Media Counsel
1001 Pennsylvania Avenue, NW

Suite 600 South
Washington, D.C. 20004
202.742.6536
June 15, 2007
43

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FEDERAL COMMUNICATIONS COMMISSION

COMMENTS OF GOOGLE INC.

Richard S. Whitt, Esq.

1001 Pennsylvania Avenue, NW

June 15, 2007

Unfortunately incumbents operating in today’s concentrated broadband market have the

I. BACKGROUND AND OVERVIEW ...........................................................................1

V. MOST FORMS OF PACKET PRIORITIZATION ARE NOT JUSTIFIED BY

COMMENTS OF GOOGLE INC.

launch a formal rulemaking proceeding to consider and adopt concrete, market-oriented

I. BACKGROUND AND OVERVIEW

Google is a leading provider of Web-enabled software applications, content, and services,

and is based in Mountain View, California. Our self-defined mission statement is

Like other Internet-based companies, Google relies on the communications infrastructure

broadband access by Google’s U.S. customers.

on most forms of packet discrimination, and an effective enforcement regime.

II. THE COMMISSION’S CHIEF OBJECTIVE SHOULD BE TO CRAFT A

A. “Network Neutrality” Constitutes An Optimal Market Environment

some of the fog.

The Internet’s open, neutral architecture has provided an enormous

bureaucrats, gatekeepers, or incumbents’ central offices.

neutral, open network – should be nourished and promoted.

Moreover, as will be seen, neutrality actually is an indispensable component to

accelerating broadband deployment. Broadband providers actually can make considerable

Kingdom and Japan, tend to provide more bandwidth at lower prices.

Internet environment as the preferred outcome.

B. What’s Past At The FCC Is Prologue For The Internet

explicit network neutrality mandate. Instead, we had an open communications platform by

discriminatory practices by the underlying telecommunications carriers. The resulting end-to-

“innovation without permission.”9

safeguards – that enabled it to flourish beyond all expectations.

Internet community responded with a single request: restore network neutrality.

of Internet platforms without artificial barriers.

C. Crafting A Tailored Approach To Regulation

enforceable prohibition on “packet discrimination” as the specific remedy necessary to counter a

broadband competition that has proven so unshakably elusive.

III. BROADBAND PROVIDERS HAVE THE MARKET INCENTIVES AND THE

A. The Consumer Broadband Market Is Highly Concentrated, With Extensive

1. A Highly Concentrated Market

compete in terms of speed, price, availability, or technological maturity.

Further complicating this absence of real competition is a disappointing lack of

current broadband deployment data collection and reporting methodology inherently

enough bar for many common Internet services.20

quite “highly concentrated.”24

and Satellite Internet – provide no real competitive option.28

competitive alternative because, among other drawbacks:

counting individual broadband technology platforms, but rather independent platforms.

dynamics, such competition, while beneficial to consumers, appropriately should be seen as

relatively shallow in nature. In contrast, a deeper form of competition would occur if

In addition to excessive market concentration, considerable and insurmountable barriers

should be seen as one featuring highly unnatural competition.

multi-year contracts, bolstered by substantial early termination penalties. The prevalence of

disincentives for consumers to move to another service provider.

another service offering in a consumer’s marketplace. Broadband increasingly is becoming a

uniformly will view broadband as essential to their daily lives.

Together, these salient factors – excessive market concentration, no viable competitors,

be sufficient to rein in the potential for discriminatory practices.

B. Any Future Competition May Not Be Sufficient to Discourage Certain

of several other broadband competitors may not be sufficient to constrain anticompetitive or

discriminatory practices in a vertically-integrated market.

competitors in the complementary market of Internet services. 37 A single monopolist may

of multiple competitors often is insufficient to discourage exclusion, discrimination, and other

1. Vertically-Integrated Broadband Providers