Google, Verizon Said to Strike Deal on Web Traffic Rules

Verizon Communications Inc. and Google Inc. have struck their own accord on handling Internet traffic, as both participate in talks by U.S. officials on Web policy, two people briefed by the companies said.

The compromise as described would restrict Verizon from selectively slowing Internet content that travels over its wires, but wouldn’t apply such limits to Internet use on mobile phones, according to the people, who spoke yesterday and asked not to be identified before an announcement.

Verizon and Google have been adversaries over the issue, known as net neutrality. Verizon was among cable and phone companies saying they need leeway on the delivery of Web content to protect performance of their networks. Google led content providers and advocacy groups that say restrictions are required so communications companies don’t favor their own online offerings or those of partners that pay for higher speeds.

The Federal Communications Commission is negotiating behind closed doors with Verizon, Google, AT&T Inc. and other companies on rules proposed by Chairman Julius Genachowski to regulate how phone and cable companies handle Web traffic such as Google’s YouTube videos. Regulations or legislation that result would bind Google and Verizon as well.

Genachowski, declining to comment on the prospect of a Google-Verizon deal, said today the FCC would continue its negotiations toward net-neutrality rules.

Preserving Openness

“Any outcome, any deal that doesn’t preserve the freedom and openness of the Internet for consumers and entrepreneurs will be unacceptable,” Genachowski told reporters in Washington.

“We’ve been working with Google for 10 months to reach an agreement on broadband policy,” said David Fish, a Verizon spokesman. “We are currently engaged in and committed to the negotiation process led by the FCC.”

Google has “nothing to announce at this point,” said Mistique Cano, a Washington-based spokeswoman, in an e-mail.

The two companies have become business allies through Verizon Wireless, the largest U.S. wireless carrier, which is co-owned by Verizon. Mobile phones that use software from Google, owner of the largest Internet search engine, helped Verizon’s profit this year.

Earnings for New York-based Verizon beat estimates last month after its wireless unit introduced phones running on Google’s Android software, including Droids from Motorola Inc. and HTC Corp., to compete against AT&T’s iPhone from Apple Inc.

‘Minimal Interference’

Verizon and Mountain View, California-based Google proposed in a January filing at the FCC areas of compromise for regulating Internet service providers. The companies said preserving an “open Internet” calls for “minimal interference from the government” for applications, content and services, such as Google and Twitter.

“What is good for Google and Verizon is not necessarily good for innovation and competition on the Internet,” said Andrew Jay Schwartzman, senior vice president of the Washington- based Media Access Project, a public-interest law firm, in an e- mailed statement.

The FCC must “stay the course” and enact rules “that benefit everyone, not just the largest companies,” Schwartzman said.

“AT&T is not a party to the purported agreement between Google and Verizon,” Jim Cicconi, AT&T senior executive vice president, said in an e-mailed statement. “We remain committed to trying to reach a consensus on this issue through the FCC process.”

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

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