Google's `Huge Hoof' Angers D.C. Allies After Web Accord

Google Inc. Chief Executive Officer Eric Schmidt once called U.S. Representative Anna Eshoo “almost the perfect example of a congressperson.” She “understands what we need,” he said.

More than two years after that comment to workers at Google headquarters in Eshoo’s district, the California Democrat isn’t returning the compliment. She opposes Google’s agreement with Verizon Communications Inc. on proposed rules for Internet traffic, saying it could let companies play favorites on Web content and limit consumer choice. Regulators today said they want to know more about areas touched by the proposal.

“The whole issue is about maintaining the open Internet that allowed Google to achieve and thrive,” Eshoo said in an interview. “You can’t just grow up and have a huge hoof and then be able to squash anyone that’s coming up.”

With old friends in Washington such as Eshoo in opposition, Google will have to decide how aggressively to lobby alongside Verizon before Congress and the Federal Communications Commission for adoption of the accord the companies proposed on Aug. 9, said former FCC Chairman Michael Powell.

“It’s been a little stunning to Google that they’ve been turned on by their own with such force,” Powell, chairman of MK Powell Group LLC, a Washington-based consulting firm, and a senior adviser with Providence Equity Partners Inc., said in an interview. The uproar is testing whether Google in particular will have the “courage of convictions” to wage a fight on the issue, he said.

Private Talks

Google spokeswoman Mistique Cano and Verizon spokesman David Fish, both based in Washington, declined to comment on the companies’ lobbying strategy.

Google, operator of the most-used Internet search engine, and Verizon, the second-largest U.S. phone company after AT&T Inc., proposed that providers of wired Internet service, such as cable companies and Verizon’s FiOS service, be barred from unreasonably slowing or speeding Web content. The companies came up with the idea in private talks.

Advocates of net neutrality, the open-Internet stance backed in the past by Google and by President Barack Obama, are focusing on two exemptions in the compromise: It wouldn’t apply to unspecified “additional services” developed in the future or to Internet service over wireless devices such as mobile phones.

Wireless content is the fastest-growing part of the Internet. Google and Verizon Wireless, which is co-owned by Verizon Communications and Vodafone Group Plc, have become partners through mobile phones running Google’s Android software.

FCC Chairman Julius Genachowski today said the agency will weigh how its rules should treat mobile-phone and special services.

‘Corporate Behemoths’

Advocacy groups say the Google-Verizon proposal is “nothing more than a private agreement between two corporate behemoths,” as the organization Public Knowledge said in a news release. “Don’t let Google be evil,” the group Free Press tells visitors to its website.

Under the proposal, Google’s YouTube could display jitter- free videos on wireless devices while users of Netflix Inc.’s online service couldn’t get a clear picture, Craig Aaron, managing director for Free Press, said in an e-mail.

It’s a myth that “Google has ‘sold out’ on net neutrality,” Richard Whitt, Google’s telecommunications and media counsel, said in a blog posting on Aug. 13 that described the accord as a good compromise to break a Washington stalemate.

“We want to protect the Internet but we also want to offer consumers more services,” such as remote monitoring of blood pressure, Verizon Executive Vice President Tom Tauke, a former Republican member of Congress, said in an Aug. 23 speech.

‘Potent Presence’

Google and Verizon will be formidable if they team up to push for their proposal, said John Dunbar, project director at Washington-based American University’s Investigative Reporting Workshop, which studies the political influence of media and broadband companies.

“These are two companies that have been at odds, joining forces,” Dunbar said in an interview. “They become a potent presence.”

Google, based in Mountain View, California, increased its lobbying spending by 50 percent in the first half of this year, to $2.7 million, according to the Center for Responsive Politics, a Washington-based research group. Google spent more than International Business Machines Corp. to become the third- leading Washington lobbying spender among computer and Internet companies, after Microsoft Corp. and Hewlett-Packard Co.

Verizon, based in New York, spent $9.2 million in the first six months, making it the biggest lobbyist among telephone utilities, outstripping AT&T’s $9 million, according to the center. Verizon has hired six new lobbying firms with employees tied to Democratic and Republican lawmakers, according to Senate records.

Closed-Door Talks

The FCC and Congress are in limbo on net neutrality. The regulatory agency broke off negotiations with companies on the issue after criticism of the closed-door talks and announcement of the separate accord between Google and Verizon.

A federal court in April ruled the FCC lacked power to censure Comcast Corp., the largest U.S. cable provider, for interfering with subscribers’ Web traffic.

Genachowski proposed reclaiming authority by declaring that rules written last century for telephone service apply to Internet-access providers, a move opposed by telephone and cable companies. Republican lawmakers and some Democrats also oppose the idea.

The FCC hasn’t set a vote on Genachowski’s proposal, and he has yet to comment on the Google-Verizon accord. Legislation to mandate a solution to the net-neutrality dispute hasn’t moved forward since being introduced last year, with Eshoo among the cosponsors.

“This is a big, complex issue with two very powerful, politically connected warring sides,” said Powell, who headed the FCC under former President George W. Bush.

Two-Thirds of Homes

Two-thirds of U.S. households have high-speed Internet connections, or broadband, at home, according to the FCC. Home broadband use has increased from about an hour each month in 1995 to almost 29 hours monthly, the agency estimated in a March report.

The industry is divided over the Googlem,sg to-Verizon compromise.

Ralph de la Vega, AT&T’s wireless chief, on Aug. 11 called it a “a reasonable framework” that shows carriers and Internet companies can agree on Web policies.

Wireless companies that form CTIA-the Wireless Association are “in general in favor” of the accord, Steve Largent, president of the Washington-based trade group, said in an interview. The agreement is “a positive start,” Largent said.

Cable companies don’t like the plan because it would impose requirements not faced by wireless competitors, Daniel Brenner, a Washington-based partner at Hogan Lovells, said in an interview. Cable companies believe “the rules should be roughly the same,” Brenner said.

The National Cable & Telecommunications Association, with members led by Comcast Corp. and Time Warner Cable Inc., wants Congress to set a “framework that can be applied more broadly across all industry players,” Brian Dietz, a spokesman for the Washington trade group, said in an e-mailed comment.

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

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