Google Gets in Bed with Verizon
Tuesday's Wall Street Journal features an Op-ed by the CEO of Google, Eric Schmidt, and the CEO of Verizon, Ivan Seidenberg, about the importance of high-speed Internet access.
It is mostly boring; until it gets to the punchline and tells us that government should have as little role as possible in delivering broadband to America. Just like government should stay out of banking regulation, I take it?
The piece starts well, talking about how broadband is good for America. It is nice to see prominent business leaders elevating that message in the Journal. The second point is dumb and disingenuous for a number of reasons, some of which illuminate the Orwellian position of big corporations in Washington.
Pretty much everyone agrees with these two guys that broadband Internet access is an important driver for economic growth and social opportunity. And we all see that digital divides are still a problem in America: rural and urban, rich and poor. We are falling behind the industrialized world in broadband infrastructure, as they build super-fast, nationwide networks, and we struggle to deliver the same quality even to our biggest cities. And when we do have good super-fast broadband, it is super-expensive -- 2 to 10 times more costly than overseas.
That's why Congress ordered the Federal Communications Commission to produce a National Broadband Plan (just published this month) to chart a course towards world-class, affordable internet for all Americans: team Obama's plan to catch up with the globe's leading broadband nations, and kickstart our economic engines into overdrive. The CEO Op-ed applauds the FCC's Plan. They agree with the FCC that broadband should be everywhere and enhancing all aspects of our lives. And, they say it should be built to the world leading standards that (not incidentally) both of these companies have built into their business plans.
For the first 80%, this is the vanilla ice cream of broadband Op-eds. Then come these two punchline paragraphs:
"The Internet has thrived in an environment of minimal regulation. While our two companies don't agree on every issue, we do agree generally as a matter of policy that the framework of minimal government involvement should continue.
The FCC underscores the importance of creating the right climate for private investment and market-driven innovation to advance broadband. That's the right approach and why we are encouraged to see the FCC's plan."
Let me translate their rhetoric: The FCC's plan is great -- as long as they don't try to implement it. Or rather, as long as they don't do anything that doesn't fit within Verizon and Google's idea of "minimal government involvement." It's no accident that the CEOs don't try to explain what they mean. If they did, they would step directly into a big, steaming pile of hypocrisy.
Most agree that the market is the preferred mechanism for achieving the goals of the nation in digital technology and infrastructure. If the market is working, government plays cheerleader.
But, hello, the whole reason the Congress mandated a National Broadband Plan from the FCC is because the market isn't working; we're slipping perilously behind the rest of the world.
The objectives set out in the plan, all of which are applauded by these companies -- world-class fiber networks, the expansion of broadband for universal availability and adoption, and the extension of broadband into every aspect of our lives -- aren't being delivered without government action.
So to recap the CEOs' position: We need a Plan and government action, so long as it doesn't constitute government involvement in their business.
Let's unpack this a bit more. Both CEOs love the idea of getting world-class, super-fast fiber-optic broadband networks to Americans. They mention that Google has only a pilot project to do this. Verizon is top of the heap in the telecom world -- deploying fiber to metro areas in the Northeast. But meanwhile, Verizon has wound down investment in fiber after pushing it out in the most lucrative neighborhoods.
Verizon inconveniently skipped over low-income Baltimore altogether. A couple of years ago, they decided all of Vermont, New Hampshire, and Maine were not favorable markets for them. They sold their less profitable networks in these states to FairPoint -- a company now in bankruptcy delivering 3rd world quality broadband. Right now, Verizon is looking to dump its networks in 14 other states. So, what about those 17 states? What about everyone else in the country who doesn't live between (suburban) Boston and Washington D.C.? Do they not deserve to have a world-class infrastructure? How will we close that digital divide? Well, the market isn't doing it, and everywhere else in the world they have done it, it has taken proactive government involvement.
"Minimal Government Regulation" makes for a good CEO bumper sticker. But it is a complete disconnect as they praise heaped on the National Broadband Plan, with its hundreds of recommendations for productive intervention in various sectors of the broadband market. Government is bad, except when it's helping me
Like most big companies, Google and Verizon hate regulation and government involvement in business when it limits bad behavior and anti-competitive activity. But they absolutely love it when it helps them. In fact, both of these companies maintain small armies of lobbyists to ply the government for all the regulations that they want, even as they fight off all the regulations they don't want.
Classic corporate hypocrisy: hate government except when you love it. Anyone paying attention has seen these erstwhile government teetotalers swigging from the flask all the time. Also, let's remember that these companies are in aggressive opposition to one another on some big policy issues that matter enormously to American consumers.
Here's a short list of stuff Google wants from their "minimal government involvement."
- Google would like government to mandate the installation of broadband conduit in every public construction project.
- Google would like stronger regulations in the market for commercial broadband services sold to big companies and cell phone towers by...you guessed it...Verizon.
- Google would like government to authorize and offer municipal broadband networks.
- Google strongly supports Network Neutrality rules.
- Google argued for open market conditions on spectrum licenses and got in a bidding war with Verizon to get them.
- Google has also argued for rules that set aside spectrum for open use by innovators.
- Google wants new rules for cable set-top boxes.
- Google supports and opposes different aspects of copyright and patent law to support and protect their business.
- Google, like most technology companies, argues for the expansion of a visa program for tech-savvy internationals. And the list goes on.
And Verizon's wish list for "minimal government involvement" is just as long.
- Verizon needed to take advantage of a shady tax loophole in order to sell off all of their rural networks to smaller companies.
- Verizon wants major changes to government programs that subsidize telephone networks and set prices for the exchange of telephone calls between companies.
- Verizon wants to set new, lower rates for leasing telephone poles and public land for their wires.
- Verizon wants protection from interference on their spectrum licenses.
- Verizon wants several different rules allowing them to get access to cable programming for their cable TV systems.
- Verizon wants different rules about how local governments oversee their cable networks.
- Verizon wants various and sundry regulations to apply to Internet companies like...Google.
Let me be clear: many of the things these companies argue for are good ideas (some of them are really bad ideas). And they are certainly not in kumbaya agreement. The point is that government is inherently and deeply involved in these markets in all kinds of ways; many of them actively desired by the very same companies that demonize government involvement. It's silly, and we ought to end the charade.
And finally, many in Washington may read this as a secret coded message that Google is abandoning its commitment to Network Neutrality and joining Verizon in opposition to rules guaranteeing an open Internet. I don't believe that is true -- and I hope never to see such rank hypocrisy.
But in the meantime, we should be glad Messers Schmidt and Seidenberg like broadband. And we should be honest that they actually like government too. Without government involvement, the goals they laud will not be reached, and more Americans will be left on the wrong side of the digital divide. And as much as they might like to deny it, both of these companies want and need government to help them succeed.
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