The proposal, discussed during a conference call featuring Google CEO Eric Schmidt and Verizon CEO Ivan Seidenberg, represents a substantial softening of Google’s position on controversial net neutrality proposals, say several tech policy observers.

Notably, while enshrining non-discrimination rules with regard to what is often referred to as “traditional Internet broadband service,” the proposal also allows broadband providers to offer what are known as “differentiated services,” such as Verizon’s FiOS service, which need not be neutral.  This is being interpreted in some quarters as a major shift on Google’s part.

The company took fire yesterday from Free Press, a pro-net neutrality group that some tech policy experts have speculated for years took money from Google to finance its advocacy efforts, which helped promote an approach that observers say could, if adopted and enforced, have benefited the corporation substantially.  In a statement, Free Press adviser Joel Kelsey remarked that “If codified, this arrangement will lead to toll booths on the information superhighway.”

But Google and Verizon assert that in fact, their proposal would facilitate further innovation, while supporters of the deal say it would not harm consumers’ ability to access information.

The deal does not preserve a regulation-free environment, and observers differ on the extent to which it can be said to enshrine a “light touch” regulatory approach.  “It indicates significant movement on Google’s part, which is positive” said one regulation-skeptical expert with whom Capitol Confidential spoke.  “However, it is not as regulation-light as a lot of the ISPs [internet service providers] would like.  It does still regulate where providers aren’t convinced that’s necessary or appropriate.”

Nonetheless, in the wake of Amazon— another historically high-profile supporter of net neutrality— having last month announced its support for a compromise position on Internet regulation, net neutrality opponents may take heart from this latest move on Google’s part, which may indicate a weakening of the coalition favoring aggressive regulation.

The company, a long-time backer of the controversial policy and member of the pro-net neutrality Open Internet Coalition, signaled in an op-ed by its Vice President for Global Public Policy, Paul Misener, openness to a compromise measure, which would allow what are known as “managed services” to be offered by Internet Service (ISPs) subject to certain conditions.

Specifically, Misener argues that “Internet content providers (and consumers) should be able to purchase ‘quality of service’ or ‘managed services’ from network operators on the same basis–equal availability and no harm to other content.”

Previously, net neutrality proponents had been unwilling to sanction the marketing of such services, irrespective of equal availability or non-prejudicial impact—a position still held by many on the “pro” side of the debate.

The shift was therefore dubbed a “major departure” by one expert tracking the net neutrality debate with whom Capitol Confidential spoke, and one that could have significant ramifications for the way the net neutrality battle plays out moving forward.

“If the pro-net neutrality side is willing to compromise, then that either indicates a recognition that their prior policy stance was untenable, or unjustified, or both,” he said in an interview.

However, another expert notes, “Amazon does not appear to be arguing in favor of no further regulation, just a little less regulation.  Given the amount of opposition that exists to net neutrality and regulation, generally,and the difficulty that has been involved in its pursuit, cautious optimism, as opposed to enthusiastic embrace, is likely to be the main response on the free-market side.  Compromise is preferable to the hardliner approach, to be sure, but this is primarily a big deal in terms of what it signifies—which should have groups like Free Press worried.”

Following a recent, unfavorable Appeals Court decision, observers say Genachowski has been eagerly pursuing a back-door, out-of-sight pathway to achieving a long-time, personal objective: Regulation of the Internet via the institution of so-called Net Neutrality rules.  Reclassifying Internet services as “telecommunications services” would enable him to do just that—though with increased public opposition to Net Neutrality having been voiced during an FCC public comment period that recently closed, and recent polling showing relatively weak support for the policy, it remains a risky option both from a public relations, and political standpoint.

For their part, the ISPs, who together with other members of a broad coalition including a prominent labor union, minority and civil rights groups, and several high-profile Democrats oppose the move, are determined to ensure that Genachowski’s preferred course of action does not go unnoticed, whether the FCC ultimately does “deem and pass,” or not.

The letter, signed by AT&T, Verizon, Time Warner Cable and the trade groups both focuses attention on what Genachowski is alleged to be planning, and seeks to debunk some of the talking points being used by supporters of the proposed reclassification.  Chief among those is the argument that the current arrangement, whereby Internet services are not classified as telecommunications services, is the specific result of a policy instituted under the Bush administration, as opposed to a standard that has existed for what one tech policy expert with whom Capitol Confidential spoke called “time immemorial.”  Per the letter, ”the commission has never classified any kind of Internet access service (wireline, cable, wireless, powerline, dial-up or otherwise) as a … telecommunications service, nor has it ever regulated the rates, terms and conditions of that service — Internet access service has always been treated as a Title I information service.”

It is an important point to make, said that same tech policy observer, because if reclassification is ultimately branded as a simple, administrative move designed to fix a bad Bush policy, the Democratic-majority FCC is more likely to approve the change.  If, however, reclassification is accurately viewed and depicted as constituting a “nuclear option,” invoked in smoke-filled backrooms, out of sight of the public, in order to placate Democratic-favorable companies and donors (including the Obama administration-cozy Google), it will be much harder—indeed potentially impossible— for the FCC to approve.

However, the difference between those two positions, and characterizations, could more than anything guarantee that the fight over reclassification could be knock-down, drag-out.  “Net neutrality supporters have a lot invested here,” says the tech policy observer with whom we spoke.  “They’re not prepared to go down without a fight, even if predicated on deeply questionable arguments.”

“There is no evidence of a market failure to justify the burdensome government regulations some are proposing,” the letter read. “Unfortunately, it appears that a few FCC commissioners lack an understanding of how regulations affect investment.”

Proponents of the FCC’s proposed broadband rules note that the issue of Net Neutrality is one in which conservatives are purportedly split. The Christian Coalition of America, a social conservative advocacy group, endorsed the Left’s overtures at re-regulating the Internet.  Likewise, Gun Owners of America have also voiced support for the controversial policy.

But last week’s letter–whose signatories include the likes of American Family Association President Tim Wildmon, Tom McClusky of the Family Research Council, prominent Catholic Deal Hudson and Mrs. Schlafly–suggest the Right, as a virtually unified whole, has turned a page in the debate over a dynamic Internet, and now is staunchly and almost uniformly opposed to what some critics call “a government takeover of the Internet.”

Among their principal stated grievances was the much-debated purported result of net neutrality: All content would be equal, and therefore ISPs would be forced to treat pornography the same as family-friendly content.

“Net Neutrality regulations also call into question how obscenity and other objectionable content on the Internet is treated,” warned the letter. “Let’s be clear, all content is not equal and does not deserve equal treatment, but net neutrality prohibits broadband service providers from prioritizing content consumers want and preventing peddlers of child pornography from having unblocked access to every home Internet connection.”

While the group’s letter was delivered only to Members of Congress, and not filed with the FCC, they hope it will spur public interest in the issue. The Commission announced in early April it had extended the deadline for public comment on the new regulations. Those interested in commenting may do so here (proceeding 09-191) this week.

Yesterday, a group of minority and women’s organizations reportedly called on the FCC to give serious consideration to the impact that net neutrality could have on what has been termed the “digital divide”—the widening of which, opponents argue, constitutes a potential unintended consequence of the policy, and one which has become a primary focal point of net neutrality critics’ concern.  In a letter and a proposal to the FCC, the groups—which include minority organizations that have previously spoken out regarding the net neutrality issue such as the Asian American Justice Center—have asked for a field hearing and workshop addressing the topic.

In addition, the groups are asking the FCC to look at whether neutrality rules should apply to search engines, as well as content and application providers.  As proposed, net neutrality rules would apply only to internet service providers (ISPs), though both outright opponents of net neutrality, and supporters of “open internet” policies who consider that the rules do not go far enough have raised questions as to where the proposed rules, as drafted, draw the line.  Recently, Google, a major proponent of net neutrality, attracted criticism from such quarters for alleged “rent-seeking” and “hypocrisy” regarding its opposition to so-called “search neutrality,” resulting in heightened scrutiny of the net neutrality concept, as currently defined.

Furthermore, the minority and women’s groups behind the new letter have suggested potential witnesses from whom they believe the FCC should hear, including Rainbow/PUSH founder Rev. Jesse Jackson, former FCC Chairman Michael Powell, and various representatives of the cable and telecommunications industries.  The groups consider that without hearing from such witnesses, the FCC may fail to appropriately understand the effect that each of six proposed net neutrality rules could have on minority investment, deployment, adoption, and participation in the broadband economy, as well as jobs.

Such concerns reflect those previously voiced by groups and individuals including the Communications Workers of America labor union, National Council of La Raza, the League of United Latin American Citizens, the National Urban League, and several high-profile African-American groups.  Proponents of net neutrality have previously dismissed the voicing of such concerns, arguing that groups raising questions about the impact net neutrality would have on the digital divide constitute “Astroturf.”

The criticism comes as the company continues to advocate for the Federal Communications Commission (FCC) to impose net neutrality rules that would target internet service providers (ISPs) while opposing so-called “search neutrality” that would impact both the company and its revenues in a manner that observers of the debate say could be particularly adverse to Google.

Last week, in a post on the official Google blog, the company’s senior vice president for product management, Jonathan Rosenberg, wrote that while Google’s “goal is to keep the Internet open,” it opposes the concept of “openness” where it would apply to its own search and ad products.

Ironically, the rationale behind Google’s opposition to “open internet” policy of this sort sounds remarkably similar to the rationale expressed by ISPs—which Google and other “open internet” advocates have targeted as the enemy in the current fight regarding FCC rules—for opposing net neutrality.  According to Rosenberg, opening up Google’s code “would actually hurt users” and result in “reduced quality” for those who rely on the service in question.

That is an end result that net neutrality opponents say could equally well be assured by instituting that specific policy, though they allege that a key difference is that net-only neutrality would help, not hurt, Google, from a financial perspective.  Broader openness, by contrast, would strike a major blow to Google—and open internet advocates and major voices in the tech sphere are now calling the company out for dressing up a public policy stance that appears to driven by a pure profit motive as philosophically principled and heartfelt.

In a recent post at Boing Boing, blogger Rob Beschizza comments on how odd it is “that of all the products Google would be forced to keep proprietary by its commitment to an open internet, it just happens to be the ones that make it all of its money.”

At top tech blog Tech Crunch, meanwhile, writer Erick Schonfeld posted an item titled “For Google, The Meaning Of Open Is When It’s Convenient For Them.”  In it, Schonfeld responds to Rosenberg’s assertion that openness in the realm of search and ad products would “hurt users” saying:

Maybe, but it is more likely it would hurt Google… really nobody should begrudge them the right to keep products they’ve spent a lot of time, energy, and money building to themselves. But don’t give us this song and dance about how everything should be open and how Google is the opennest company in the world…. Google should just be honest and say that they think everything should be open—except for search and advertising.

In addition, an open internet advocate who alleges his firm was hurt by Google’s practices has now also called out the company for trying to argue “that discriminatory market power is somehow dangerous in the hands of a cable or telecommunications company but harmless in the hands of an overwhelmingly dominant search engine” in a New York Times op-ed.

Writes Adam Raff, a co-founder of Internet technology firm Foundem, “Google’s treatment of Foundem stifled our growth and constrained the development of our innovative search technology.”  He asserts that the effect of the FCC enshrining limited openness, such as what Google wants, could be “a bleakly uniform world of Google Everything — Google Travel, Google Finance, Google Insurance, Google Real Estate, Google Telecoms and, of course, Google Books”—in short, a government-sanctioned, Google monopoly.

Observers say that is something that would undoubtedly be to Google’s significant financial advantage, but which would certainly irk anti-corporate, public interest and consumer advocate groups who together with the company have formed the core of the pro-net neutrality coalition.

“There is a growing rift” says one observer, who also noted that support for net neutrality from existing coalition members seems to be waning.  That individual points to top blogger Glenn Reynolds, listed as a “Charter Member” of the pro-net neutrality Save the Internet Coalition, having recently voiced skepticism regarding efforts to regulate the internet and suggests that the coalition may be weakening.

That could be bad news for Google, but good news for opponents of the FCC’s proposed net neutrality rules.  As it stands, the FCC continues to invite public comment on those rules, with a decision expected next year.

 
Internet Service Providers—the ones who have actually invested in the architecture and infrastructure that enables us all to access the internet—have long been opposed to net neutrality, as have conservatives and libertarians concerned about maintaining free markets and promoting innovation and quality service.  
 
But, with concerns that the FCC might now act to push net neutrality through, some voices less traditionally associated with opposition to the policy are speaking out regarding the proposed rulemaking, too.  In fact, a number of Democrats and groups typically aligned with the left—the online component of which has long treated net neutrality as a top three policy objective—seem to be feeling less than warm and fuzzy about increased government intervention with regard to the internet.

 Those groups include the Communications Workers of America labor union, which in a letter to Chairman Genachowski from Thursday, raised concerns regarding the impact that the FCC’s rulemaking could have on job creation at a time of 10 percent unemployment.  Groups like the Asian American Justice Center, National Council of La Raza, the League of United Latin American Citizens and the National Urban League, keen to avoid a widening of the “digital divide,” also voiced concerns in a letter to the FCC dated October 13.
 
Democratic Governors, including Arkansas Gov. Mike Beebe and North Carolina Gov. Beverly Perdue, have urged caution with regard to the issue. Meanwhile, Oklahoma’s Democratic Gov. Brad Henry wrote to Genachowski earlier this month to tout the positive effects of his state’s model of “light or no regulation for landline, broadband and wireless services.”  
 
Last Thursday, 72 Democratic members of the House of Representatives, also in a letter to Genachowski, wrote that “it is our strong belief that continued progress in expanding the reach and capabilities of broadband networks will require the Commission to reiterate, and not repudiate, its historic commitment to competition, private investment and a restrained regulatory approach.”  
 
A restrained regulatory approach net neutrality would not be, of course.  Opponents of the policy rightly argue that its implementation would stifle innovation and impact service—a little bit the way that a government takeover of health care would with regard to that industry.  Also like health care, the internet is something that most Americans are unable and unwilling to go without.  Turning the internet into the functional equivalent of the US Postal Service (a communications system in which Genachowski takes a deep, and arguably ironic, personal interest) is the wrong answer to preserving it in a viable, useful form.  
 
Of course, Genachowski should know this.  Here’s hoping some of his fellow FCC commissioners bear it in mind before going along with their Chairman’s big government, overtly leftist and doomed-to-fail scheme.