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Summary:

Google has reached an agreement with Verizon over Internet traffic management. It is the first step in what would amount to slow asphyxiation of network neutrality. The deal apparently prevents Verizon from blocking traffic but allows prioritization of certain types of traffic.

A long time ago, I offered to make a bet with a friend that when commercial interests would collide with the broader interests such as network neutrality, Mountain View, Calif.-based Google would do what any large company does: do what is right for its commercial interests. I should have made that bet. I would have won.

Today, news emerged that Google has reached an agreement with Verizon over Internet traffic management. It is the first step in what would amount to the slow asphyxiation of network neutrality. While Verizon and Google are keeping mum, in response to the news, Federal Communication Commission said: “The broad stakeholder discussions continue to actively include Google and Verizon.” The FCC is in closed-door conversations with different players — from Internet companies like Google to carriers such as Verizon and AT&T.

According to the Washington Post:

Google and Verizon’s agreement would prevent Verizon from offering paid prioritization to the biggest bidders of capacity on its DSL and fiber networks, according to the sources. But any promises over open-Internet access wouldn’t apply to mobile phones, the sources said, speaking on the condition of anonymity because the companies have not officially made their announcement. According to the sources, Verizon and Google have met separately to come to an agreement they will tout as an example of successful self-regulation.

Politico offers more details:

Sources familiar with the agreement tell Politico it would prevent Verizon from blocking traffic, but would allow it to prioritize certain traffic—such as premium services that would speed up movie downloads, for example – as long as doing so does not harm consumers.

This agreement shouldn’t come as a surprise. The two companies are becoming increasingly close of late. Google is trying to make Android a major player in the mobile world. One of the company’s closest partners in this effort, in the U.S., is Verizon Wireless. It would therefore make sense that the two will come to some sort of an agreement. The news has clearly riled up a lot of folks in Washington, D.C. Free Press President and CEO Josh Silver said:

“Two of the largest companies – Google and Verizon – have reportedly agreed to abandon consumer protections, filter content and limit choice and free speech on the mobile Internet. If true, the deal is a bold grab for market power by two monopolistic players. Such abuse of the open Internet would put to final rest the Google mandate to ‘do no evil.’ The financial interests of Google appear to have finally trumped its belief in policies to preserve the open Internet. A deal with Verizon cements its market power, and could make it more difficult for new app developers and software entrepreneurs to reach consumers.”

A coalition of public interest groups that included Public Knowledge, New America Foundation, Media Access Project and Free Press issued this statement:

As the major public interest groups in Washington involved in the struggle to protect an open Internet, we are united in our dismay about an agreement reportedly reached by Verizon and Google.   It is unseemly and inappropriate for two giant companies to decide the future of the Internet and how Internet will work for millions of users.  It would be inappropriate for Congress and the FCC policy makers to use this agreement as the basis for public policy.

“The public and policymakers should not be fooled.  This agreement cannot be enforced by any governmental agency and will provide no protection against the types of abuse we seen from large Internet Service Providers.  The Internet belongs to all of us, not to Verizon and Google.  There is widespread public support for an open Internet.

“We call on the Federal Communications Commission (FCC) to abandon its ‘negotiations’ with Google, Verizon and other large companies. Instead, the Commission should move ahead with legally enforceable, binding rulemaking that would govern not only the open Internet, but also ensure the Commission’s authority to reform Universal Service, and to make policy in cybersecurity, privacy, device compatibility and other critical issues involving broadband services.”

By Om Malik

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  1. Remember that Google entered the network neutrality debate only when Telcos started talking about “free rides” and threatening to limit traffic if they didn’t pay up. Google’s definition has always been whatever doesn’t disadvantage Google. Anything else you may have heard from them is PR rhetoric.

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  2. Totally surprised at the news of death nail for net neutrality. To tell the truth, I was on the other side of the fence who thought, you know, may be there is a company that would not budge to just the commercial interests. Especially on a issue like net neutrality. Lucky I did not bet on it :)

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  3. Sorry, I missed to mention that NYTimes is also a running a report on it.

    http://www.nytimes.com/2010/08/05/technology/05secret.html?pagewanted=1&_r=1&ref=technology

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  4. Om, “network neutrality” is not a “broader interest.” It is the corporate agenda of Google and is against the public interest. (The groups which you mislabel as “public interest” groups above all have ties to Google and lobby for it.)

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  5. Maybe it’s because I’m a little tired, but the second reading of this post has failed to clarify exactly what Google expects to gain.

    There’s no question that a carrier has much to gain, either by prioritizing its own premium services at the expense of rivals or by auctioning off what is after all a finite resource, wireless bandwidth, to the highest bidder. But Google?

    Is the expectation the Android phones or Google services will receive a larger slice of Verizon’s spectrum pie? At first glance, if Google is selling out net neutrality, Microsoft and possibly Apple, with significant bankrolls of their own, might be in a position to take advantage at Google’s expense. Utimtaely Verizon would be the only winner.

    Depending on the existence of this agreement and the details, there may be three victims: net neutrality, Google, and Google’s share-holders.

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  6. [...] and had somehow convinced themselves that, when push came to shove, Google would somehow not respond like the large, publicly traded, for-profit enterprise it is by cutting a deal, and who now feel betrayed. Oh [...]

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  7. [...] neutralidad parece haberse escapado por la puerta trasera, junto a los restos de Google Wave.Vía: GigaOM TwitterFacebookMenéamedel.icio.usGoogle Buzz Dirección para [...]

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  8. I agree that on face value this news looks threatning to net neutrality. But if this debate had come down to pure lobbying who do you thing was getting to get hurt. The consumers. Verizon has revenues of ~100 Billion and ~230,000 employees while Google has revenues of ~25 Billion and 22,000 employees. When push comes to shove who do you think Washington will support , when it comes to saving jobs and keeping face. I do not know how Google’s lobbying arm compares to the telco’s but I am pretty sure that we cant leave it up to that .

    I am not defending Google here & perhaps this was not the best way to approach this , but the only other options they have is to either invest in infrastructure ( check.new fibre optic experiments) or watch a long drawn out battle where everyone gets hurt.

    Think about it , if all the telco’s start getting relegated to becoming utilities and dumb pipes, the government is going to step in to save the jobs ( lots of them ).

    While I ultimately believe that connectivity should be a utility akin to power, this can be a good first step in that direction.

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  9. Bandwidth quality pricing and broadband metering makes sense. Youtube consumes about half the internet bandwidth today apart from BitTorrent bandwidth usage. I think it could actually mean cheaper and faster internet access for everyone, it depends how it would be implemented though.

    Imagine with this, for example, Verizon could offer FiOS service at 1gbit/s to the home for free, but where users would have to pay per Gigabyte that they use. Basic price per GB for basic usage where fast is only small sized contents, though where video contents would be delivered on lower priority bandwidth unless the user pays slightly higher price per GB for higher priority delivery of for example HD video contents. In a good system, the price per GB would be reasonable, less than $0.10/GB at normal priority high latency bandwidth and $0.15/GB high priority low latency bandwidth.

    For example, you’d want premium bandwidth for checking your email without latency, for browsing the web fast, for buffering videos or audio and for images in the browser. But for video, you wouldn’t mind it being delivered on lower priority worse quality bandwidth, as long as that video doesn’t interrupt its playback.

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    1. “I think it could actually mean cheaper and faster internet access for everyone”

      yeah, dream on

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  10. I don’t fully understand this.

    Quote: Google and Verizon’s agreement would prevent Verizon from offering paid prioritization to the biggest bidders of capacity on its DSL and fiber networks, according to the sources.

    The above quote seems to indicate that they have reached an agreement for Verizon to NOT give priority to anybody who pays them to do so. Isn’t that the definitely of Net Neutrality?

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    1. *definition of Net Neutrality?

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      1. You are correct, but there’s an exception with regards to mobile in the deal:

        “But any promises over open-Internet access wouldn’t apply to mobile phones”

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  11. The NYT article is based on a Bloomberg article, but it sounds nothing like what NYT is reporting. A CNET article comes to the same conclusion as Bloomberg.

    Google isn’t paying Verizon for preferential service. They are just two among several players, including FCC representatives, trying to negotiate an amicable solution.

    Mobile access is caught in the crossfire, it seems, but that may be a battle left for future days.

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  12. Om,

    I did predict that Google wasn’t genuine or logical about their advocacy on net neutrality back in 2007

    http://whohastimeforthis.blogspot.com/2007/02/net-neutrality-is-politically-correct.html

    and then in 2008

    http://whohastimeforthis.blogspot.com/2008/12/i-told-you-so-alyssa-milano.html

    But alas nobody reads MY blog…

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  13. Hamranhansenhansen Thursday, August 5, 2010

    It’s amazing how much damage Google has done to their reputation and brand in the past 5 years.

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  14. [...] Om Malik of GigaOm (“Did Net Neutrality Just Get Knifed in The Back?“) says this “shouldn’t come as a surprise” but terms it “the first step in what would amount to the slow asphyxiation of network neutrality.” [...]

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  15. I’m starting to question peoples reading skills. “Google and Verizon’s agreement would prevent Verizon from offering paid prioritization to the biggest bidders of capacity on its DSL and fiber networks”. To those that think they have free access on your phone, you don’t. Even with the best smart phones in your hands, your provider is playing with your contant and speed all the time.

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  16. [...] NYT, GigaOM, Bloomberg, TechCrunch Category: News | Tags: android, broadband, Droid, Droid X, FCC, google, Net [...]

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  17. The story in the New York Times is bullshit.

    Verizon Policy Blog: New York Times’ Story is Mistaken
    The NYT article regarding conversations between Google and Verizon is mistaken. It fundamentally misunderstands our purpose. As we said in our earlier FCC filing, our goal is an Internet policy framework that ensures openness and accountability, and incorporates specific FCC authority, while maintaining investment and innovation. To suggest this is a business arrangement between our companies is entirely incorrect. http://policyblog.verizon.com/BlogPost/740/NewYorkTimesStoryisMistaken.aspx

    PC World: Net Neutrality Deal May Not See Wider Support
    A Google spokeswoman declined to comment on talks between her company and Verizon, but she denied a New York Times report that said the two companies were negotiating a tiered service agreement that would give Google services faster network speeds than some competitors. That story “is quite simply wrong,” said Mistique Cano, manager of global communications and public affairs at Google. “We have not had any conversations with Verizon about paying for carriage of Google traffic. We remain as committed as we always have been to an open Internet.” http://www.pcworld.com/article/202636/net_neutrality_deal_may_not_see_wider_support.html

    Doesn’t anybody check their facts any more?

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    1. “Fundamentally misunderstands our purpose” doesn’t mean that the story is wrong – it means “we’re killing network neutrality to benefit our customers”. At least, that’s how they’re going to spin it – it’ll be all about “supplying quality of service” via “ensuring that the kinds of content which consume large amounts of bandwidth pays its fair share of the costs of transport.” This is the same line that the telcos have been spinning all the way through this. Of course, that’s not “a business arrangement” – it’s a “quality of service guarantee”.

      As for “we have not had discussions about paying for carriage of Google traffic”, again, that doesn’t mean they haven’t had conversations which involve other companies paying for their traffic. YouTube would still be free (perhaps with a revenue split on ads served) while other video sharing sites might well have to pay.

      Really, Richard, you need to learn to read these statements with a little bit more of a skeptical eye – just because someone says something doesn’t make it a fact.

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      1. I’m more willing to accept the evidence I’ve seen with my own eyes and ears on the Verizon/Google talks that a press report that I know is wrong from personal knowledge, Ian. Go see this video: http://itif.org/events/preserving-open-internet-consensus-emerging

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  18. The buzzphrase “network neutrality” has never had any agreed-upon definition. In practice, it simply means whatever the speaker hopes to accomplish by imposing onerous regulations upon ISPs. In Google’s case, there are several ways that it can protect its multiple Internet monopolies (Internet search, Internet search advertising, Internet banner advertising, Internet video) by regulating ISPs, and thus several “definitions” that would be acceptable to it.

    In this case, Google is being crafty and hedging its bets. Its internal lobbyists are pushing for one definition in negotiations with Verizon and behind closed doors at the FCC (one which denies needed services to Google’s potential competitors), while Google’s hired lobbying groups (Public Knowledge, Free Press, New America, Future of Music Coalition, Open Internet Coalition) are pushing for another. Either way, Google wins, and the public is harmed by higher broadband prices, fewer choices of Internet providers, lower quality of service, slower deployment, less innovation, and (of course) being forced to deal with Google’s monopolies.

    The only way the PUBLIC wins is if no “network neutrality” regulation of any form happens. It’s not necessary. The Internet has survived for 27 years without it and is still going strong — despite the doomsaying of Google’s lobbyists.

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  19. [...] FCC decision comes less than 24 after hysterical and confused reports of a Google and Verizon deal on net neutrality began circulating among the media and Washington. I [...]

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  20. [...]    0 Right now it’s unclear where Verizon and Google are in their discussions to end net neutrality, and under what terms the telco would grant preferential treatment to certain types of content and [...]

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  21. I never get the point about “network neutrality”. The word “neutral” make this sounds desirable. But at the heart it is about adding a regulation to telcos on how they can conduct their business. I’m just isn’t convinced that it is good or necessary for the society.

    Should we have a regulation for mobile operator that require them to provide only flat pricing or only usage based pricing? Which is better? I don’t know. I’d say each plan has its pros and cons. It we are not really certain that a rule will benefit the society without unintended consequence, why add a new regulation at all? I’ll rather err on the side of less regulation.

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  22. [...] FCC decision comes less than 24 hours after hysterical and confused reports of a Google and Verizon deal on net neutrality began circulating around media outlets and [...]

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  23. Sorry Om, but the bet is still on.

    Doth Google and Verizon have officially stated today that there’s been no agreement or even a conversation concerning traffic management and that the New York Times report that first broke the news was inaccurate. Google stated through Twitter that they were still committed to an “open Internet,” obviously avoiding that push button phrase “net neutrality.”

    Om, I also have to apologize that I completely missed the point of your post, which I believe is that dispite Google’s mantra of “do no evil,” we would be best served to consider them no different than any other business where the bottom-line is priority one. You may still win that bet yet.

    There seems to be a lot of dispute as to the meaning of “Net Neutrality” when there shouldn’t be. Long before the term was coined, it was one of the guiding principles in the design of the protocols used since the earliest days of the Internet: that data packets on a network wouldn’t be prioritized.

    Regardless on what side a person falls in the debate, two things are fairly obvious. First, in most of the world, the Internet today still adheres to the “net neutrality” principle laid down at its inception (with a few notable exceptions.) Second, while adhering to that principle and by almost any standard, few inventions have been as successful or had more impact in people’s lives as the Internet.

    A move away from “net neutrality” would be the move into uncharted waters with all the attendant risks and consequences, seen and unseen. Because of the importance of the Internet, we all understand this at some level. That’s why reports like yesterday’s, even when they turn out to be bogus, spark such lively debate.

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    1. Ray says: “Long before the term was coined, it was one of the guiding principles in the design of the protocols used since the earliest days of the Internet: that data packets on a network wouldn’t be prioritized.”

      Wrong, wrong, wrong, wrong, wrong.

      Since the earliest days of the Internet, the Internet Protocol header has contained 6 bits for packet class of service or type of service. The Internet is not a network, it’s an internetwork, so IP passes these bits to the actual carrier network to interpret and process according to its design; in most cases, that means assigning priority. Read RFC 2475 for more information and RFC 795 to see how it was done in the very earliest days of the Internet.

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      1. Absolutely right. And the move to MPLS/IP has made traffic prioritization much easier to implement.

        “Network neutrality” should mean simply that no company can buy faster speeds for its content than anyone else sending the same kinds of content.

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      2. Whoa there big fella! No need to go “Ted Stevens” on us.

        I was well aware of the the 7-bit DS code in the IPv4 header. The DS code allows a packet to, in effect, request special handling from a network. Networks don’t have to honor the request and most don’t: there’s simply no way to verify to legitimacy and necessity of the request on networks that handle public packets.

        The question of “net neutrality” focuses not on prioritizing packets based on the DS value or any other house-keeping codes, but on the source and destination IP addresses, i.e., whose creating and consuming the content and traffic. It’s on those counts that I made my statement on the historical neutral Internet.

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      3. Datagram networks are designed to make it easy to prioritize packets whenever it’s necessary or desirable. All of the network technologies that carry IP datagrams today – Ethernet, 3G, Wi-Fi, Sonet – prioritize, just as ARPANET, PRNET, and SATNET did in the early days of the Internet. Anyone who thinks the design of the Internet is in any way hostile to priorities is blowing smoke.

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      4. Hold on there minute Ted!

        “Sonet – prioritize, just as ARPANET, PRNET, and SATNET did in the early days of the Internet. Anyone who thinks the design of the Internet is in any way hostile to priorities is blowing smoke.”

        That doesn’t relate at all to what I said. What I said was that the DS code to which you initially referred was in effect a packet making a request of a network where as what we’re taking about when it comes to “net neutrality” is the network imposing restrictions on packets based on source and destination addresses, entirely two separate things. Of course networks can prioritize based on the latter. The questions is “should we allow them to?” Isn’t that what the debate is all about?

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    2. “Doth Google and Verizon have officially stated today that there’s been no agreement or even a conversation concerning traffic management…”

      Ray, that’s precisely what they haven’t said. Look at the statements carefully, and it’s pretty clear they’re being very opaque about what’s being claimed.

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      1. “”We’ve not had any convos with (Verizon) about paying for carriage of our traffic.” “We remain committed to an open Internet.”

        Those are the tweets, widely reported today, that Google made yesterday before my comment. Now true, I not savy to all the speak of the youngins today, but I think in your not having conversations with someone, it’s hard to have an agreement.

        Of course, if what the WSJ reported is true, that Google and Verizon would have a big announcement today (Friday), then, well … By my clock they still have hour to make the big announcement.

        What I believe is the simplest explanation for all this: the NYT got it wrong (does happen) and the Internet has accelerated the mistake at the speed of light.

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  24. It’s a shame that the label “network neutrality” brings with it mostly uninformed web noise. I suggest that anybody who wishes to write or comment about it, first acquaint themselves with this interview from over 2 years ago (maybe search it for “network neutrality”).

    http://blog.ecomm.ec/2008/01/future-of-telecoms-and-broadband.html

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    1. In the interview cited above, Geddes says what I have been saying for nearly 10 years now. IP transport is not the best way to carry all information and “network neutrality” is not a solution to anything. Competition, on the other hand, is a solution to virtually every problem faced by consumers in the telecomm space. (Perhaps Lee would be interested in having me present some of these points in more detail, and from the point of view of an operating ISP, at his next conference. I was going to do this a couple of years ago, but the agenda was already full and they did not wind up having me speak.)

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    2. Yep, Martin Geddes is one of a handful of people who really understand the implications of net neutrality. Open Internet principles are good, Neutral Internet principles are bad, and they certainly aren’t the same thing. The Internet is not neutral, wasn’t designed to be neutral, and should never be neutral in the future. It needs to provide each user and each application with the service and performance he/she/it needs, and it can’t do that without active management.

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  25. [...] a comment » I’m trying to parse the Google-Verizon deal which, as Om Malik says, appears to be a knife in the back of net neutrality.  The NY Times started it all off by [...]

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  26. Competition, on the other hand, is a solution to
    virtually every problem faced by consumers in the
    telecomm space.

    Well, sure competition is good, and saying it’s a solution for ISP issues even made sense back in the dial-up days, when one could choose from at least 7 local call dial-up providers, and it didn’t take much investment to start up a new competiting ISP.

    But most broad-band providers are either monopolies or competing with only one other provider (in many places, your choice is the cable monopoly or nobody. If you’re lucky it’s the duoploy of cable or the telephone line.) When there’s no or little competition, how can competition cure problems?

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    1. Competition solves many problems, but not all of them. It won’t bring broadband to rural areas where there’s no money to be made by selling broadband, and there are natural economies of scale in network services that tend to move toward consolidation.

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      1. Competition is the answer to deployment problems as well, Richard. The reason WISPs are not already serving every area that’s uneconomical to serve via fiber or copper is that carriers are engaging in anticompetitive tactics in the realm of “special access.”

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  27. [...] Jared Newman at PC World: If Google and Verizon really are conspiring to kill Net neutrality, as several reports suggest, both companies would bruise their reputations in the process. [...]

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  28. [...] negotiations related to net neutrality after the news of Google and Verizon reaching a side deal leaked, and follows almost a year of debate on the issue of how and when a broadband provider can [...]

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  29. [...] latest is net neutrality — an issue some have called “the third rail” of communications policy, because it [...]

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  30. [...] Kenobi) comments to essentially make fun of the Google/Verizon proposal over network neutrality. And here we were writing post after post after post to essentially point out how Google changed its [...]

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  31. [...] is clearly one reason Google veered from its net neutrality stance for wireless network when it struck a compromise with Verizon early this year that said carriers may need differentiated [...]

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