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Updated: Google Quietly Tries Brokering Deals With ISPs To Get Priority Access

Congress has failed to pass legislation regarding so-called “Net Neutrality,” and now the issue is bubbling up again. This time, it appears Google (NSDQ: GOOG), which traditionally has been a huge advocate of network equality and openness, is working behind the scenes with major cable and phone companies to get its Internet traffic prioritized, according to documents reviewed by The Wall Street Journal.

In essence, network neutrality means that cable and phone companies must treat all content crossing its lines equally, much like how phone companies today don’t prioritize one phone call over another. Many supporters claim that this is the secret to the internet’s success — if some content were prioritized, only rich companies could participate, and new entrants would never have a chance. For consumers, network operators like Comcast (NSDQ: CMCSA) or Time Warner (NYSE: TWX) would be able to control content distribution, or even promote their services over another. But now, the counter-argument is starting to pick up steam. Network providers maintain that as internet traffic grows by more than 50 percent annually (according to some estimates), content companies should share in the costs.

UPDATE: Both Google, and Lawrence Lessig, an Internet law professor at Stanford University, who the WSJ said “recently shifted gears by saying at a conference that content providers should be able to pay for faster service” have responded to the article in blog posts. Lessig’s writes: “The article is an indirect effort to gin up a drama about a drama about an alleged shift in Obama’s policies about network neutrality. What’s the evidence for the shift? That Google allegedly is negotiating for faster service on some network pipes. And that “prominent Internet scholars, some of whom have advised President-elect Barack Obama on technology issues, have softened their views on the subject.” Separately, Google calls the WSJ confused, and writes in a post that Google remains strongly committed to the principle of net neutrality: “All of Google’s colocation agreements with ISPs — which we’ve done through projects called OpenEdge and Google Global Cache — are non-exclusive, meaning any other entity could employ similar arrangements. Also, none of them require (or encourage) that Google traffic be treated with higher priority than other traffic. In contrast, if broadband providers were to leverage their unilateral control over consumers’ connections and offer colocation or caching services in an anti-competitive fashion, that would threaten the open Internet and the innovation it enables.”

More after the jump

Any potential tiered deal will be faced with a landslide of criticism, but the WSJ suggests that even some of the most hardcore neutrality fans are fading. For instance, Microsoft (NSDQ: MSFT) and Yahoo (NSDQ: YHOO), which formed a coalition two years ago to protect network neutrality, have quietly left, and are now dealing directly with operators. Microsoft provides software to AT&T’s Internet TV service, U-verse, and Yahoo has a DSL partnership with AT&T (NYSE: T). In addition, the WSJ reports that prominent scholars, some of whom have advised President-elect Barack Obama on technology issues, are also softening their views.

The matter will likely become a political one quickly, and will test incoming president Barack Obama on the subject. The WSJ said the issue could regain momentum quickly. It recalled that in approving AT&T’s 2006 acquisition of Bell South, the FCC made AT&T agree to shelve plans for a “fast lane,” or tiered service, for 30 months; that expires in the middle of next year. Plus, a Democratic lawmaker has already promised new network-neutrality legislation early in 2009, and a new chairman of the FCC could take a stricter position on enforcement. It appears the only thing holding Google back from signing a deal is the government’s threat. One major cable operator, who is in talks with Google, told the WSJ: “If we did this, Washington would be on fire.”