Verizon-Google Agreement Means Almost Nothing

The paranoid streak of Internet fans shines forth in Technicolor over the recent memorandum of understanding between Verizon and Google. A new private Internet is going to be created, they opine, and only those with money will be able to access the coolest and newest web stuff. These self-described geeks may understand technology, and perhaps a dollop of business and politics, but they have this one completely wrong. This MOU isn't worth the paper it's written on; no MOU is.

As usual when discussing Google, this journal is at pains to point out that it derives a pittance from GoogleAds, which one can see to the right of this text. The more readers click on those links, the more this journal receives. As for Verizon, this journal terminated its landline relationship after the company failed to provide a dial-tone for 12 days following a rainstorm and will never deal with the company, its subsidiaries or successors ever again.

Here is the part of the MOU that has many people in an uproar, "We both recognize that wireless broadband is different from the traditional wireline world, in part because the mobile marketplace is more competitive and changing rapidly. In recognition of the still-nascent nature of the wireless broadband marketplace, under this proposal we would not now apply most of the wireline principles to wireless, except for the transparency requirement." In other words, Net Neutrality, where all content is treated the same, may not apply in the wireless broadband sector.

That debate is, at best, tertiary to the realities of the situation. Wireless operates through the electro-magnetic spectrum which under Federal law is public property. Broadcasters of whatever stripe (AM, FM, TV, cell phone) pay a fee to lease a segment of that spectrum. However, the airwaves are the common property of all Americans, and the government can tell corporations what to do, how to do it, and even prevent them from doing things by refusing to renew licenses. The fact that the current FCC has little interest in doing anything about wireless neutrality is a matter for elections to decide.

Moreover, anyone who has been in business a reasonable amount of time knows that an MOU is bovine droppings of the highest order. Any two idiot CEOs can sign an infinite number of these things, and the result is usually nil. That's why most PR agencies discourage their clients from announcing MOUs; they tend to raise expectations that cannot be met. Indeed, the SEC has said on numerous occasions that MOUs and letters of agreement are not material events requiring a Form 8-K filing.

Above all, though, Verizon and Google do not make law. They may hire K Street lobbyists to nobble the FCC and members of Congress, but they don't carry enough weight to force this through. After all, AT&T, Sprint & T-Mobile might have something to say to Verizon on the matter. And while Google does have a dominant position in its space, alternatives exist, e.g., Yahoo! Yes, Google and Verizon have tipped their hands, but no one who pays attention to corporate behavior is the least surprised. What is surprising is the number of otherwise intelligent people who think this actually matters.

© Copyright 2010 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.

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