Verizon's Tom Tauke left the DC swamp this week for a stint in Aspen's alpine environs, where the Technology Policy Institute is hosting a conference. But the change of air didn't change what's on Tauke's mind: the fallout from the net neutrality policy framework agreed to by both Google and Verizon.

Much of that fallout has focused on wireless—the Google/Verizon framework refuses to apply even minimal nondiscrimination rules to wireless (only "transparency" would apply). Verizon and other wireless vendors have recently been flogging the "wireless is different" mantra everywhere it can be flogged, and Tauke took his cat-o-nine-tails up to Aspen this week to flog the idea once more.

"[The wireless rules] caused a bit of controversy," Tauke said yesterday. "Of course, we indicated that transparency of course should apply to wireless. But we acknowledged wireless is different for a variety of reasons. First, the physics: with wireline, we know there will be this connection in the home. It doesn’t move. With wireless, all of a sudden people all gather in one place—in Washington, DC, they all gather on the mall, or there is a traffic jam. That creates a much different situation when it comes to running a network. There also is in wireless, no single technology standard; there is a variety."

Physics! I mean, we're talking laws of nature here! Bedrock principles of the universe! Wireless operators simply cannot abide even the loopholed nondiscrimination provisions that would apply to wireline networks. In fact, any attempt to force such nondiscrimination provisions on Verizon's wireless networks would likely be illegal, violate the First Amendment, and represent a secret Google attempt to enrich itself at Verizon's expense.

How do we know? Because Verizon made all of these points clearly to the Federal Communications Commission back in 2007. That was back when a big new chunk of prime 700MHz spectrum came up for auction, and Google had asked the FCC to impose openness conditions on the main winner.

The FCC agreed at last to do so (PDF), rejecting "Verizon Wireless’s assertion that the requirements we adopt here are designed to unjustly enrich Google." It also rejected "arguments by Verizon Wireless that the requirements that we adopt today for devices and applications for the Upper 700MHz C Block violate the First Amendment."

And it was having none of this "physics" argument about wireless capacity. Winners of the so-called nationwide C Block "cannot exclude applications or devices solely on the basis that such applications or devices would unreasonably increase bandwidth demands. We anticipate that demand can be adequately managed through feasible facility improvements or technology-neutral capacity pricing that does not discriminate against subscribers using third-party devices or applications." In other words, the winner could build more towers, add more radios, increase backhaul, or implement usage-based pricing. What the winner could not do was simply start blocking traffic to ease the burden.

Given Verizon's stance at the time and its stance now, it might be surprising to recall that it was actually Verizon who took home the C Block license (after flirting with a lawsuit against the FCC) and at last agreed to its openness conditions. According to the FCC, Verizon agreed not to "block, degrade, or interfere with the ability of end users to download and utilize applications of their choosing on the licensee’s C Block network, subject to reasonable network management."

It's not as though Tauke forgot about this little bit of history; in fact, in his speech he touts Verizon's C Block bidding as an example of its commitment to openness.

All of the complaining about the Google/Verizon proposal "is a little ironic because there is only one company in the US that has a requirement for open access as a wireless entity, and that of course is Verizon," Tauke said.

We bid on the C-block spectrum in the 700 megahertz auction. That spectrum carried with it requirement of no blocking and no discrimination, a tougher standard than has ever been imposed on the wireline business. Now we made the decision to bid for that spectrum and operate under those rules. The FCC had adopted a policy which said if one nationwide carrier is building out 4G under this set of rules, that is going to ensure that the Internet will be open to anybody, and that this will ensure that the marketplace will be driven toward openness. Look what’s happened since the FCC adopted that policy 24 months ago: openness has become the standard in the wireless industry. So for those reasons, our conclusion was transparency was important, but in this rapidly changing market, more rules didn’t make sense.

What's odd about Tauke's points is how completely they would appear to undermine his basic argument. Verizon has already made a multibillion dollar bet that it can make plenty of cash on spectrum constrained by a few basic neutrality rules, so arguments about the "physics" of the issue ring a bit hollow. Academic observers like Rob Frieden agree, saying that "the rationale for exempting wireless does not pass the smell test."

Second, Tauke appears to agree that FCC policy has pushed the entire industry to openness, and that this openness is a good thing; the idea that basic openness principles will destroy private investment (one of Verizon's stated concerns) would thus appear to need far more nuance than it is usually given.

Google grows up, sheds rich-kid idealism



Tauke's speech also highlighted the shocking about-face in Google's approach to this entire issue. For instance, the new Google/Verizon proposal notes that wireless services should be exempt from all nondiscrimination rules thanks to the "competitive and still-developing nature of wireless broadband." Tauke played this idea up in his talk, saying that wireless users are simply spoiled for choice.

"There is a lot of choice in wireline—more than some people acknowledge," he said. "But, across the country, people can have six or more wireless carriers that serve their area or nationwide. In some cases, in supposedly hard-to-serve areas, you could have up to 20 carriers getting universal service support to serve these areas. There are just a lot of players in the wireless space. So, if a customer doesn’t like the policies of a particular carrier, they are able to move relatively easily."

Just a few years back, when the 700MHz auction rules were being finalized, Google couldn't disagree more. "In the US, wireless spectrum for mobile phones and data is controlled by a small group of companies, leaving consumers with very few service providers from which to choose," wrote the company. Given that reality, Google believed the FCC had to push the carriers into opening up their networks—and the company was ready to plunk down $4.6 billion of its own money if no one else stepped up to bid.

Google's change of heart on competition wasn't due to the presence of more competition; in fact, according to a recent report on mobile competition from the FCC, concentration in the wireless sector has gone up significantly over the last few years.

And, while Tauke talks up the industry's love of openness, the Google-of-a-few-years-back reminded us all that "deep packet inspection 'has been deployed far and wide' by various wireless last-mile network operators. Further, the contractual terms imposed by major wireless carriers purport to prohibit the use of peer-to-peer applications, Web broadcasts, server or host applications, tethering, and the use of wireless as a substitute for wired broadband."

As we documented a few weeks ago, Google's sharp about-face on these issues has been whiplash-inducing. A couple of years ago it argued for FCC openness rules on wireless, it said the wireless industry faced limited competition, and it was willing to put up $4.6 billion for its ideas. Much of that has now gone by the wayside.

"Internet" is not the future of broadband



So, what's the vision for broadband in America under the new Google/Verizon proposal? It's not Internet access, and Tauke reminds us what's at stake with the "managed services" issue.

"Certainly nobody believes that the promise of broadband is Internet access and video, which is what we have today," said Tauke. The future is "'other services' that should be available over the broadband pipe. They need unique creativity and partnerships to make them work. It’s the communications company partnering with the power company to do the smart grid. It’s the communications partnering with the health care provider to do heart monitoring at home. That requires a different set of rules than the rules that govern the best-efforts Internet."

Welcome to the future: it's one in which you can call your ISP and get Internet access, sure, but you'll also have the privilege of signing up for a home health monitoring package, a TV package, a VPN package for your home office, and many more wonderful things that "we cannot even envision now." If you like your cable bill, you're going to love this brave new world. ISPs are determined not to become a dumb pipe; there's too much money in other services.

All these services will probably use Internet Protocol, and yes, they'll all run over the same wire into your home. But they are completely different from the Internet and all the companies that offer the exact same services in "over-the-top" (that is, over the Internet) fashion. Verizon tells us that one is the "broadband platform" and one is "the open Internet."

All of this talk in industry circles about "convergence"—in which functions collapse into a single device (like a smartphone) and services collapse into a single offering (a broadband pipe)—is nonsense; the real future of the Internet is "divergence." The best-effort Internet isn't going away, but in Verizon's view, the future is hundreds of new managed services, each with its associated fee (and many with their own associated, specialized devices). If you don't want to pay, you're free to continue using services delivered over the "open Internet" and keep using your computer.

"Yes, we want to protect the Internet but we also want to offer consumers more services, and giving consumers more services is a good thing," said Tauke. "And giving consumers more choices is a positive thing."