The Federal Communications Commission has ended its closed-door negotiations with a small group of players on opposing sides of the net neutrality debate, talks that had been aimed at finding a consensus on rules for the transmission of Internet traffic.
The ongoing meetings ended abruptly amid reports that Google (NASDAQ: GOOG) and Verizon (NYSE: VZN) had reached a side agreement on nondiscrimination principles apart from the FCC talks.
"We have called off this round of stakeholder discussions," FCC Chief of Staff Edward Lazarus said in a statement.
"It has been productive on several fronts, but has not generated a robust framework to preserve the openness and freedom of the Internet -- one that drives innovation, investment, free speech and consumer choice," Lazarus added. "All options remain on the table as we continue to seek broad input on this vital issue."
Public-interest groups advocating for strong net neutrality provisions had blasted the notion of a side agreement between Google and Verizon, adding to their ire over the secret nature of the FCC talks.
"We welcome the FCC's decision to end its backroom meetings," Derek Turner, research director at Free Press, said in a statement. "We're relieved to see that the FCC apparently now finds dangerous side deals from companies like Verizon and Google to be distasteful and unproductive."
For their part, Google and Verizon have downplayed the significance of their meetings. Both companies have disputed a New York Times report this week that described the deal as paving the way for Verizon to offer speedier transmission of Internet content for Web companies that paid additional fees, precisely the sort of tiered transmission regime that net neutrality advocates warn against.
In a post to the Google public policy Twitter account, the company denied any conversations about "paying for carriage of our traffic," reiterating support for an "open Internet." Verizon spokesman David Fish penned a brief blog post countering the Times story, writing, "To suggest this is a business arrangement between our companies is entirely incorrect."
In addition to Google and Verizon, AT&T (NYSE: T), the National Cable and Telecommunications Association, Skype and the Open Internet Coalition were involved in the FCC's negotiations.
The talks were aimed at hammering out a consensus framework that would serve to steer legislation in Congress and avoid, or at least delay, a looming and highly controversial proposal at the FCC to reclassify broadband as a regulated telecommunications service.
The push for broadband reclassification, vigorously opposed by cable and telecom providers, came in response to an April court ruling that struck down the FCC's 2008 order punishing Comcast (NASDAQ: CMCSA) for secretly blocking peer-to-peer traffic on its data network. Though the court's ruling was only concerned with the Comcast case, the lengthy opinion cast serious doubt on the FCC's authority to act on a variety of Internet issues under the current framework in which broadband is classified as a so-called Title I information service under communications law.
Shifting broadband to the Title II telecommunications designation would resolve that uncertainty, but would likely spark a new wave of protracted litigation from powerful industry groups bitterly opposed to reclassification.
Already, a majority of lawmakers have signed their names to letters asking FCC Chairman Julius Genachowski to scrap the Title II proposal, urging him to defer to Congress on the matter. The closed-door talks appeared to be an effort to do just that, to reach a consensus on the rules of the road for managing Internet traffic that could then form the basis of a bill with support from stakeholders that have historically lobbied against one another on the issue.
But apart from the impact of the Google/Verizon talks, the prospects for speedy action on a polarizing issue like net neutrality in a sharply divided Congress on the eve of the midterm elections seemed to dwindle by the day.
Sen. John Kerry (D-Mass.), the chairman of the Senate Commerce Committee Internet subcommittee and a proponent of net neutrality, noted this deadlock in a statement reacting to Genachowski's move to call off the talks.
"As we work to find a path forward for governing broadband, congressional stalemate is making a legislative solution look increasingly unlikely in the near term," Kerry said. "As a result, Chairman Genachowski is now moving forward along a regulatory path. While this is an imperfect solution, it's his only real option to maintain the proper role of government oversight in communications."