In particular, the ability of a service provider to charge differently for different grades of service must be maintained. (Similar to First Class and Economy class on air flights).
[Aside. It is interesting to note that many of the noteworthy cloud-based services — e.g., AWS, Cisco Webex/Umi, Google Apps, Salesforce.com — work just fine, even though they are all delivered through "economy" class Internet access in the last mile. End of Aside].
The interview is conducted by John Battelle and Tim O'Reilly. The link for the net neutrality discussion portion, using 'start' and 'end' parameters, of the video is provided below:
Battelle [00:28:10]: "... the question of net neutrality and the question of openness are often, sort of, mashed together, as sort of similar, philosophical ... "
Schmidt [00:28:20]: "Of course, they are quite different."
Battelle [00:28:22]: "... I am curious if you can, maybe, take a minute to educate us on how you came to the joint statement you made with Verizon on the issue of net neutrality, in particular the idea that, well, in the open wired web, net neutrality means (a), and on the wireless web it means (b) ..."
Schmidt [00:28:45]: "And which is precisely not what we said. A little bit of background, it is helpful by the way to define the terms. So, net neutrality has for Google for many many years, and I think for responsible people in the industry, has meant that if you have one data type — video or whatever — the telecommunications vendor won't unfairly penalize their content over the others of the same type. It explicitly allows for discrimination between different types, so you could prioritize video below audio, for example, or SMS or whatever — a networking decision. And, we Google have always been in favor of that, and we continue to do so. The telcos, as a general rule, are ok with this, if you actually talk to them, because they are not really doing it and ever since Comcast's experience with BitTorrent, which is sort of a complex narrative — you know they saw the public's reaction to what was essentially a minor example of this problem, where they were doing traffic shaping. So, I think everybody understands how sensitive people are on this. So, the problem with the telcos as an aggregate — I am using the cable companies as well — is they don't want to be regulated. And, if you talk to them privately, what they will say is 'We are sort of OK with this but the one thing we do not want is the Government writing regulations, we just left 30 years of regulations'. So, our idea was to start the process of trying to put an industry agreement together, I think let us focus on wired. Now, why would you focus on wired? In most cases, the choice you have for high quality wired connection consists of 1. So, it is not as competitive a market as wireless, right? And, we figure competition will probably keep wireless under control. And, Verizon, to their credit, was willing in principle to agree with this as a policy statement. So we jointly announced, the two of us together thought that it was a pretty good idea. We did that in order to try to encourage more conversation about this in the industry ..."
O'Reilly [00:30:50]: "But, at the same time, the FCC was really in the middle of an initiative here and we took the wind out of their sails."
Schmidt [00:30:59]: "I am not sure I completely agree with that because we spent a lot of time with the FCC and, indeed, the FCC was in a series of meetings which we were in, and all of that. I was heavily ... I am very good ... I am close to the chairman, and so forth, I disagree with that rendition, and that is a different report."
O'Reilly: "I talked to Julius [Genachowski, FCC Chairman] at about that time, he was a little taken aback ... "
Schmidt: "Well, I did the same ..."
Battelle: "Fortunately Julius is here, and we could talk to him about that too ..."
Schmidt: "So, the effect of this was that unfortunately election fever took over, I don't think anything is going to happen until January, February, probably nothing for a while longer ..."
Battelle [00:31:40]: "There is a core agreement that, at least it came across, I think it is more fair to say if you can explain ... that wireless is different from wired but yet we open this conversation with 'wireless is extraordinary, important and distinct, and we need to be very careful ... '
Schmidt [00:31:50]: "I wouldn't ... I wouldn't be too ... I wouldn't obsess about this too much. I understand that all of these things matter. What we were only trying to do here is to move the ball a little bit forward. If the ball doesn't move forward because we didn't do it, somebody else needs to move it forward, we are just trying to be helpful. With respect to wireless, the conclusion we came to was that wireless is very very competitive, which I think is true. ... That doesn't mean ... and, so, if your view is that it should also be regulated, then that is a fine view, but we generally prefer competition to produce the right outcome."
Battelle [00:32:20]: "But, as you said, the principle of net neutrality, as you described it, just to make sure I understand it, should apply absolutely to wired, but not necessarily to wireless, is how I read it.
Schmidt [00:32:35]: "We didn't actually say that. What we said was that, [we could] after lots of arguing with a partner/foe in the debate, we came to common ground in this area. So our proposal was that wireless stuff we will deal with separately, which is not the same thing as what you said ..." [00:32:50]