On the fixed Internet, Google doesn't actually care about prioritisation. In almost all developed markets, "best-effort" Internet access is perfectly adequate for YouTube and other "heavy" Google apps, especially when used with variable definition-quality, either at the user's control or using dynamic rate adaptation.
The agreement with Verizon means that VZ won't deliberately block or degrade YouTube or other content. That's one worry off the table for Google. But, interestingly, it also suggests that it can't prioritise either - something I'd been seeing expecting as a possibility for broadband business models. At least, it can't prioritise *Internet* traffic. More on the non-Internet service options later.
But I don't think Google really cares *that much* about getting HD YouTube to peoples' PCs, so the fact it won't be able to buy high-priority, QoS-controlled video clips isn't a problem. It wouldn't have bought them anyway - and I suspect Verizon knew that. (Unlike some of the more naive European operators).
Instead, it cares about two things:
- Better targetting of PC-based YouTube advertising (and ads on other Google PC services)
- Opportunities for non-PC (and non-mobile) Google services, for TVs, energy meters, tablets, consumer electronics and so forth.
While the proposals stop Verizon asking for money to *prioritise* YouTube traffic, it doesn't stop them asking for money to help *monetise* YouTube traffic. So Verizon customer data + Google adverts on PCs = more money than just just Google adverts alone. Win-Win. And not so good for the other web companies who don't have slick affiliate / advertising-targetting / rev-share engines.
The other side is around non-PC access. To be honest, there's not really any need to connect your TV or your electricity meter or your toaster to the "real Internet". You're not going to be browsing, or downloading new apps, or really doing any of the cool, ever-changing things the Internet permits. They will also have some very specific network requirements - eg the meter or a healthcare gadget will *absolutely* need security and prioritisation - and in fact, having them running as a service separate from the Internet is much safer and possibly regulatorily-mandated. Your TV, on the other hand, will come with extra user expectations - no video buffering, for a start.
So it seems to me that it is quite right that a future Google Smart Grid, or Google TV-YouTube, or Google HealthMonitor service should be able to operate on a completely separate basis from normal, best-efforts, PC-application Google stuff. With appropriate business models, however configured by all the parties involved. And not just Google, either. I wouldn't want a future Verizon / GE remote-monitored pacemaker service to be viewed "neutrally" on a par with the Internet access partition on the network.
The issue here isn't about a two-tiered Internet.
It's that networked services and applications are already split between Internet and non-Internet, and they're going to stay that way.
The Internet is absolutely fantastic for many applications, and absolutely wrong for others.
In the same way, massmarket cellular networks are fantastic for many applications, but I wouldn't want my smart meter or a policeman's radio running over those, either.
This issue of prioritising non-Internet uses of broadband lines is covered in considerable detail in the report on Broadband Busines Models published a few months ago. Details here