Posted by Richard Whitt, Washington Telecom and Media Counsel

The Federal Communications Commission made real, if incomplete, progress for consumers this afternoon, as it set the rules for an upcoming auction of the publicly owned spectrum in the 700 MHz band.

None of us like how the current system locks you into wireless service plans that limit the kind of phone or PDA you can use, prevent you from downloading and using the software of your choice, and charge you hefty termination fees if you try to get out. And it's hard to ignore how the existing wireless carriers talk a good game about the virtues of the free market, but prefer to keep us stuck in their closed market. Today the FCC took some concrete steps on the road to bringing greater choice and competition to all Americans.

In essence, the FCC embraced two of the four openness conditions that we suggested several weeks ago: (1) open applications, the right of consumers to download and utilize any software applications or content they desire; and (2) open devices, the right of consumers to utilize their handheld communications device with whatever wireless network they prefer. We understand that the Commission also may have added real teeth to these two requirements, by plugging some of the more obvious loopholes and giving consumers a tangible remedy for any carrier violations.

Just two months ago, the notion that the FCC would take such a big step forward to give consumers meaningful choice through this auction seemed unlikely at best. Today -- thanks in no small part to broad public support for greater competition -- the FCC has embraced important principles of openness, and endorsed the unfettered workings of the free market for software applications and communications devices. Moreover, over the last few weeks several leading wireless carriers have reversed course and for the first time acknowledged our call for more open platforms in wireless networks. By any measure, that's real progress.

By the same token, it would have a more complete victory for consumers had the FCC adopted all four of the license conditions that we advocated, in order to pave the way for the real "third pipe" broadband competition that FCC Chairman Kevin Martin has been touting. For our part, we will need time to carefully study the actual text of the FCC's rules, due out in a few weeks, before we can make any definitive decisions about our possible participation in the auction.

In the meantime, we thank Chairman Martin for his leadership, and his compelling insight that American consumers deserve better in the wireless and broadband worlds. We've also had the pleasure of working on this issue with a broad cross-section of public interest groups that understand the need to foster more choices and competition in the wireless and broadband worlds.

Posted by Richard Whitt, Washington Telecom and Media Counsel

The upcoming FCC 700 MHz spectrum auction certainly has spurred both lively debate and, at times, heated rhetoric. With the FCC set to vote tomorrow on the rules for the auction, I thought it would be useful to summarize briefly where things stand at this point.

FCC Chairman Kevin Martin has stated from the beginning that his number one priority is to make broadband available to all Americans through a “third pipe” to the home (in addition to telephone and cable company broadband service). In support of that viewpoint, the Chairman has taken a bold stand for consumer choice by proposing that licensees must allow the use of any device or application on a specified portion of the 700 MHz spectrum. This approach -- if crafted with appropriately effective and enforceable provisions -- would free consumers from burdensome and artificial constraints on what they can do with their phones and software. These license conditions for the first time will enable device and applications competition at the "edges" of the wireless network.

Unfortunately, these same conditions fall well short of Chairman Martin's own goal of fostering the creation of a third pipe competitor. As long as incumbents are motivated by a desire to protect their current business models, and can continue to use a “blocking premium” to thwart fair market rates, they have every incentive to outbid would-be rivals. Such an auction outcome will constitute business as usual -- with no new broadband options in sight for consumers.

Google has joined numerous public interest groups and other Web companies in seeking more fundamental “wholesale open access” conditions. We believe these additional conditions would ensure that, no matter who wins the auction, consumers, along with service providers of all shapes and sizes, will have a seat at the table. We even committed to invest at least $4.6 billion in such a scenario, despite the fact that we have not traditionally been a communications company. Some have criticized us for, in their view, rigging the auction to our own benefit. We think quite the reverse is true: only by imposing certain openness conditions will potential new market entrants have a fair shot at successfully bidding in the auction.

Openness, user choice, and innovation have been elements fundamental to the rise and success of the Internet. We believe those same elements are critical for even the possibility of new broadband competition in the wireless space. If the FCC ultimately decides not to adopt "wholesale open access" license conditions, we do not see how significant new competition can emerge from this auction.

The time for debate is drawing to a close. The five FCC commissioners are this moment contemplating the relative merits of the parties' arguments, and are set to make a final decision on Tuesday morning. The prospects for fostering robust competition in this slender but valuable slice of spectrum hangs in the balance.

Posted by Adam Kovacevich, Manager, Global Communications and Public Affairs

The Boston Globe editorial board weighs in today on the spectrum reform debate, saying that "opening up wider access to a significant part of spectrum could jump-start wireless service in the United States -- for broadband, telephone, and who knows what else," and that "the FCC needs to adjust the auction rules so that this space becomes a competitive Internet marketplace." The Globe also writes that:

The Google plan would also be good for consumers. It would encourage the development of a national wireless system, providing competition to keep the cost down in communities now served by wired broadband and improving access in underserved areas, such as the Berkshires, that are too sparsely populated to justify private investment now.

The Globe is the only newspaper to weigh in on the spectrum debate. Earlier this month, USA Today and the Los Angeles Times also said that our proposal could help stimulate competition and bring the "broadest public benefit from these valuable public airwaves."

Posted by Pablo Chavez, Policy Counsel

It’s been a little over three months since Google announced our plans to acquire DoubleClick. We’ve blogged about our reasons for making the acquisition, and the deal has certainly made news. But less attention has been paid to what's been happening in the broader online advertising world since the deal was first announced: namely, a series of almost back-to-back acquisitions that demonstrates how many choices advertisers, website publishers, and consumers really have. Consider that after we announced the DoubleClick acquisition on April 13:

• On April 30, Yahoo announced its intent to acquire Right Media, an online advertising exchange, for $680 million.

• On May 16, AOL announced its plans to acquire ADTECH AG, an online ad-serving company, for an undisclosed amount.

• On May 17, WPP Group announced its planned acquisition of online advertising company 24/7 Real Media for $649 million.

• On May 18, Microsoft announced its planned acquisition of aQuantive, an online advertising firm, for $6 billion.

And just this week, two more announcements highlighted the tremendous activity in this space:

• On July 24, AOL announced its acquisition of TACODA, an online behavioral targeting advertising network, for an undisclosed amount.

• Finally, yesterday Microsoft announced that it has agreed to acquire online advertising exchange AdECN Inc. for an undisclosed amount.

What does all this mean? It means that each of the leading Internet companies believe that they can position themselves to succeed in the online advertising space -- through the free market, and without government intervention. These companies believe that there are many ways to compete in this business.

Google, Microsoft, AOL, Yahoo, and others are developing different combinations of capabilities in an effort to provide the most compelling offering to advertisers, publishers, and customers. For example, Microsoft’s purchase of aQuantive will eventually result in it owning an ad serving business that competes with DoubleClick, and will also make Microsoft one of the largest interactive advertising agencies in the U.S. In DoubleClick, Google is acquiring a technology that delivers and measures the performance of display ads – a technology that is critical if we are to compete in display advertising.

Beyond the different approaches that companies are taking, more capital infusion into the online ad business also means that more entrepreneurs will enter it, too. In fact, we have noticed that several startups in the online advertising space have received venture funding since April. More entrepreneurs, more market participants, and more capital are combining to create more competition and innovation.

Brian McAndrews, the President and CEO of aQuantive (which, as noted above, has been purchased by Microsoft) recently said about online advertising: "We're in the first or second inning of a long game here. There's no monopoly on innovation. I don't think you're going to see two or three big players and then game over. There will continue to be a broad range of companies." We couldn’t agree more.

In fact, we think that these acquisitions signal a new phase in online advertising, in which barriers between technology providers and advertising agencies are beginning to fall. These market dynamics will ultimately benefit consumers who will see more relevant and useful ads, and provide advertisers and publishers with more choices. And these are exactly the kind of competitive and innovation-driven market conditions that policy makers should be encouraging in our economy.

Posted by Alan Davidson, Senior Policy Counsel

You (or at least the engineers among you) may have heard about Google's Summer of Code. Based on our CEO's recent schedule, this is looking more and more like Eric Schmidt's Summer of Public Policy.

As more and more public policy issues affect Google and our users, Eric and many of our other senior executives have made an effort to meet more often with policymakers in Washington and around the country to talk about the future of the Internet -- and the individuals it empowers. Loyal blog readers may recall that YouTube's Chad Hurley was here to testify on online video in May and our people operations VP Laszlo Bock testified on immigration in June.

Last weekend, Eric was in Traverse City, Michigan speaking to the annual conference of the National Governors Association. As reported by the Traverse City Record-Eagle, Eric told the governors that "education must evolve to teach students how to research and access information instead of memorizing facts," and lamented that the tremendous teaching resources on the Internet are not being fully used to teach students. Check out the full video of Eric's NGA talk:



On Monday, Eric joined YouTube's Chad Hurley and Steve Chen in Charleston, South Carolina for the first CNN/YouTube presidential debate (which, by the way, was the second most-watched presidential debate so far...in no small part to the revolutionary voter-generated format). Today, Eric showed up on Capitol Hill to meet with a number of Senators and House members, discussing health care, patent reform, immigration, privacy and consumer issues. And next month, Eric will be among the tech policy wonks gathering at the Progress and Freedom Foundation's annual Aspen Summit, where we expect our recent advocacy for spectrum reform will be a big topic of discussion.

Posted by Adam Kovacevich, Manager, Global Communications and Public Affairs

I'm down in Charleston today for the first CNN/YouTube presidential debate, featuring the Democratic candidates (the Republican candidates will debate in September). You've no doubt seen the promos on CNN, or maybe even submitted a question yourself, but be sure to check out the debate tonight at 7pm ET / 4pm PT. Here's a small flavor of some of the questions that have been submitted:

Posted by Richard Whitt, Washington Telecom and Media Counsel

In recent days, and especially following Eric Schmidt's July 20 letter to FCC Chairman Kevin Martin, many people have asked us a straightforward question: why don't you just attempt to win the spectrum bidding outright, and then implement an open wholesaling business model yourself? Or, as AT&T has put it, "put up or shut up."

That question makes a lot of sense, especially for those most familiar with the ordinary marketplace structures they see on eBay, or Home Shopping Network, or at Target. In those everyday cases, the buyers and sellers collectively determine what is the fair market value for something, based on what willing participants on both sides agree should be the price. The free market is the optimal market.

But an FCC spectrum auction is a very different animal. Unlike in most commercial transactions, participants in an FCC auction operate in an artificially defined market. Initially, the spectrum comes sliced and diced in predetermined packages of varying bandwidth, geography, and duration. Those discrete slices tend to be compatible with what regulators perceive to be the prevailing services and technologies of the moment, such as centralized voice communications.

Further, given the sizable investments involved, only well-capitalized corporations can afford to bid at auctions. Ordinary citizens or entrepreneurs with novel ideas don't even show up. Even so, players still come to the table with unique assets, and in some cases disparate business models. For the upcoming 700 MHz auction in particular, the issue boils down to the different incentives at work between the existing national wireless carriers -- the incumbents -- and those companies seeking to enter the market for the first time -- potential new entrants.

As we have seriously considered entering the 700 MHz auction, we have been consulting with auction experts and game theorists to help us better understand the dynamics of a typical spectrum auction. What they have been telling us is that in a head-to-head bidding war between an incumbent wireless carrier and a potential new entrant, the incumbent almost invariably will prevail. Why? The answer involves two key economic factors: what we call the "incumbent blocking premium" and the "incumbent dilution discount."

Incumbent blocking premium

A significant economic factor that comes into play in an auction environment is the incentive and ability of one of the players to thwart the designs of the other. In the context of an FCC spectrum auction, there are at least three pertinent elements.

First, incumbent wireless carriers come to the auction with a vast array of existing assets, including thousands of radio towers, tens of thousands of miles of communications "backhaul" networks, and millions of customers, along with numerous retail outlets and tons of advertising. And perhaps most important of all, incumbents already own lots of spectrum -- much of which the FCC gave away for free some years ago, rather than sold at auction. By contrast, a true new entrant has none of these assets. Thus, to an incumbent, purchasing another wireless license is just an incremental investment, one made that much less costly given the existing, readily-available business inputs. To a new entrant, facing the daunting challenges of actually building and operating a network for the first time, the investment is less certain.

Second, the incumbent has the added benefit of operating in a less than fully competitive environment. Some use the term "monopoly rents" to describe the situation where a company enjoys revenues and profits that exceed what normally would be the case in a robustly competitive environment. Potential new entrants do not enjoy the same advantage.

Third, and perhaps most important, the incumbents have every incentive to preserve and protect their existing business model. Given their investment in all the necessary business inputs, and the relatively high prices and low bandwidth characteristics of their existing service offerings, the incumbents must prevent the entry of potential competitors to the market. In a spectrum auction, this means paying whatever it takes to block new entry. Not surprisingly, economists call this a "blocking premium."

As the diagram below shows, these three elements together mean that an incumbent will almost always be in a position to outbid a potential new entrant, simply by bidding above and beyond the fair market price. Unlike in a healthy auction situation, the final price would be higher than otherwise would be commercially reasonable.

Incumbent dilution discount

The second significant economic factor that comes into play in any auction environment is related to the number of players who actually show up to participate in the bidding. Again, in a normal commercial environment, market prices are shaped by the number of willing buyers, from just a few to potentially millions. However, an FCC spectrum auction presents a comparatively artificial scenario.

Given the existence of the incumbent blocking premium, as described above, it is often the case that there are no new potential entrants to bid against an incumbent. Why should a new player even bother to bid, or bid aggressively, if the incumbent inevitably will prevail? Where there may be only two incumbents -- or even one -- left to bid for a license, obviously the resulting price will not reflect the fair market value that otherwise would have been reached. The dilution of competitive bidders means the final price will be lower than otherwise would be the case. Recent studies have confirmed that this is a pervasive aspect of the FCC auction environment.

Un-skewing the spectrum auction

When looking at the combined impact of the incumbent blocking premium and the incumbent dilution discount, it's easy to see how FCC auction results become skewed.

Ironically enough, it is Google that has been accused of attempting to skew the auction structure, by our recommendation that the licenses be conditioned on certain "open platforms" requirements. Of course, as we have explained it is the current auction system that skews the results away from potential new entrants and in favor of existing incumbents.

Our position is simple enough. FCC Chairman Kevin Martin and the other commissioners have argued persuasively that we need a real third pipe broadband competitor in this country. They also believe that the upcoming 700 MHz auction is the best way to get there. All we are saying is that, based on what we know, new broadband competition will emerge from the upcoming auction only if the FCC's rules allow it to happen. For Google, and other potential new entrants, the prevailing imbalance can be corrected most effectively by introducing license conditions based on open platforms.

While Google embraces the kinds of openness and innovation that are the hallmark of the Internet, the incumbents apparently prefer their existing business models. That of course is their prerogative. However, open platforms -- specifically, open applications, open devices, open wholesale services, and open network access -- together make the spectrum more valuable to Google, or any other potential bidder seeking to create innovative, higher-speed, lower-priced offerings.

That is why Google has indicated that it is willing to spend a minimum of $4.6 billion in the auction, which is the FCC's reserve price for the particular spectrum block in question. At the same time, incumbents are unable to leverage anti-competitive blocking in this scenario. Regardless of who wins the bidding, however, the end result is an auction that yields a fair market price, with the added bonus of a new broadband network that is open to all comers. The American people get full value for their spectrum, plus open broadband platforms -- and even the possibility of a real third pipe competitor. Not a bad deal overall.

If the FCC ultimately decides not to adopt open platforms conditions that "un-skew" the 700 MHz auction, we believe it is unlikely that robust new broadband competition will emerge. In that case, our country would have lost a golden opportunity. Nonetheless, we remain optimistic that the FCC will stand up for its stated public policy goals, and pave the way for a much brighter broadband future for all Americans.

Posted by Chris Sacca, Head of Special Initiatives

(Cross-posted at the Official Google Blog)

For several years now, many Googlers have been working to identify the obstacles that prevent the Internet from being available to everyone on the planet. It strikes us as unfair that some people should enjoy such abundant access to this rich resource while billions of others aren't so lucky. Though the technology exists today to provide access on a global scale, often we have learned technology isn't the problem. In this context, we have worked hard to advance a set of principles that will make Internet access for all a priority.

For instance, we wrote last week on our Public Policy Blog about Google's interest in promoting competition in the broadband market here in the U.S., to help ensure that as many Americans as possible can access the Internet. However, it takes more than just ideas and rhetoric if you want to help bring the Internet to everyone.

So today, we're putting consumers' interests first, and putting our money where our principles are -- to the tune of $4.6 billion. Let me explain.

In the U.S., 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. With that in mind, last week, as the federal government prepares for what is arguably its most significant auction of wireless spectrum in history, we urged the Federal Communications Commission (FCC) to adopt rules to make sure that regardless of who wins the spectrum at auction, consumers' interests are the top priority. Specifically, we encouraged the FCC to require the adoption of four types of "open" platforms as part of the auction:

• Open applications: consumers should be able to download and utilize any software applications, content, or services they desire;
  
• Open devices: consumers should be able to utilize their handheld communications device with whatever wireless network they prefer;
  
• Open services: third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
  
• Open networks: third parties (like Internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee's wireless network.
  

As numerous public interest organizations noted earlier this week, all four of these conditions adopted together would promote a spirit of openness, and could spur additional forms of competition from web-based entities, such as software applications providers, content providers, handset makers, and ISPs. The big winners? Consumers. As choices increase, prices come down and more Americans have access to the Net.

The FCC is currently considering draft rules for the auction, and the reports we've heard are that those rules include some -- but not all four -- of the openness conditions that we and consumer groups support. While any embrace of open platforms is welcome, only if the FCC adopts all four principles will we see the genuinely competitive marketplace that Americans deserve. In particular, guaranteeing open services and open networks would ensure that entrepreneurs starting new networks and services will have a fair shot at success, in turn giving consumers a wider choice of broadband providers.

There are some who have claimed that embracing these principles and putting American consumers first might somehow devalue this spectrum. As much as we don't believe this to be the case, actions speak louder than words. That's why our CEO Eric Schmidt today sent a letter to FCC Chairman Kevin Martin, saying that, should the FCC adopt all four license conditions requested above, Google intends to commit at least $4.6 billion to bidding for spectrum in the upcoming 700 Mhz auction.

Why $4.6 billion? While we think that a robust and competitive auction based on these four principles will likely produce much higher bids, and we are eager to see a diverse set of bidders competing, $4.6 billion is the reserve price that FCC has proposed for the auction. With any concerns about revenue to the U.S. Treasury being satisfied, we hope the FCC can return its attention to adopting openness principles for the benefit of consumers.

In the meantime, thank you to those who have reached out to help with our efforts. It feels good to see how many of you support true competition for the benefit of consumers and we look forward to hearing from even more of you in the days to come.

For now, and for all of us, the issue is simple: this is one of the best opportunities we will have to bring the Internet to all Americans. Let's seize that opportunity.

Posted by John Burchett, State Policy Counsel

I'm excited about a new partnership that Google announced yesterday with the State of Michigan -- for two reasons. Not only will this partnership help make the online information and services provided by the state's government more accessible to its citizens through Google and other search engines (something everyone can support), but it also benefits residents of my home state (and where, coincidentally, I worked before joining Google two months ago).

As part of our alliance with Michigan, we've helped state government agencies implement what's called the Sitemap Protocol, which enables Google and other search engines that support the protocol (including Microsoft and Yahoo) to more comprehensively access and index the pages of their websites, specifically records in large online databases, making them visible in search results.

For example, Michigan Education Assessment Program (MEAP) test scores for hundreds of schools spanning multiple years currently reside in over 25,000 documents. The new partnership will allow a user to find the results for the school name and test year, eliminating multiple searches requests and clicks. It will also help make accessible information about child day care centers and homes, workers compensation appellate decisions, fish stocking, Michigan school report cards, lane closures on Michigan roads, and more.

Michigan is the fifth state we've partnered with in this effort to help Google users better access their government online, joining Arizona, California, Utah and Virginia. In the past, governments fulfilled their obligation to make information accessible by providing a document reading room or public notices in the newspaper. Today, the pioneering efforts of some states are bring citizens closer than ever to government -- literally one search away.

As luck would have it, I'm actually in the Wolverine State today, preparing for the National Governors Association meeting here in Traverse City. Our CEO Eric Schmidt will be here this weekend, and we'll be spreading the word about this issue.

Posted by Patricia Moll, European Policy Manager

The European Union recently agreed on new rules for broadcasting and on-demand content. The catchily termed "Audiovisual Media Services Directive" – formerly known as the "Television Without Frontiers" Directive – will update regulations on broadcasting across Europe and introduce a new framework for content viewed on other platforms, like the internet or mobile phones.

This new set of rules will distinguish between two types of content: television ("linear") and television-like on-demand content ("non-linear"). Anything which looks or feels like the traditional programmes that you'd watch on your TV falls into the first category, and user-generated content, such as on YouTube and Google Video, may fall into the second category.

Online vs. Broadcast Content

When discussions on the directive began there was little distinction between the two types of content, meaning that YouTube and Google Video would have had to comply with a complex set of rules designed to control traditional broadcasting. Thankfully, this was changed in the final draft of the legislation, which must still be voted on by the European Parliament. We believe that on-demand content shouldn't be regulated in the same way as traditional broadcasting because the two are quite different. People control the online content they demand, compared to the content which is broadcast on television.

The directive explicitly states that it will not apply to search engines. We hope that it will not apply to the content created by users themselves – although the language is less clear on this point.

The directive contains important measures to protect users, particularly children, from harmful and illegal content. There are also new rules to make sure that on-demand content doesn't feature material inciting hatred based on sex, racial or ethnic origin, nationality, disability, religion or belief, age or sexual orientation. Google supports these rules, which reflect the rules we already have in place through our user agreements.

We have talked to politicians and decision makers about the importance of empowering people to use the net and other platforms safely, and to make informed decisions through the use of filtering and labeling systems. For example, there is a passionate debate at the moment regarding clips from award-winning films on the YouTube "EUTube" channel promoting European "cinematic heritage." We think there are better ways to safeguard users than introducing unnecessary regulation.

The new directive also includes an important reference to the "country of origin principle," which simply means that content will continue to be regulated by the rules of the country from which it originates. Each country within the European Union will have broadly similar rules but there may be subtle differences. Anyone supplying content to users would only have to worry about one set of rules, rather than differing laws across the EU's Member States.

Next Steps

We expect the European Parliament will vote on the proposed directive in the autumn. After the Parliament has made its final decision, the EU member states will have two years to implement the directive into their own national law.

We will be following this process closely. If we need to, we will step up our advocacy efforts to make sure that politicians and regulators don't impose unnecessary regulations which would stifle the fantastic growth of user-generated content.

Posted by Adam Kovacevich, Manager, Global Communications and Public Affairs

Rep. Ron Paul (R-TX) became the fifth presidential candidate to visit the Googleplex Friday (following Hillary Clinton, John McCain, Bill Richardson and John Edwards), and the liberty-loving congressman was greeted by an overflow crowd of Googlers.

"I want to be president not because I want to run your lives," Rep. Paul told the crowd. "I don't want to be president to run the economy. I don't want to be president to run the world. I want to be president to restore liberty. I want a government that protects your privacy and exposes government secrecy."

The San Jose Mercury News reported that "Paul did call the Internet 'rather miraculous,' as he pitched his free-market, small-government mantra to the employees, many of whom came in shorts and even one in bare feet...But he did not sanitize his talk for his Net-centric audience. He said he does not support network neutrality, the concept that telecommunications companies should be restricted from controlling broadband access to the detriment of Web companies like Google, nor does he support tech-friendly immigration reforms in Congress recently. And he doesn't believe in federal student government loans, which a huge majority of the audience, by a show of hands, had used to make it through college."

Check out the complete video of Rep. Paul's town hall meeting with employees:


Rep. Paul also sat for an interview with YouTube's Steve Grove, with the questions posed entirely by YouTube community members:

Posted by Peter Fleischer, Global Privacy Counsel, Google

Citizens should have a right to privacy online. And governments have an obligation to keep their citizens safe. Finding the right balance between privacy and security is a delicate balancing act. Europe’s recent experience with data retention holds interesting lessons for everyone concerned with this balance.

In the aftermath of the Madrid bombings in 2004, the European Council adopted a Declaration on Combating Terrorism, which stated the need for rules on the retention of communications traffic data by European service providers for the first time. In some European countries, the ability to monitor communications was perceived as a practical priority in helping law enforcement agencies prevent and investigate terrorist acts. In April of 2004, the UK, Sweden, Ireland and France put forward a proposal for a Framework Decision calling for the retention of a wide variety of data for between 12 and 36 months.

However, for some politicians, the idea of adopting wide-ranging measures, requiring providers of telecommunications and Internet services to retain details of calls and electronic communications for periods of time beyond their pure operational needs, was not entirely justified. Indeed, for a while European privacy rights appeared to have the upper hand and the European Union institutions seemed to listen to the objections of the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs.

According to the calculations of this group of European Members of Parliament, if all the traffic data covered by the proposal did indeed have to be stored, the network of a large Internet provider would accumulate up to 40,000 terabytes – the equivalent of four million kilometers worth of paper files -- or about 10 stacks of files each reaching from Earth to the moon. But others pointed out that even the slowest terrorist would figure out that he could simply avoid his communications being traced by using a non-European service provider. Nonetheless, the political pressure continued, and the European Commission went on to propose a directive on data retention in September 2005.

The rest is history… and now law. Although the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs succeeded at introducing some amendments aimed at softening the effect of the proposal, an unprecedented data retention directive was adopted by the European Council on 15 March 2006. This directive imposes retention obligations between six months and two years in relation to accessible data generated or processed as a consequence of a communication or a communication service.

On paper, the aim behind the directive is simple and proper: to harmonise data retention rules across the EU and to ensure that the necessary information is available for the purpose of the investigation, detection and prosecution of serious crime. Unfortunately, the simplicity pretty much ends there. For a start, using the words “directive” and “harmonisation” in the same sentence is often an oxymoron, especially when a directive is cobbled together as a compromise between conflicting ideological positions.

On a practical level, the likelihood of seeing a consistent implementation of the rules across the EU is effectively zero. The timing of the implementation – due by September 15, 2007 – will certainly vary. 16 of the 27 EU Member States have already declared that they will delay the implementation of data retention of Internet traffic data for an additional period of 18 months, as permitted by the directive. The compulsory retention period for each type of data will also vary from country to county (e.g. Germany has proposed 6 months, the UK 12 months, and the Netherlands 18 months). The interpretation of other key elements, such as “serious crime," “competent national authorities,” or “electronic communications services” will be different across jurisdictions too.

These uncertainties impact on the justification for any privacy intrusions. Is a country more democratic than its neighbour because of its shorter retention period? Or do the citizens of that country face a greater security risk for the same reason? If there is something about the data retention directive that can be called into question is its proportionality – not necessarily in terms of financial cost to service providers, but in terms of privacy and anonymity loss. And what will Internet companies do in practice, especially if they operate one data architecture that cannot vary from one country to another: apply the longest retention period, or the shortest, or some “average”?

The data retention directive is of course just part of the picture. Several other initiatives provide additional evidence of the fact that traditional concepts of Internet privacy are in turmoil. One example was a proposal by the German government to complement its anti-terrorism measures by prohibiting the use of anonymous email accounts, by mandating that service providers verify the identity of their account holders.

Thankfully, the German government has recently retracted this proposal. Nonetheless, the idea continues to appeal to many: to make sure that every single e-mail user can be tracked down to an identifiable individual, so that the police can locate the terrorist behind the e-mail with the bomb-making instructions attachment, to take the most blatant possible example. The issue once again is whether this threat to anonymity on the Internet will be effective in making the world a safer place. Or will it do nothing to catch your average technology-savvy terrorist while eroding yet another layer of Internet privacy?

So, against this background, what is Google doing? We have recently announced a new policy to anonymize our search server logs after 18 months (we’re the first in our industry to have taken this step). We’re trying to get the balance right too, between privacy and other goals (like security, fraud prevention, and search improvements). People want to be free as much as they want to be safe. That’s true online too.

Posted by Richard Whitt, Washington Telecom and Media Counsel

As I’ve written before, Google has become increasingly involved in U.S. spectrum policy issues this year. One of our top public policy objectives is to expand the Internet's reach to more Americans. In part, that means creating new competition to challenge the existing broadband access duopoly (between cable and phone companies), by paving the way for consumers to gain meaningful alternatives via advanced wireless services.

Unfortunately, the wireless airwaves required to develop such a service traditionally have been allocated in a fragmented and inefficient manner. The federal government’s upcoming auction of spectrum in the 700 MHz bands (as part of the digital television transition) offers a tremendous, and probably unique, opportunity to promote competition and web-based innovation.

Earlier this year, Google and other members of the “Coalition for 4G in America” urged the Federal Communications Commission to adopt flexible rules that encourage competitive entry by new and innovative broadband companies. At the time, we stated that our advocacy in the 700 MHz proceeding did not necessarily signal our intention to participate in the auction itself, although no final decision had yet been made.

In comments we filed in late May, we stressed that new entrants face considerable hurdles when competing head-to-head with incumbent wireless carriers. We also noted that a proposal by Frontline Wireless to impose a wholesale/open access mandate on a certain spectrum block would ensure that the owner of that block at least would operate its wireless network in an open manner.

Over the last several weeks, we’ve been taking a closer look at whether and how Google might participate meaningfully in the auction. As part of that look, we've consulted with spectrum auction experts and conducted various game theory scenarios. Our analysis has confirmed that, under the originally proposed rules, the existing national wireless carriers are likely to prevail in the bidding process against a potential new entrant like Google. While we remain interested in the possibility of participating in the auction, it’s clear that the incumbent carriers have built-in advantages that will prove difficult to overcome (particularly the economic and operational barriers to entry for a company like ours, and the relatively greater value and usefulness that spectrum brings to existing carriers).

What would happen if one or some of the existing national wireless carriers win this valuable spectrum at auction? They would probably use it to protect their existing business models and thwart the entry of new competitors -- both understandable actions from a rational business perspective. Beyond the loss of a valuable public resource, however, that outcome would not bring us any closer to fostering much-needed competition in the broadband market, or providing innovative new web applications and service offerings.

Too much is at stake for the federal government to let that happen. Late yesterday, we filed a letter urging the FCC to take concrete steps to make sure that regardless of who wins the spectrum at auction, consumers’ interests are best served. We believe that the winning bidders should be required to adhere to enforceable rules that require the adoption of four types of "open" platforms:

• Open applications: consumers should be able to download and utilize any software applications, content, or services they desire;
• Open devices: consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
• Open services: third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
• Open networks: third parties (like internet service providers) should be able to interconnect at a technically feasible point in a 700 MHz licensee's wireless network.

We believe that adopting these four license conditions collectively will encourage prospective broadband companies to participate in the auction, and be able to bid successfully for the available spectrum. Not only are new entrants more likely to embrace an ethos of openness, but additional forms of competition will emerge from web-based entities, such as software applications providers, content providers, handset makers, and ISPs. And consumers ultimately will come out ahead in that rich and vibrant broadband environment.

In the meantime, there is now potentially positive news coming out of the FCC. Chairman Kevin Martin apparently is about to circulate proposed auction rules to his fellow commissioners, and we're hearing through the proverbial grapevine that his proposal includes several of the open platform conditions we have recommended. If these reports are accurate, we are most encouraged by this favorable development. Obviously we'll need to see the fine print, but such a proposal would represent a step forward for new, innovative entrants to the broadband market.

Posted by Adam Kovacevich, Manager, Global Communications and Public Affairs

Still looking for that perfect summer vacation? Consider a visit to great Nebraska destinations like the Fort Robinson State Park, the Stuhr Museum of the Prairie Pioneer, and of course, Carhenge.

U.S. Sen. Ben Nelson (Nebraska) -- who earlier this year used Google's MyMaps tool to create a virtual tour of his visit to Iraq -- is at it again. Yesterday Sen. Nelson launched two new Google maps mashups promoting Nebraska tourism. One map highlights state and federal parks; another, offbeat attractions in the Cornhusker State.

These maps are clearly a great new way for elected officials to communicate with the citizens they represent. Here's hoping that more Senators and House members will follow Senator Nelson's lead. In the meantime, anyone up for a road trip to the world's largest porch swing?