So apparently the Wall Street Journal was wrong

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Google backing off net neutrality with ISP deal? Not really

First, let's look at what Google's up to. The Journal doesn't bother describing it until the very end of the article, and the description is sorely lacking; all the authors say is that the deal would "place Google servers directly within the network of the service providers." Fortunately, Google's Public Policy Blog has been used for damage control, as company counsel Richard Whitt describes the system in more detail. The plans are to have Google become its own edge-caching service provider, and do what commercial companies like Akamai are already engaged in: hosting copies of content at servers with high-speed connections to major regional networks. Under this system, users who are looking to obtain a large download, such as a video, get redirected to a copy of the file on a server that is local to them, providing a low-latency connection that avoids any network congestion elsewhere on the Internet.

Google's twist on the edge-caching setup is that it doesn't want to bother with the hassle of setting up a server facility and arranging a fat pipe to connect it with the local network. Instead, they're negotiating with ISPs to simply colocate their servers in the existing network facilities, neatly clearing both of these hurdles. Google emphasizes that these deals won't be exclusive—any content provider could get the same sort of deal if it's willing to pay the ISPs' price—and its commitment to net neutrality stands.

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Net Neutrality and the Obama Stimulus Package

As long as US telecom is duopoly dominated, a neutral Internet is endangered if not impossible; regulation of this kind of concentrated power is necessary but is unlikely to be sufficient. The solution, IMHO, is to dilute the power of the duopoly so that consumers can buy whatever kind of Internet access they want. Countries like the UK with a competitive ISP market do not seem to have net neutrality problems nor require net neutrality regulation and have better Internet access than we do at lower prices.

... part of the problem with net neutrality regulation; it's almost impossible to write workable definitions. Fervent supporters of the concept of net neutrality disagree on what is or isn't a violation of such neutrality. There is a huge danger that any regulation would result in further advantage to the incumbents who are accustomed to using regulation to their advantage. Would you want to wait for the FCC to certify your new service neutral before you could introduce it?

On the other hand, it's easy to recognize the virtues of a neutral Internet. With a few exceptions, we've had that so far. The backbone itself delivers packets to anywhere from anywhere without trying to figure out who sent them or what they might contain. It is wide open to innovation. It allows innovative business models whether they're disruptive or not – and whether they will ultimately succeed or not. Friend Om Malik warns "Many startups might skip over this issue, which I constantly bring up, but they need to wake up and realize that in the end they are all going to be impacted if network neutrality is backstabbed to death." He's right.