Shareholders Reject – Again – Meaningless Net Neutrality Proposal

by Mike Wendy on May 6, 2013

You may remember that last year activist investors sought a shareholder vote from Verizon (and others), urging the company to “publicly commit to operate its wireless broadband network consistent with network neutrality principles” in a manner that does “not privilege, degrade or prioritize any packet transmitted over its wireless infrastructure based on its source, ownership or destination.”

Though wireless companies already operate under Net Neutrality regulations, these burdens are not as stringent as wireline rules, due in large part to FCC-recognized network capacity and management issues.

Nevertheless, the activists – i.e., all the usual suspects, like Free Press – wanted more tools to further hamstring network providers into becoming (one day, they dream) government controlled, owned and operated public utilities.


Well, why do they do anything?  Because in their view capitalism is immoral.  And Verizon’s networks are assets that are just too important to society to be controlled by private actors.

Not surprisingly, Verizon’s Board thought otherwise and came out strongly against the proposal, pointing out the folly of the scolds’ less-than-wise entreaty, stating:

…The proponents appear to have no concept of the negative technical and operational ramifications of requiring purely “neutral” routing of Internet traffic. This proposal would substantially interfere with the technical operation of Verizon’s wireless broadband network and have a wide-ranging and significant impact on Verizon’s business and operations. Among other things, the proposal would prevent Verizon from engaging in reasonable network management practices designed to address potential congestion, security and other wireless network problems and make the network more efficient and more widely available to all customers…

…Verizon already complies with the FCC’s net neutrality rules and voluntarily operates its wireless broadband networks in accordance with additional openness principles published on its website. The Board believes that the rigid operational requirements of this proposal will not further the “openness” of the Internet; to the contrary, it would expose Verizon’s wireless broadband customers to reduced service quality and security.

‘Nuff said.

Anyway, last year’s votes failed miserably, being crushed by shareholders.

Not having enough of a beating then, the activists were back at it again this year, albeit with a much more watered-down version of their Net Neutrality finger-wagging, essentially asking Verizon to study the implications of its Net Neutrality stance as it works to overturn the FCC’s rules in Federal Court.

Late last week, the shareholders overwhelmingly rejected even this watered-down version.

Again, Verizon’s Board rightfully urged rejection, noting:

…As a leader in developing an open architecture for the access to and use of the Internet, the Company’s position on all aspects of the “network neutrality” debate has been consistently and publicly conveyed in the mainstream and industry-related media, through online and traditional publications, in the development of technology standards, through legislative and agency fact-finding processes and in applicable agency and court filings, to name but a few of the forums in which Verizon participates.

In view of the extensive information that Verizon makes available about its approach to the public policy issues associated with network management, the Internet and network neutrality, the Board believes that the report requested by the proposal would provide no additional meaningful information to shareholders and would be a waste of corporate resources.

I’ll say, especially since the request was never meaningful in the first place.

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