Back in December, the U.S. Federal Communications Commission released a “Report and Order” specifying new rules related to network neutrality. The rules have since been challenged in court in separate suits by Verizon and Metro PCS. They’re also under attack by the House of Representatives, though whatever they do is unlikely to pass the Senate and the president.

The Report and Order is quite long and involved, a typical federal document that runs to 194 pages (here’s a PDF of it, in case you’d like to read the whole thing). On page 135 there begins a statement by FCC Chairman Genachowski, which contains, on page 137, five points, “key principles”, as Mr Genachowski says, that lead to “key rules designed to preserve Internet freedom and openness.” That’s sort of an executive summary of the document.

I’ll note principles four and five here:

Fourth, the rules recognize that broadband providers need meaningful flexibility to manage their networks to deal with congestion, security, and other issues. And we also recognize the importance and value of business-model experimentation, such as tiered pricing. These are practical necessities, and will help promote investment in, and expansion of, high-speed broadband networks. So, for example, the order rules make clear that broadband providers can engage in “reasonable network management”.

Fifth, the principle of Internet openness applies to mobile broadband. There is one Internet, and it must remain an open platform, however consumers and innovators access it. And so today we are adopting, for the first time, broadly applicable rules requiring transparency for mobile broadband providers, and prohibiting them from blocking websites or blocking certain competitive applications.

In apparent response to those points, and taking “transparency” seriously, Verizon Wireless has recently updated their Customer Agreement (Terms and Conditions). If you scroll down to the bottom of that document, you’ll find a section called “Additional Disclosures”, the first paragraph of which says this:

We are implementing optimization and transcoding technologies in our network to transmit data files in a more efficient manner to allow available network capacity to benefit the greatest number of users. These techniques include caching less data, using less capacity, and sizing the video more appropriately for the device. The optimization process is agnostic to the content itself and to the website that provides it. While we invest much effort to avoid changing text, image, and video files in the compression process and while any change to the file is likely to be indiscernible, the optimization process may minimally impact the appearance of the file as displayed on your device. For a further, more detailed explanation of these techniques, please visit www.verizonwireless.com/vzwoptimization

That URL at the end lacks the “http” at the beginning and has not been made into a clickable link, but if you copy/paste it into your browser’s address bar, you’ll be redirected to a long page called Explanation of Optimization Deployment, full of technical details. It’s perhaps the most detailed and technical disclosure I’ve seen presented to consumers, full of terms such as “Internet latency”, “compression formats”, “codecs”, “caching”, “transcoding”, and “buffer tuning”.

I have to say that the policy looks reasonable. They say that they apply their “optimization” (not really the right term, here, but that’s the marketing spin) to “all content, including Verizon Wireless branded content.” They compress images and transcode video to reach a compromise between fidelity to the original content and what’s likely to be useful on a mobile device, conserving transmission resources by doing it. But it also benefits the consumer by way of reduced data charges. They also, basically, stream the content (“buffer tuning”), so if you stop a video in the middle you don’t have to transmit (nor pay for the transmission of) the unwatched portion.

The only disadvantage of any of this as I see it is that there’s no way to turn it off. If you notice degradation of your video content and want to watch the original — and are willing to pay for extra data transmission that entails — you can’t.

As a first step, this looks good: it’s a reasonable policy that preserves the essence of neutrality and fits the “reasonable network management” model. Of course, Verizon Wireless may just be testing the water, introducing changes a little at a time, with the most benign changes first. We’ll have to see.