Shareholders Target Verizon’s Threat to Open Internet
Proposal to Be Considered at Shareholder Vote on May 2
April 30, 2013 // New York, NY: Shareholders of Verizon Communications Inc. (NYSE:VZ) this week will consider a proposal which asks the company to report on business risks to the company stemming from its opposition to open Internet and network neutrality principles.
The proposal will be voted on at Verizon’s annual meeting in Tulsa, Oklahoma on Thursday, May 2. Net neutrality is the principle that all Internet traffic should be treated equally and that Internet Service Providers cannot block, speed up or slow down content based on its source, ownership or destination.
The sponsors of the proposal, Trillium Asset Management LLC and the Nathan Cummings Foundation, argue that Verizon is employing a strategy of voicing support for open Internet principles while actively seeking to undermine them. In an open letter to Verizon shareholders, the proposal sponsors say failure to uphold network neutrality could reduce consumer choice, stifle economic growth and create enormous barriers to tech innovation.
ISS Proxy Advisory Services, the leading advisor to institutional investors, has recommended a vote in favor of the proposal, concluding:
“Given the public and sensitive nature of net neutrality and open Internet issues, shareholders would benefit from additional, specific information about how Verizon is managing these public policy concerns. Providing such information would not be unduly burdensome and could help shareholders assess the company’s management of potential risks related to these issues. Therefore, this proposal merits shareholder support.”
ISS went on to note that, “Although Verizon has expressed its commitment to supporting an open Internet, the company is currently the lead party in a court challenge opposing the FCC’s Open Internet rules.”
The shareholder proposal asks Verizon to issue a report on “how Verizon is responding to regulatory, competitive, legislative and public pressure to ensure that its network management policies and practices support network neutrality, an Open Internet and the social values described [in the proposal].”
The Verizon v FCC lawsuit was filed in 2012 and is currently before the U.S. Court of Appeals for the D.C. Circuit. In its court filings, Verizon made a bold claim that the company is entitled to exercise ‘editorial discretion’ to decide which content it provides to consumers who access the Internet using its services.
As one of the largest Internet Service Providers in the country, tens of millions of Americans will be affected by Verizon’s intention to control which Internet content is delivered on its networks. In addition, the proposal’s sponsors argue that the future of tech entrepreneurship is threatened. Many of today’s most successful companies—eBay, Amazon, Google, Facebook, Twitter—were once small startups that relied on open Internet access to grow into the companies they are today.
In a similar action filed last year, a net neutrality proposal got 7.9% of shareholder votes at Verizon – a substantial number for a first-time proposal. This year’s net neutrality proposal is expected to receive even greater support.
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