The BBC is reporting that talks in the US, intended to find a way to make sure all data on the Internet is treated equally have stalled.
The FCC (Federal Communications Commission) began the talks on net neutrality after Google and Verizon said they wanted to see faster access speeds for websites that paid extra for the privilege.
"Any outcome, any deal that doesn't preserve the freedom and openness of the Internet for consumers and entrepreneurs will be unacceptable," said FCC chair Julius Genachowski.
Google and Verizon both deny that they were close to agreeing on how they would lead a "two-tier" Internet with Google saying "We remain as committed as we always have been to an open Internet".
Further, Google's founder Eric Schmidt said "We have been talking to Verizon for a long time about trying to get an agreement on what the definition of what net neutrality is. We are trying to find solutions that bridge between the hard core 'net neutrality or else' view and the historical telecom view of no such agreement."
Net Neutrality would mean that no one type of traffic could be prioritised over another. Failure to maintain this would mean that small businesses and individuals could see their services and websites harder to access than those owned and operated by large commercial businesses with advertising and products to sell.
The move by Google and Verizon would be a big blow for the common man and the general freedom of the Internet. It has been a thorny issue for the FCC.
A recent court case limited the agency's powers to police what happens to data when it ruled that the FCC did not have the power to sanction Comcast for throttling some traffic.As a result the FCC said it would reclassify broadband under a more heavily regulated part of the telecommunications law known as Title II. Cable and phone companies claimed the move would stifle investment in next generation broadband.
With the fear that these companies would resort to legal action, the agency began holding what critics termed "secret negotiations" aimed at forging a consensus on how to treat Internet traffic.
The FCC's move to end these talks with firms such as Verizon, Google, Skype and AT&T suggest they broke down without reaching a decision.
Some public-interest groups believe, probably correctly, that such a move to a two-tier system would end the Internet we know and love today.
It remains to be seen what will happen from here on in.
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Ghacks is a technology news blog that was founded in 2005 by Martin Brinkmann. It has since then become one of the most popular tech news sites on the Internet with five authors and regular contributions from freelance writers.