You have probably seen some net neutrality scare tactics recently. The issues are complex and proposals to “guarantee” net neutrality usually promise to protect Internet users from a variety of evil ISP behaviors by authorizing the FCC to treat the Internet as a common carrier / utility, with powers to regulate and tariff (that is, price control) services. As is usually the case when powerful business and political interests are involved, the spin obscures more than clarifies.
First, let’s look at a reasonably neutral outline of the issues, from Open Secrets:
Net neutrality is the principle that all data on the Internet should be treated equally, not discriminated against based on platform, content, user or any other characteristic; ISPs may not create pay-to-play “fast lanes” that only some content providers could afford. Sounds simple enough, but the application of this axiom is technically and legally complex given the immense, intertwined — and sometimes competing — interests of ISPs, governments, and consumers in Internet industries and infrastructures
Debate over net neutrality in the U.S. has picked up in recent years, but it’s been an issue of worldwide contention since the early 2000’s. The US government has attempted to implement various strategies for regulation over this timeframe with little success. Net neutrality supporters believe that the government hasn’t gone far enough to protect individual freedom and security on the Internet; opponents fear that government intervention will hamper innovation and investment while increasing the costs of getting online.
Much of the recent debate has centered on the concept of paid prioritization. ISPs, such as Comcast, want content providers to pay them to deliver data faster. The ISPs claim that allowing these fast lanes is the only way they’ll be able to manage data efficiently and generate revenue to expand and improve Internet infrastructure. Opponents of paid prioritization, including content providers like Netflix and Amazon, assert that this kind of data discrimination will stifle the growth of fledgling companies that cannot pay to compete with developed corporations in the fast lanes. Advocates on both sides of the issue believe that additional costs will be absorbed by customers if their adversaries prevail. Paid prioritization is only a part of the Net Neutrality issue, but it has become the most prominent aspect of the public discussion.
By voting in February to regulate broadband communications like a utility under Title II of the Communications Act, the FCC effectively prohibited paid prioritization. The Title II statute prohibits “common carriers,” which ISPs are now considered, from creating “any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services.” Similar common carrier laws have been used to regulate monopolistic markets like the telephone and railroad industries. Additionally, Title II imbues the FCC with the authority to investigate any consumer complaints in the Internet market and requires privacy and fair use assurances from ISPs. Net neutrality supporters rejoiced at this decision, but opponents are not settling for defeat: Congressional attempts to reign in the FCC’s authority over broadband have commenced as the first wave of telecom litigation arrives
Furthermore, some proponents of net neutrality like Google worry that the broad Title II classification may promote unintended consequences that raise costs. This is because Title II, an expansive set of regulations, permits the FCC to impose tariffs and other forms of rate regulation that are looked upon unfavorably by the private sector. FCC Chairman Tom Wheeler has vowed to selectively enforce Title II authority in an attempt to minimize costs and negative externalities, but such assurances have not assuaged the concerns of those embroiled in the debate.
Proponents of net neutrality regulation emphasize fear that ISPs will abuse their customers by using their power over what is delivered to discriminate against content — in its simplest form, the fear that the sites *you* want to see and paid to access will be slowed in favor of others. ISPs are widely resented in much of the US where local municipalities — authorized by Federal law to allow only one cable TV company to operate in their territory — restrict entry of wired Internet competitors, leaving the average US citizen dependent on 1.5 broadband Internet providers, usually the incumbent cable TV operator along with a few less competitive alternatives like DSL from remaining telephone carriers. You are stuck with one company, and as a result the company is unresponsive, the standard model for a regulated monopoly utility, and gets a better return on money spent lobbying its regulators and buying political influence than it does from spending to satisfy customers.
No one is suffering from differential slowdowns at the moment — though many suffer from lower speeds and higher monthly bills due to lack of consumer choice. Because most have no alternative, cable companies can milk their customers and make high profits while failing to invest in new equipment and network capacity. Until recently these companies were generating so much cash on cable TV that they were able to reinvest in content providers by buying up TV networks, cable channels, publishing houses, and newspapers. So today we have Time Warner, soon to be swallowed by Verizon (which originated as a rollup of old Bell System companies), Comcast (which now owns NBC-Universal and its cable channels (including MSNBC, CNBC, USA Network, NBCSN, E!, and The Weather Channel), Charter-Spectrum-Brighthouse, Cox, and so on.
The giant and most hated of these is Comcast, with its reputation for unresponsive, DMV-like service, constantly rising prices, and occasional abuses of power to favor their own content over competitors’. Comcast is maneuvering to get net neutrality regulation tailored to its interests — this would prevent other ISPs from charging for access to its content, while allowing it to provide better service and access for its own services within its dominant network.
On the other side are major content providers who want a net neutrality that bars ISPs for charging them extra to guarantee quality of service (QoS) for their customers. Netflix, for example, is paid by customers by the month, and those customers suck huge amounts of streaming data through the system to their homes; if that data bogs down the network, ISPs either have to spend money on new capacity and charge non-Netflix users for it, or control use by capping data use or speed. While metering data and charging both originators and receivers for it at a very low rate might be the closest to economic fairness, asking big data sellers like Netflix, Amazon, and Google to pay something for their use is at least approximately fair. Of course these companies don’t want to pay unless all of their competitors (especially the in-house content generators of the ISPs) are required to.
So the big campaign to scare you into supporting the latest generation of net neutrality regulation is really a fight between big media and ISP companies to keep their own margins high and competitors weak. Notice the real underlying problem for consumers — limited choice of ISPs and local monopolies — isn’t addressed at all. Nearly every legislator at federal, state, and local levels gets some campaign funding from the media and ISP giants (as well as flattering news coverage that is a major advantage for incumbents), and by finding problems only where the big donors want them to look, they keep voters from understanding where the real problem is. This is much like the current battle to “repeal and replace” the ACA, which carefully neglects to address the biggest underlying problem, the cost and limited availability of medical services and treatments due to overregulation and cartelization of supply.
In the long run, beyond 5 years, technology will eliminate the local cable monopolies — wireless 5G and beyond will provide broadband data service in most locations at a reasonable cost. Google fiber rollouts have stopped and most companies with fiber optic ambitions have decided to scrap new installations as the high costs would have to be written off in a short time, which is why Verizon FIOS, a winning product where it was allowed to compete with coax-based cable TV, was never fully installed where authorized and has been sold off to other companies.
The giants are competing for advantage in a future marketplace by promoting regulation that benefits them or reduces competition. But in their focus on their interests, they are opening the door for broader FCC regulation of the Internet, which in the long run could be applied to wireless and as well and result in constant political warfare and control of what you see and hear. The excuse for FCC regulation in the New Deal era was to prevent a kind of Tragedy of the Commons in radio and television — since there was limited spectrum for signals and laissez-faire broadcasting would ruin it for everyone, Congress declared the spectrum a public resource, then promptly turned it into a property right by handing it out for free to TV and radio stations connected to the powerful (see, for example, how Lady Bird Johnson made LBJ a multimillionaire by using his political pull to get TV licenses.) FCC control came with regulations of content and suppression of minority political viewpoints, something many party politicians would like to see return. Already the incumbent social media giants like Facebook and Twitter are suppressing “dangerous” views, and countries like China are suppressing Internet speech to continue their control of public discourse. Even a small step in that direction like the current net neutrality proposals is dangerous.
Free people don’t need protection; they need freedom to change providers. Start by opening up competition in ISP services so any abuse can be dealt with by going with someone else. Don’t give unelected government regulators control of your feed.
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