11 questions you were too afraid to ask about net neutrality

January 15, 2014

You've heard that a major federal court just murdered the Internet. Or something. It's not really clear. People are shouting about "net neutrality," but that sounds more like a newfangled tennis term than anything else. What does it mean? Why should you care? If you're confused about net neutrality, we're here to help.

So, net neutrality isn't about tennis?


All right. What is net neutrality, really?

It's mainly an idea about fairness. It says that no Internet service provider (ISP) should be allowed to speed up, slow down or block Web traffic from getting to where you, the customer, want it to go.

Let's say you're trying to watch Netflix. In the next room, your spouse is checking e-mail. A believer in net neutrality would say that your ISP should provide both of you with the same quality of service. Just because you're streaming a big video file and your partner is sending tiny packets of text doesn't give your ISP the right to modify your Internet experience.

Why would my ISP want to change that?

Running a network is expensive. Some believe that if you use more data, you should pay for it — in the same way that your utility company charges you for using more water or more electricity. [Edit: As Alexander Furnas points out, a more accurate way of putting this would be to suppose that your water company charges you different rates for tap water as opposed to washing-machine water. Simple usage-based pricing, or metering, has been around forever.] And companies that operate the networks are always looking for new ways to bring in revenue so that they can make more upgrades — or, if you're a cynic, so that they can line their pockets.

Okay, but my ISP doesn't do that now.

That's because, until this week, broadband companies were bound by a set of rules that banned them from treating your Netflix video and your partner's e-mail differently. These rules were put in place in 2011 by the country's top telecom regulator, the Federal Communications Commission.

So what happened this week?

Those rules got nixed by three federal judges.

Why did that happen?

Verizon brought a lawsuit against the FCC's net neutrality rules, arguing that the agency didn't have the authority to regulate the broadband industry in this way.

No authority? Isn't that what the FCC is all about?

Well, the FCC does a lot of things. But one of the agency's unresolved questions is how much power it has to regulate ISPs. You see, ISPs fall into a different category from the traditional telephone companies the FCC regulates. That means that when the FCC decided to regulate ISPs, it couldn't use the same tools that it normally applies to phone companies.

And the FCC tried to do just that?

In a word, yes. The court said that the FCC was trying to apply what are known as "Title II" obligations to companies that are regulated under Title I of the Telecommunications Act, which is the law that created the FCC and gives it its powers. It used the wrong tool for the job.

The court actually sided with the FCC on the whole idea of net neutrality, arguing that a ban on traffic discrimination would help keep the Internet an innovative place. But it ruled that the FCC had overstepped its legal authority in trying to do so.

What happens now?

Well, companies like Verizon will be free to experiment with new business models. That's good for Verizon, but potentially bad for consumers. There are many ways this could play out. But in general, they all result in consumers paying more to access the same services they get today.

To return to the Netflix example: Verizon could charge you an additional fee for watching Netflix, on the grounds that you're using more data than you otherwise might if you were simply checking e-mail, like your spouse. Or, more likely, it could turn around and demand that Netflix pay a fee to reach Verizon customers. Netflix could then pass those added costs on to you.

Or Verizon and Netflix could team up, signing a deal that gives the video company preferential treatment over, say, its rival Hulu. If you wanted to watch Hulu instead of Netflix, it might cost you extra. Or perhaps Hulu wouldn't be available on Verizon at all.

These same dynamics could take hold beyond Internet video. Online gaming could become a premium privilege. So could doing academic research.

And ISPs would be free to mix and match these services however they wanted, perhaps creating a bundle of applications you could buy together as a package — much like you buy a cable package today that includes some channels but not others.

What's more, some consumer advocates worry that small businesses might be crushed by larger competitors if they can't afford to participate in a pay-for-play Internet.

As you can see, there are any number of possible outcomes in a world that's not bound by net neutrality. While it's all very interesting in theory, consumers might get hurt by a regime that actively discriminates between different types of Internet traffic.

But the FCC isn't just going to roll over, right?

Probably not. Its chairman, Tom Wheeler, says he's looking at an appeal. There are a few choices for the FCC at this point. It can do nothing, which might be an attractive option given that net neutrality was something the last FCC chairman was really into and his successor merely inherited.

Another path would be for the FCC to ask the federal court for a rehearing. This would require a vote by all the judges of the court. If the court votes to rehear the case, it'll involve a different set of judges who might be more sympathetic to the FCC's argument. It's like asking for a do-over, with the hope of better luck. There's some reason to think this could work; President Obama has been working to add new judges to the D.C. Circuit court, and assuming that Democratic nominees would be open to supporting a Democratic agenda at the FCC, net neutrality could sneak by that way.

Anything else the FCC might try?

It might attempt to redefine ISPs into the kind of telecom business that it's got more authority to regulate. This process is called reclassification, and it would involve moving ISPs from the Title I bucket to the Title II bucket. But that would be a pretty bold move, and it would attract a lot of criticism from Verizon and the other companies that opposed net neutrality in the first place.

The FCC could also try to create more authority for itself within the Title I classification. But any additional powers it got by doing that wouldn't be enough to make up for what it lost in the case.

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