Net Neutrality: Who is losing?

The internet is under attack. But we can still win. This assertion, in bold bright orange lettering against a black background, can be read on one of the many, many Internet freedom group sites that are speaking up against a repeal of net neutrality. Net Neutrality. “The only two words that promise more boredom in the English language are Featuring Sting,” professes John Oliver, comedian and political commentator in his skit on the topic. This skit, however, was aired in 2014, so why is it that four years later the term is back at the center of the debate? And what even is net neutrality?

What is net neutrality?
Net neutrality is the idea that Internet Service Providers (ISPs) and wireless providers should treat all internet traffic equally. It prohibits Internet providers from blocking, throttling, and paid prioritization—”fast lanes” for sites that pay, and slow lanes for everyone else.

Despite being a simple idea (maybe even a given,) net neutrality has proven difficult to translate into policy. Its position at the intersection of highly technical internet architecture and equally complex administrative law makes it a contender for ongoing debate. The term “net neutrality” itself wasn’t even coined by an engineer but a legal academic, Tim Wu.

Why is it threatened?

The FCC voted to repeal 2015 net neutrality regulations, requiring ISPs to treat all web traffic equally

On December 15, 2017, the Republican-controlled Federal Communications Commission (FCC) chaired by Ajit Pai (a former Verizon lawyer) voted to repeal 2015 net neutrality regulations, dismantling the Obama-era policy that requires ISP to treat all web traffic equally, and classified broadband as a common carrier.

Can repealing net neutrality, a cornerstone of the open Internet, fundamentally change the way the Internet is experienced? Let’s have a look at the key players that command the Internet ecosystem. First, there’s the FCC, which represents the main U.S. regulatory bodies for internet usage. There’s the president, who appoints the members of the Commission and Congress. Then there are the businesses, which are awkwardly divided into “edge providers” (Google, Facebook, Netflix) and “infrastructure” providers (ISPs). Increasingly, the divide is blurring as ISPs become content creators. In between are advocacy groups with strong biases, minus the funds to lobby like the other titans.

There’s the question of whether or not the Internet should be treated as a utility, which by definition, doesn’t compete with anyone, its monopoly eliminating incentives for investment, innovation, maintenance and customer service. The rather sad state of most power, water and mass transit systems illustrates that argument. There’s the state of today’s commercial internet, its activities having evolved from static web browsing and email to streaming, shopping and socializing. ISPs (note that the top 6 providers account for 92% of broadband.) complain that this growing, unstoppable amount of data transferred by content providers to end users is clogging up their networks, and why should they pay the cost?

Why should I care?

Smaller ISPs could not compete with the larger content providers, crushing innovation and dissuading investment

Concretely, what could be a plausible scenario? Providers could practice “zero rating,” which exempts certain services from data caps. Comcast for example zero-rated its own service, Stream TV, to give itself competitive advantage over Netflix or Youtube. The provider could also demand that the content provider pay an upfront fee to join the Zero Rating club or simply benefit from a fast connection. If fees can be extracted from the likes of Netflix, then surely ISPs can lower the monthly fees charged to consumers. However, small ISPs could not compete, which sort of brings us back to square one: a monopoly that crushes innovation and dissuades investment. And even if giants like Spotify can dish out the money and buy dominance, you would be wiping out the next Google, the next Facebook, many of which were created without much seed capital and likely would have not been so successful if they’d had to face heavy upfront investment and limited access to broadband networks.

An internet driven more by deep pockets than bright ideas would take us back to an outdated form of entrepreneurship. Never before has launching a new venture been so easy (we call it the democratization of entrepreneurship.) Good ideas can emerge from anywhere and instantly achieve global reach. This is the beauty of an open Internet. An unprecedented and inexhaustible resource, a global community.

Three years ago, Netflix Inc. was a strong proponent for net neutrality. At the time, the video-streaming service provider depended wholly on ISPs AKA a good connection. Netflix, in anticipation of big guys like Disney pulling out their films streamed on Netflix, has recently become an original content creator with shows like Stranger Things, whose Season 2 premiere was watched by 15.8 million people (of which 361,000 binge-watched the all nine episodes in one day.) This year the company that just joined the 100-billion dollar club yesterday, wasn’t so outspoken. Like other tech titans, their newfound strength insulates them from ISPs themselves.

“I’m not sure that Google, Netflix and Facebook need the protection of the open internet order anymore,” Cowen & Co. analyst Paul Gallant said in an interview. “They have a lot more power than they used to.” Gallant contends that the largest content providers now have an edge over ISPs. “If Facebook or Netflix or Google or Amazon go pull their content off a particular ISP — that’s a problem for the ISP,” Gallant said.

Internet Freedom advocates can support big guys like Google in pitting themselves against ISPs, each taking turns lobbying millions of dollars to commissions like the FCC but the truth is, as Netflix CEO Reed Hastings puts it, “net neutrality principles have been and will continue to be strictly enforced not by regulations but by powerful market forces.”