We Will Be Fine Without Net Neutrality
The F.C.C. once again added fuel to the Net Neutrality fire this week by releasing preliminary rules that would allow internet service providers to create special, faster lanes for online content companies to reach consumers if the companies pay extra to access those lanes.
The New York Times points out the commission only released these rules after a federal appeals court struck down the commission’s rules banning these types of agreements for a second time.
“The F.C.C. had previously warned against those types of deals, saying they could unfairly discriminate against companies that could not or were not willing to pay. But after a federal appeals court struck down, for a second time, the commission’s earlier regulations, the F.C.C. is trying again.” (Via NYT)
The Verge voiced concern, saying the new proposal would destroy the Internet as we know it. Though they have since softened several of their claims following FCC chairman Tom Wheeler’s statement.
I get it. Everyone’s afraid. They’re no longer sure all ISPs will give them access to the entire web - at least at a consistent speed. It is cause for some concern. There’s a chance that Comcast or AT&T will take this to heart and start charging Netflix or allow certain content providers to pay extra cash to obtain special access to your home. But seriously, take a deep breath and understand the internet market has been preventing this from happening almost as much if not more than federal regulations. This isn’t the television market.
The most frightening (and exaggerated) graphic I’ve seen out of the whole debate is this one. The idea is that you’ll basically purchase access to websites like you purchase access to cable television channels, but your ISP doesn’t pay websites for the ability to send them to you.
There would have to be serious collusion on the part of ISPs to maintain a market with 0 net neutral providers. Even if they started price and speed fixing, the arrangement would break down because it would be profitable for an individual ISP to deviate and allow more websites or drop their prices.
Timothy Lee of the CATO institute wrote an exhaustive policy analysis on net neutrality in 2008. He argues the application of policies and content discrimination by ISPs would be too difficult to implement.
“The average Internet user has no clear sense of the type or amount of data any given application generates. Any pricing policy complex enough to distinguish among the many categories of Internet content is likely to be incomprehensible to most customers
Tech-savvy users would present an even bigger headache for a network owner with a discriminatory pricing strategy. If different types of data were billed at different rates, users would have a powerful financial incentive to camouflage their high-priced bits to look like lower-priced bits. That would spark a techznological arms race in which the ISP developed more sophisticated filtering technology and users developed better evasion techniques. Network owners would almost certainly lose this arms race, but not before spending millions of dollars on unnecessary hardware and software.” (Via The CATO Institute)
Some of the arguments in favor of a federal regulation to ensure Net Neutrality come off as ironic because people are arguing against regulation of the Internet by supporting regulations from the Federal Government. The Wall Street Journal Editorial Board notes just how odd some of these arguments are.
“Only in an era of super-sized government would a plan to give a politically appointed Beltway panel discretion to make ad hoc decisions on what constitutes ‘reasonable’ commerce be seen as ushering in an unregulated market. And by the way, as Mr. McDowell notes, ‘there's still nothing broken that needs fixing.’” (Via WSJ)
Though there are still two serious concerns. The first is the worry large ISPs could successfully force Netflix and other broadband hogs to pay more and actually have the pull to shut them out of the market by maintaining enough loyalty that their own customers would simply switch to Hulu+ to keep their ISP. The second concern is that rather than Netflix (& similar services) feeling threatened, they are able to utilize these new, faster channels to successfully monopolize the market and keep competitors out.
Now both of these concerns have huge caveats attached to them because it’s unclear whether either is possible or - more importantly - profitable based on the reality of the market.