A Response to Open Internet Regulation – Net Neutrality

If you find yourself in an outrage over the reversal of net neutrality regulations, you may be a victim of biased and exaggerated journalism.  The world is not ending and the internet is not over.

The Context

Ajit Pai, Director of the Federal Communications Commission has made clear the stance they will take on regulation of broadband providers in the United States.  Although most Americans have their minds fixed on the regulatory path they think the FCC should take, few have actually considered what the open internet actually is and the effect regulation has on it.

In the simplest form, the internet has four major players: providers, servicers, consumers, and regulators.  Generally, providers are those who invest in infrastructure to maintain internet connections and offer broadband access to others.  Servicers (generally businesses) are those who use the internet as a delivery channel for its product or daily operations.  Next, the category you and I probably fall under, consumers, are those who use the internet for consumption and recreation.  This leaves a fourth party, Regulators, who are given the task of balancing a power struggle between the three other parties.

In an effort to find this balance between providers, servicers, and consumers the FCC took initiative to reclassify broadband providers as common carriers under Title II of the Communications Act.  Doing this granted them more regulatory control over the reclassified industry.  This would mean the FCC could begin regulating against throttling, blocking, and paid prioritization on broadband networks.  In principle, every consumer and business would have equal access to the same networks and sites at the same speeds.

Though this sounds like a bullet proof regulation, the net effect of it is almost non-existent.

The Internet is not a Level Playing Field

The internet is not, and never will be, a level playing field.  One of the driving concepts behind the open internet is that all businesses will be able to compete evenly.  Net neutrality principles will promote competition and fairness between businesses.  Given any thought to the practicality of this idea, you will quickly realize how absurd it is.

Despite connection speeds, larger companies create clear network advantages due to unmatched investment.  Have you ever noticed that every time you Google something, they disclose to you how long it took to retrieve search results?  They take pride in search efficiency as it is one of their competitive advantages.  How could a company possibly rely on faster speeds with regulations such as net neutrality in place?

The answer is simple.  Net neutrality principles have little real world application.  Google has the resources to tunnel cables under lakes and rivers, and connect directly to broadband provider’s servers.  This allows them a very privileged connection to you (a consumer) that smaller companies will never have.  This illustrates clearly how network speeds are manipulated as much by servicers as it is providers.  How is this neutral?

Net Neutrality Reduces Investment and Innovation

Net neutrality principles make the assumption we are done improving broadband speeds.  Increased regulation reduces both investment and innovation within the broadband industry.

In their ‘Open Internet Order’, the FCC addressed the growth of broadband investment from research done by US Telecom, but however; US Telecom released research this November concluding “U.S. broadband providers invested approximately $76.0 billion in network infrastructure in 2016 down from approximately $77.9 billion in 2015 and $78.4 billion in 2014.”  Though this may seem to be a coincidence, even they bring up the definite possibility this decrease could be attributed to “FCC’s 2015 decision to reclassify broadband providers as common carriers under Title II of the Communications Act.”

Furthermore, what may be even more harmful to industry investment is regulation against paid prioritization.  This aspect probably gets the most attention in the news, but it is easily the most misunderstood.

Let us be clear about what is and what is not happening here.  Broadband providers are not going to increase the cost of connections for consumers, doing this would greatly reduce demand for their products as most of the industry is consolidated.  For example, if AT&T increased the cost of adequate connections, subscriptions to products that require these connections will fall.

On the flip side, broadband providers will charge large businesses more for their connections.  At peak times, Netflix accounts for more than 35% of all downstream broadband traffic.  The amount of investment required by providers to maintain infrastructure to support this traffic is very high.  Netflix costs providers more, so they should have to pay more.  Net neutrality principles will have you think backwards though, calling this paid prioritization, and therefore illegal.

Additionally, some say this will hurt Netflix’s business.  In a recent interview with Recode, Netflix CEO Reed Hastings explained that net neutrality is not one of the companies “primary battles.”  It is well understood that they are large enough to both take advantage of their size; further supporting the idea of net neutrality being absurd.

Regulating Equality is Impossible

If we were really concerned about an open internet, regulation would extend to servicers, but this is not the case.  Largely everything we experience online is somehow filtered by either Google or Facebook.  Why would your connection even matter if what you saw wasn’t the product of a search result or the output of an algorithm?  Connection becomes meaningless when your experience is controlled.

Furthermore, server prioritization is used by many companies to increase efficiency of their servers.  Oracle itself recommends this as a way of increasing efficiency.  If a broadband provider hints at doing this though, the world loses its mind.  There is absolutely no evidence service prioritization was harmful prior to 2015, and there still is none today.  Maybe regulation would benefit the whole if it was aimed at servicers rather than providers.

Though net neutrality principles may be well intended, they are ineffective and the reversal of them should alarm no one.  The country as a whole may even benefit from their repeal.  The idea of a corrupt regulatory agencies and evil corporate takeovers is an easy way for news outlets to get reactions from their readers.

3 thoughts on “A Response to Open Internet Regulation – Net Neutrality

  1. “In 55% of the U.S., there is only one major broadband provider and in most of the remaining 45%, there are two. That means that if that sole provider chooses to be the proverbial “bad actor,” there is no “free market” to correct their actions. If you’re a consumer, you have no other options.” I wish I had more options to select a provider

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s