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What is Net Neutrality and why is it such a big deal?

What is Net Neutrality and why is it such a big deal?

What is Net Neutrality?

FCC Riles Oliver Stone to Jello Biafra on Web Fast-Lane VoteNet neutrality is the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, or mode of communication.

The Internet has become a part of our lives. Its hard to imaging a life with it, and we take it for granted to the extent that we (maybe falsely) believe it will always remain the free and open medium it is now. We’d like to believe it will remain a place where you can always access any content you want, and where the content providers  can’t play favorites because they disagree with the message being delivered or want to charge more money for faster delivery. But, who referees and guarantees this freedom will be protected and that the game will be played fairly? Or better yet, should we have a referee in the first place, after all, things are working out just fine now (by and large).

On November 10th, 2014, President Obama urged the Federal Communications Commission (FCC) to take up the strongest possible rules to protect net neutrality, the principle that says Internet service providers (ISPs) should treat all internet traffic equally.

He starts off really well, saying that the Internet was organized around the basic principles of Openness, Fairness and Freedom. Yet during the second half of the video, he says he is asking the FCC to regulate it. Call me a sceptic, but I do not trust that having the Government involved in regulating the internet is a good thing.

Known Exploits

The first question I asked when I heard of this debate was why are we even talking about changing something that is working so well. As it turns out though, some providers have been caught “cheating”:

  • In 2007, Comcast was caught interfering with their customers’ use of BitTorrent and other peer-to-peer file sharing.
  • We’ve seen discriminatory traffic shaping that prioritizes some protocols over others, like when a Canadian ISP slowed down all encrypted file transfers for five years.
  • The FCC fined Verizon in 2012 for charging consumers for using their phone as a mobile hotspot.

Finally here is a list of the worst violations in history article by the Daily Dot.

The obvious conclusion here, based on these blatant violations is that the problem is real. The question remains however, do we fix it with a sledge hammer (i.e. Broad Government Regulation) or do we fix it with finer, smaller instruments (i.e. minor legislation that fixes ONLY what is broken, fines content providers instead of levying taxes).

Side Effects of Government Regulation

Increased Cost

This report on network neutrality finds the policy could pass on an up-charge of as much as $55 per month to the consumer.

This article claims that and internet tax is forth-coming. If you have ever taken a look at your telephone bill it is hard to not believe this is what’s coming to the internet bill as well.

Internet users would be forced to pay a new federal tax on their monthly bills if the government approves regulations recently endorsed by President Obama, a member of the Federal Communications Commission predicts…

…That law requires telecommunications companies to pay into the FCC’s “Universal Service Fund” — and would likely require the same of Internet companies. But O’Reilly says history clearly shows that the fees would quickly be “passed off” to customers, just like they are now on monthly phone bills.

FoxNews.com

Impact on the Consumer and Economic Growth

The author finds a “policy which seeks to manage competition by influencing the investment decisions of operators could have a significantly negative impact on consumers, job growth and the economy generally.”Consumer Communication Services (CCS)

No Incentive for Innovation

Robert E. Litan and Hal J. Singer find an FCC mandate on network neutrality “would be detrimental to the objectives that all Americans seemingly should want—namely, the accelerated construction of next-generation networks, and benefits of lower prices, broader consumer choices, and innovations these networks would bring.”

Robert Hahn of the American Enterprise Institute finds, “’Hands off the Internet’ was good policy when the Internet was brand new, and it’s good policy now.” Noting several attempts at regulation that currently prohibit competition and stifle innovation, Hahn views additional regulation as directed toward a nonexistent problem. If competition should decline, current antitrust law would solve any problems, he observes.

Check out this video featuring Timothy B. Lee, Adjunct Scholar for the Cato Institute and member of the Center for IT Policy at Princeton University and Jerry Brito, Senior Research Fellow for the Mercatus Center and Adjunct Professor of Law at George Mason University School of Law. Here Mr. Lee reviews what network neutrality is, why it matters, and how regulations could stifle innovation online. They will also talk about the recent power grab in the Comcast network neutrality case. It is 38 minutes long, but well worth watching.

Impact on Small Businesses

This study finds government-enforced regulation has a disproportionately large economic effect on small business.

So, What Now?

Several studies have found that the FCC’s enforcement of net neutrality rules would harm the digital economy and us, the consumers. As you saw  from the research and articles listed earlier in this post find that regulation would stifle innovation and impose costs that would be passed on to consumers. It is hard to dispute any of it. Study after study finds net neutrality is an attempt to fix a rather small problem (for the time being) but with rather disrupting measures.

Its obvious at this point that protecting net neutrality is a hard problem, with no easy solutions.  It’s going to take a variety of actions and ongoing vigilance. However, I disagree with the need for federal regulatory action by the FCC. We should maintain the current federal minimal regulatory approach that allows the competitive marketplace to drive broadband and broadband-related application development and deployment.

I support policies promoting an open, accessible and vibrant Internet consistent with the principles of ‘light touch’ regulation, and hope that we can apply these same principles in finding a solution to this problem. What’s your take?

mm
Antonio Chagoury

Founder and CEO

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