By: Noam Zolty  | 

The Demise of Net Neutrality

The U.S. government has recently taken an enormous step in handing control of the internet away from the bureaucratic control of Washington and consolidating that power in the hands of the large internet service providers.

In November, the Federal Communications Commission made an enormous decision when they announced that they would scale back the Obama-era rules that require that internet providers treat all web traffic equally, a move that could fundamentally reshape the internet economy and consumers online experience. These changes, which are expected to be adopted by the F.C.C. in Mid- December, could open the door for a wide range of new opportunities for internet providers, such as allowing companies to form deals with internet service providers that would give their webpages preferential treatment. Examples of this superior treatment would be ensuring that certain websites received better streaming quality and that they would load more quickly. They would also guarantee that by controlling the order of the results of a google search, the websites that made these deals would be more accessible to consumers than those websites that didn’t make such deals. This would particularly help websites that are run by large companies with larger revenues that would be able to make these presumably expensive deals and would give them a large competitive advantage in the sphere of internet competition.

These deals, otherwise known as “paid prioritization”, were explicitly outlawed under the Obama rules, which required internet service providers, such as Verizon FiOS, Comcast and AT&T, to keep all corners of the internet equally accessible to consumers, and limited the providers’ ability to favor content, including their own. These laws were inspired by the principle known as Network Neutrality Principle, which states that the Internet should be treated as a utility, and such it is the government’s duty to guarantee that all internet traffic be treated equally. Proponents of this principle believe that public information network will end up being most useful if all content, websites, and platforms (e.g., mobile devices, video game consoles, etc.) are treated equally.

The real root of the issue is a philosophical question about whether the Internet should be treated like a commodity or a utility. Utilities, while still run by private companies, are heavily regulated and their services are doled out evenly to all customers. Commodities are subject to regulatory pressures, but their pricing and availability are governed more by the powers of supply and demand than by federal authorities. A utility, such as water or electricity, is a necessity for all people, and therefore the government needs to regulate the price and availability to guarantee that everyone must have access to the product or service. Many feel that the internet should also be treated as a utility, and that the government must regulate the industry as a whole. Proponents of the new initiative point out that this position ignores the billion dollars in private investment that made the internet so powerful in the first place. They feel that certain companies build a superior website and service and therefore should be able to differentiate themselves by being put on a higher platform than inferior websites. Just as certain food products are able to purchase better shelf space at supermarkets by making deals with the large chains, so too should internet providers be able to acquire better “shelf space” on the internet by making their superior products more accessible to the consumers.

The new rules are expected to undo this “open internet” plan that was adopted by the Obama administration. Supports of the current laws, which include consumer groups and many of the large internet companies, argue that these laws are necessary to restrain the control that the large broadband companies hold over the internet. They feel that these internet service providers are able to unfairly dominate what people can access by controlling the link between consumers and the websites that they are trying to reach.

Advocates of this recent reversal of the laws, which include the current FCC chairman Ajit Pai, argue that it is not the place of the government to be regulating the internet and that these restraints can stifle investment and innovation in a fast moving and rapidly growing industry. They feared that once the Obama era laws were passed, the government would continue their slow march to an eventual total control over the internet and very heavy handed regulation and oversight. They believe that the internet was created to be a largely unregulated “information service” and that the government has no business in meddling with this crucial aspect of what they internet represents. In a recent interview with the Wall Street Journal,  Mr. Pai argued that the Obama laws severely stifled internet service providers from providing the best possible product to consumers. He also stressed that with the pullback of these laws the internet bills of many of these companies will be reduced significantly. He in short believes that “internet across will be improved significantly for all consumers”.

Those who are opposed to the new laws believe that the internet will become less free and will be “ruled” by the major internet companies. They believe that a fundamental element of the internet is that it is a totally free platform where all have equal access and share. They strongly supported the laws that President Obama put in place, and are staunchly opposed to the reversal of these laws. They argue that in addition to the loss of freedom, consumers will be charged more by companies such as Netflix and Hulu, who will be forced to charge customers more in order to offset the additional expense of paying the internet providers. In their opinion, this new policy is another example of the government stepping in to help out the big corporate companies and in turn, hurt the “little guy”.

Whatever ends up happening, one thing is certain, the debate over net neutrality will continue to rage for a long time.