The Net Neutrality Furor

It seems pretty clear now that the FCC is going to reverse the net neutrality decision of a few years ago at their upcoming December meeting. They mechanism they will use to reverse the order is by reversing the decision to place broadband under Title II regulation. That move will take the FCC out of the business of regulating broadband, meaning that not only would net neutrality rules be reversed, but the FCC would no longer regulate things like broadband privacy. The FCC expects that washing their hands of broadband sends privacy and other issues to the Federal Trade Commission.

A lot of the public is up in arms over this FCC direction and the topic is all over the news and social media. But unfortunately, I think the public is fighting to maintain net neutrality for the wrong reasons. People seem to fear that without net neutrality that the ISPs will begin abusing their customers in dreadful ways. I’ve seen social media warnings that the end of net neutrality means that the ISPs will block or throttle any web site that is not under their economic control. People fear that the ISPs will block content they don’t like such as porn or political content they disagree with.

I have a hard time buying these arguments. The ISPs have no economic incentive to badly antagonize customers. Removing the net neutrality rules now does not mean that ISPs can’t be regulated again in the future. Congress always has the power to regulate them in any manner desired, and if the ISPs start doing crazy things some future Congress will likely react. The net neutrality rules have only been in place for a few years and the ISPs didn’t abuse customers in these feared ways before these rules. I find it unlikely that would do the extreme things that people are warning about.

But I still think people are right to support net neutrality. But the issue they should care about is not net neutrality, but the basic Title II regulation. That is the framework the FCC used as the basis for passing the net neutrality rules. These rules largely allow the FCC to regulate broadband in the same manner they have regulated telephone service. The ISPs challenged the FCC’s Title II regulations in court and the courts have upheld the FCC’s right to regulate broadband.

The ISPs hate Title II regulation, but not because it imposes the net neutrality principles. Their real fear is that the FCC will use these rules to regulate broadband prices. A lot of analysts think that the big ISPs are planning on significant rate increases over the next few years. While the Wheeler FCC said they would not regulate rates, the Title II rules grants the FCC authority to do so at any future time. And the FCC can regulate more than just prices and has the authority to regulate things like data caps.

The big ISPs have been working hard to repeal the Title II regulation due to the threat of price regulation – not because they don’t want the net neutrality principles. There are numerous quotes from the CEOs of the big ISPs saying that they could live with the net neutrality principles – and I largely believe them.

Interestingly there is already at least one ISP that is completely flouting the net neutrality rules. T-Mobile now includes Netflix for free with its cellular plans. This practice is called zero rating and is in violation of the paid prioritization principle of net neutrality. It’s likely that many T-Mobile customers won’t buy other video content since they are already getting Netflix for ‘free’. This practice clearly puts other OTT providers at a disadvantage on the T-Mobile network. And yet, I don’t hear any public outcry about T-Mobile’s practice and suspect their customers really love this feature. This is what zero net neutrality rules looks like – ISPs are likely to bundle in features that a large percentage of their customers like. But the negative consequence to this is not to directly disadvantage customers, but rather to pick winners and losers among web companies. But my guess is that the ISPs will bundle with platforms a lot of people already like and that this bundling will be largely popular, like the T-Mobile bundling of Netflix.

I honestly believe that the big ISPs are largely laughing at the public on this issue. The ISPs understand that the public has badly interpreted their real reason for attacking Title II regulation. The ISPs want the unfettered ability to raise prices. Without regulation it’s true that the ISPs could probably do the sorts of things the public is so stirred up about – but it would be bad business to do so. Can you imagine the furor if AT&T started blocking web sites? Since the ISPs and the FCC understand the real game they can brush off the public hysteria that is concentrating on the wrong issues, and they can now get down to the business of raising rates.

7 thoughts on “The Net Neutrality Furor

  1. Thanks for this good commentary Doug! It is ironic that those fighting for net neutrality would not pick this more simple and direct argument rather than the much more complicated and nuanced arguments that they now put forward. The defenders of the current FCC trend have now positioned this fight as a battle of selfish and powerful Silicon Valley corporate giants battling with ISPs.

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    • You are right about that, Bill. The big ISPs are sophisticated these days and one has to wonder if they have not helped to stoke the shrillest of the opposition against them. Folks that are worried that Comcast would block search engines they don’t like are far off base and a lot of the opposition is stirred up about the wrong issues.

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  2. My experience: Prior to Net Neutrality, I had a 100 Mbps ISP only, no cable TV connection service from Comcast. Netflix, for some mysterious reason, just did not stream, ie, it did not work until I got a Chromecast (VPN, Comcast could not detect what I was trying to do with Netflix) and then it worked fine. It was clear to me that Comcast was throttling Netflix at my house in the hope I would give up and order some premium cable TV programming from them.

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  3. Before Title II we had Inter-Connection issues that messed with Netfix and others. Without Privacy, VZ can go back to its super cookie in order to send more disturbing ads. Who says that VZ won’t prioritize Yahoo search over Google? It would make more ad revenue for them.

    Cellular companies were NOT imposed the NN rules which is why all 4 have zero rating content. This is EXACTLY what most people worry about. In cellular you have generally at least 3 good choices. In terrestrial broadband, at most 2 – in 30% of the US, just 1.

    The Internet is vital for the flow of info; learning; work; and now healthcare. It is a Utility and should be regulated as thus.

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  4. Dear Doug:
    Never underestimate the public’s ability to misunderstand complex issues. This is a society that has mostly grown up on TV, and they have “a-mile-wide-and-an-inch-deep” viewpoint on issues.
    (1) When it comes to price hikes, the public will hue and cry, and some people will get upset about it, but most will just go ahead and pay. It is cynical, but that is what the “Big ISPs” are betting on. To most people, the broadband bill is just another home utility… and it’s a lot more reliable than PEPCO!

    (2) As far as Title 2 discussions, when I mention it, most people’s eyes start to glaze over before I get to the “2”… they don’t understand it and think of Title 2 as regulating telephones. There needs to be a little re-education of the populace on how Title 2 actually affects modern day life. In truth, the Big ISPs and high tech cos. (Verizon, AT&T, Comcast, Google, Apple, Microsoft, etc.) want to keep the conversation on “Net Neutrality” and “de-regulating the big (bad) government” because this takes the FCC off their backs. [Could they ultimately be trying to get rid of the FCC? Maybe a discussion for another day on your ~blog…]

    (3) Putting Ajit Pai is charge of the FCC has not been the most detrimental move by the current administration… but it is close. (That award might go the Admin. of EPA, who I think made his career fighting them!!) With the fox in charge of the hen house, so to speak, this is what we get… a rollback of all sorts of forward progress. Again, most folks probably do not care either way, only telecom professionals and lobbyists…

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  5. The left just as much as the right doesn’t get it. This is a point that so many people miss about principled support of a free, fair and open internet. “Principled” doesn’t mean that you don’t loathe your ideological opponents and wish that their message could be buried: it means that you’re smart enough to know that any such attack on freedom, fairness and openness will someday be turned on you. It’s not pie-in-the-sky, privileged libertarianism that relies on a perfectly spherical marketplace of ideas of uniform density travelling on a theoretical frictionless internet: it’s pure, informed self-interest guided by the self-control and foresight to know that the weapons you fashion know no allegiance to you.

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