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.