Myth of Net Neutrality Would Limit Internet’s Potential

With Net Neutrality the hot topic today, in particular this article in the New York Times, I thought I’d post an op-ed I wrote about the topic for a Media Law class last semester. I can’t say I’ve stayed up to date on how the issue has evolved since the time this was written (November), so if anybody has new information they’d like to contribute, feel free to post in the comments. Here it is:

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We’ve all seen it; we’ve all been captivated by it; we’ve allowed ourselves not to question it because it’s the American journalistic dream: take boring old news and make it interesting to the average consumer. John Oliver, television’s newest comedy anchor, has been great for American awareness. Unlike his contemporaries, Oliver has managed to not only entertain, but also to incite protest. The foremost example has been Oliver’s rant on Net Neutrality, in which he compelled Internet commenters to send complaints to the Federal Communications Commission, urging it to reconsider legislation that would, according to Oliver, fix a problem that doesn’t exist. And comment they did, as the FCC’s website crashed as a result of a wave of traffic the very next day.

But there was a massive oversight on the part of Oliver and his staff that critically skewed the issue and that led many — including myself, initially — to come to the wrong conclusion regarding the importance of Net Neutrality, and the necessary course of action. The focus needs to be on the market conditions surrounding Internet Service Providers and creating new incentive structures and regulations to optimize use of the internet rather than on preserving an outdated and inconvenient ideal.

Let’s start back in 2009. By then, the myth of web traffic being evenly distributed over thousands of different content providers had become just that. That year, half of all internet traffic stemmed from less than 150 large content providers, and the internet simply couldn’t function in the way it long had; it could no longer be neutral. Large providers like Google, Facebook, and Netflix began making special arrangements with ISPs to bypass the back-and-forth communications that tend to slow down Internet accessibility. In simple terms, they developed their own fast lanes. And that was it. The idea of Net Neutrality that Oliver preached so vehemently for commenters to preserve hasn’t been a reality in half a decade. Nor could it be. Today, those 150 companies providing half the content have shrunk to 30. Without a fast lane, a Netflix or an HBO would never work. There simply isn’t enough bandwidth if big content providers are forced to share with everybody else. The average start-up doesn’t have access to this fast lane, but for the most part the average start-up doesn’t need it. How do I know? Well, start-ups seem to be doing fine for themselves right now, and did anyone — did John Oliver, or any of his viewers — even know that the status quo was so different from what it was five years ago?

There is a serious issue to confront here — because the concern becomes one of escalating power and incentives for ISPs and content providers — but it isn’t about Net Neutrality at all, because Net Neutrality is neither alive nor optimal. The question is how to adjust the system such that those companies we’re all supposed to hate so much — Comcast, Time Warner, Verizon, etc. — are forced to invest in increasing broadband, and are prevented from using the ability to prioritize certain content to their advantage, at the expense of consumers. “We should be asking ourselves how do we create abundance, not how do we manage and allocate scarcity,” says Blair Levin, a former FCC chief of staff. As Oliver points out in his rant, America is currently 31st in the world in download speeds, behind even Estonia, a country that Oliver characterizes as looking like they “still worry about Shrek attacks.”

But before once again painting ISPs as the bad guys with regard to this issue, consider that this is a capitalist country, and for-profit corporations like Comcast are around to make money — and more importantly, to maximize profits for shareholders. Comcast CEO Brian Roberts gets judged upon how much money he makes his company, not whether or not his customers are happy — note that those two ideas aren’t correlated in monopolies, which is one of the big problems with the current environment.

Consider the situation for Verizon, who recently invested $26 billion to provide its Fios service to 20 American cities. Only approximately 40 percent of eligible households signed up for the service, which led to a $1,350 investment from the company in each customer, something that will take years to earn back and is hardly worth it for the provider in an industry in which customers have few other cable and internet options to begin with. The situation certainly wouldn’t be any more favorable if such monopolies were forcibly dissolved; if anything, the incentives for companies like Verizon to invest in better technologies would be even fewer and farther between.

So what is the solution to this mess? It certainly doesn’t involve clinging to the “ideal” of net neutrality, which is neither the current reality nor optimal. ISPs need to be regulated ferociously, but maintaining monopolies may in fact save everybody money. The FCC needs to enact legislation that creates bidding between companies for monopolistic power in each area, with strict conditions for each winning ISP that involve heavy investment in new technologies, limits on the differences between fast and slow lanes, and price maximums for consumers. Will it be easy? No. Nothing in American politics seems to ever be so. Hopefully corporations will see this as a compromise to avoid the limits of full “net neutrality.” But this is necessary so that consumers can continue to use the Internet to its potential, and so that such potential can be expanded evermore.

Oliver was right about one thing: the system isn’t currently broken. But it is likely to run off track if we don’t take extreme action now to change the incentive structure for ISPs, who are monopolies just looking to maximize profits. Maybe a new rant is in order, John, and your “pretties” need to be made to fly once again — this time armed with the whole story.

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