Net Neutrality is Dead. What Happens Next?

On December 14th, 2017, Ajit Pai and the FCC officially repealed the Obama-era “net neutrality” laws.

Why did they do this? What will happen to the open internet? Will our online world get better or worse? And what the heck was net neutrality anyway?

Here’s a quick rundown of all the facts you need to know.

what is net neutrality?

What is “net neutrality,” and why was it implemented in the first place?

Back in the 1990s, when the internet was new and wild and barely regulated, website owners and Internet Service Providers (ISPs) could do whatever they pleased. And everybody was happy… at least for a little while.

But then something unexpected happened. In 2003, an internet security company called NetScreen Technologies invented a cool new antivirus technology: firewalls with deep packet inspection capabilities.

Deep Packet Inspection

NetScreen’s new cybersecurity software analyzed content as it flowed between servers and clients. NetScreen developed Deep Packet Inspection software as a way to detect (and block) viruses, but the technology had other use cases as well.

ISPs started to use deep packet inspection to distinguish between different types of data flowing through their servers, and treating them in different ways. And then the real problems began to arise.

AT&T Rocks The Boat

In 2005, AT&T announced a plan to allow internet companies (like Google and Amazon) to pay a premium for preferential treatment of their traffic.

For example, if YouTube paid for premium (high-speed) AT&T delivery, and Netflix did not, YouTube would stream smoothly for AT&T users, while Netflix would stream slowly, annoying viewers with laggy, buffering video. AT&T users would perceive YouTube as a fast-loading website, and Netflix as a slow, laggy site, and would likely begin to develop YouTube-oriented viewing habits.

On the surface, this business model seems perfectly reasonable. But internet companies were taken aback. If AT&T really did go through with their plan, it would create a bidding war among internet companies. Every internet company would be pressured to pay AT&T extra money, in order to keep up with their competitors.

Internet companies feared that the other ISPs would see all the extra money AT&T was making, and follow suite. Amazon and Google spoke out against this policy, and appealed to the FCC to prevent it from happening.

It wasn’t just the internet giants who were up in arms. Small business owners with small websites and web services realized that they would never be able to compete with large corporations in such a scenario. While the established internet companies tried to outbid each other for the fastest delivery speeds, small and medium business owners would be priced out of the internet, and left in the dust.

The Network Neutrality Principle

There had been a long-standing principle in the tech community, that governments and ISPs should not interfere with the “open internet” — that all data should be treated equally. This idea that networks should treat all internet content equally is called “network neutrality.” This principle existed far before net neutrality was encoded into law by the FCC during the Obama administration.

The goal of network neutrality is that any user connected to the internet should be able to access the entire internet, in its full, unadulterated glory. This is often referred to as “the open internet.” If ISPs were to give preferential treatment to some websites over others, it would give them the power to “rule” the internet. They’d be able to kill off websites they didn’t like. They would indirectly kill off websites that couldn’t compete with their “premium” clients. They’d be able to destroy any services that threatened to compete with their own. The idea that ISPs should be prevented from doing these things — that all traffic on the internet must be treated equally, in order to preserve the open, democratic nature of the internet — is called “net neutrality.”

ISPs Violate Net Neutrality Principles. Obama Shuts It Down.

In 2005, voice-over-internet-protocol (VoIP) was a new technology. People were starting to call each other over the internet (through services like Vonage), instead of through traditional phone lines. Phone companies were understandably nervous about this. One phone company, Madison River Communications, decided to take matters into its own hands. It began actively blocking its customers from accessing VoIP services. The FCC fined Madison River for its unfair treatment of its customers. They ordered the phone company to stop blocking VoIP websites.

In 2007, Comcast was caught slowing down (“throttling”) peer-to-peer internet traffic. This was a big blow to the blossoming decentralization movement, and the torrent industry in particular. P2P enthusiasts (and angry Comcast customers, who were paying good money for high-speed internet) cried foul. This was seen as a sneaky, unfair move on Comcast’s part. For their part, Comcast claimed that it was just trying to prevent the data-heavy BitTorrent traffic from gobbling up too much bandwidth, leaving other subscribers with slower internet speeds. That explanation did little to assuage the concerns & indignation of net neutrality advocates & slighted customers.

The Monopoly Problem

If ISPs were just normal businesses, with low startup costs, then net neutrality wouldn’t be such a big issue. If one ISP was abusing its customers, others would pop up and steal its market share. The problem is that ISPs in America were set up as quasi-monopolies. Internet service requires physical infrastructure, like telephone wires and optical fiber cables. By design, each American home only has access to one or two internet providers. Thus, if all of the providers in one area are treating customers unfairly, those customers are simply out of luck. It is for monopolistic tendencies like these that Comcast has earned (and held) the crown for being the #1 most hated company in America.

net neutrality: arguments for and against

By 2014, millions of Americans were urging the FCC to reclassify the internet as a telecommunications service (a necessity rather than a luxury). This would allow the FCC to enforce net neutrality, by treating ISPs as public service providers. The FCC could stop ISPs from harming consumers, internet companies, and the digital economy with monopolistic business practices. Under the Obama administration, the FCC responded to consumer pressure by creating regulations to enforce net neutrality.

Who supported net neutrality, and who was against it?

Generally, the battle lines in the fight over net neutrality have been drawn between the ISPs and the internet companies. Internet companies call upon the government to prevent ISPs from engaging in monopolistic business practices. ISPs oppose the government’s attempts to regulate them. Corporations tend to protect their own interests.

Consumers, and consumer advocacy groups, have tended to side with the internet companies and against the ISPs. 83% of Americans surveyed in a December 2017 study supported net neutrality and opposed its repeal, including 75% of Republicans, 89% of Democrats, and 86% of independents. Like corporations, consumers also tend to support their own best interests. It seems that the majority of consumers are swayed more by the arguments in favor of net neutrality than those against it (listed below).

Netflix and Google advocated strongly for the Obama administration’s net neutrality regulations in 2014. Fast forward to 2017, and those same companies were mostly quiet about the FCC’s plans to repeal them. Why? According to Netflix’s CEO, Reed Hastings, “We think net neutrality is incredibly important… [but it’s] not narrowly important to us because we’re big enough to get the deals we want.” Essentially, giants like Netflix and google don’t need to worry about net neutrality anymore. They’re so big, they have more customer loyalty than the ISPs do. If ISPs try to throttle their websites, consumers will switch to other ISPs.

In the 2017 net neutrality debate, small-to-medium-sized internet companies, as well as millions of tech-savvy consumers (many of whom took to the streets in protest of the FCC’s plans to repeal NN), were the primary opponents of the repeal, while ISPs (and telecom lobbying groups) were the primary advocates.

Net Neutrality advocates

What are the arguments for net neutrality?

The arguments for net neutrality (and against the FCC’s recent repeal) have largely centered around corporate greed. The assumption is that monopolistic ISPs will use their newfound powers for their own personal gain, rather than for the benefit of the public.

Net neutrality advocates argue that giving ISPs the power to promote some (and discriminate against other) content will harm the open internet in a number of ways:

1. Unchecked ISPs squash competition & innovation.

Without net neutrality regulations, there will be nothing to stop ISPs from squashing services that compete with their own. AT&T could throttle (or even block) VoIP applications like FaceTime and Skype, that compete with its own telephone services. Comcast could slow down Netflix, which competes with Comcast’s own television services. This kind of competition-squashing practice would make it much more difficult for new technologies to enter the market, hindering innovation and limiting consumer choice.

ISPs claim that they would not harm customers in such a way, but NN advocates are quick to point out that AT&T has actually tried blocking Facetime before, and had to be prevented from doing so by the net neutrality groups appealing to the FCC in 2012. Comcast has throttled Netflix before as well, which was one of the events that led to the NN regulations in the first place. NN advocates argue that competition benefits consumers and the economy as a whole, and repealing net neutrality regulations will lead to less competition and innovation on the internet as a whole.

2. Unregulated ISPs harm internet companies — especially small-to-medium-sized businesses.

Net neutrality advocates argue that allowing ISPs to give preferential treatment to some content sources while discriminating against others gives them the power to extort internet companies for money. This would start a bidding war among well-funded internet companies like NetFlix and YouTube. Worse, it would leave small-to-medium-sized internet companies unable to compete.

The average website owner would not be able to afford to pay for access to “the fast lane”. Average mom-and-pop websites would load much slower than upper-tier websites like Facebook. Internet users have short attention spans, and low tolerance for long loading times. Internet traffic would naturally become more centralized, flowing toward “preferred” websites like Facebook and Google.

3. Monopolistic ISPs can limit freedom of speech and social activism.

NN advocates argue that the open internet allows people to connect with each other on a range of issues, including socio-political concerns. By giving ISPs the power to decide the kinds of content internet users will be able to access, they could legally suppress political views that oppose their own (or those of their wealthy patrons).

NN advocates argue that this could lead to a worsening of corruption and fascism in the United States, by giving special-interests the ability to directly influence the information available to US citizens. Actions like these could also stop budding social movements and activist organizations from being able to effectively communicate, organize protests, etc.

ending net neutrality

What are the arguments against net neutrality?

1. Regulating ISPs is unnecessary.

Free-market forces (like competition between ISPs) already incentivize ISPs to do what’s in their customers’ best interests. While NN advocates point out that this argument fails to acknowledge the quasi-monopolistic nature of ISPs in America, Ajit Pai has argued that net neutrality regulations prevent small ISPs from entering the market.

If this is true, and NN regulations were stifling new ISPs, then the repeal may actually help new ISPs develop. This would increase competition among ISPs, and mitigate the necessity for net neutrality regulations in the first place.

2. Net neutrality regulations hurt ISPs — especially small-to-medium-sized providers.

In his arguments for repealing net neutrality, Mr. Pai presented a petition signed by 22 small ISP owners, stating that net neutrality regulations put an “onerous” burden on their businesses, paying out tens of thousands of dollars in legal fees to prove their compliance with the regulations. However, NN advocates point to independent research, which has found that many small ISP owners actually want to keep the net neutrality regulations in place.

After Mr. Pai published his petition, 40 more small ISP owners sent their own petition to the FCC, to keep net neutrality regulations in place. Their rationale? If large ISPs are allowed to squash competition, small ISPs will no longer be able to compete at all.

Still, with less regulation, it does stand to reason that the barrier to entry for new ISPs may be lower, opening up the door to more competition. We’ll have to see how this plays out over the coming years.

arguments against net neutrality

3. There are valid reasons for ISPs to charge some companies more than others for the same amount of bandwidth.

Take Netflix, for example. Netflix users tend to pile onto the network all at the same time, during prime TV-watching hours. They also all happen to be streaming very data-heavy video content, and demand high-speed transfer of that content. This creates spikes in network usage, which slows down the internet for everyone — Netflix users and non-Netflix users alike.

ISPs argue that this slowdown of service is not fair to non-Netflix users. In order to satisfy everyone, ISPs would need to develop more infrastructure to handle the Netflix traffic. They argue that it is reasonable to charge Netflix a premium for its bandwidth needs, because it costs the ISP more to handle peak-hours traffic than it does to handle evenly-distributed traffic.

In this light, Comcast’s deal with Netflix in 2014 makes a lot more sense. It may have slowed down the network for other services and given Netflix an unfair advantage over competitors, but other video services had the opportunity to work toward striking deals with the ISPs as well.

In a competitive free market, ISPs could charge video providers for high-speed content delivery on a sliding scale, depending on their size and broadband requirements. Ultimately, this would push out less efficient & less profitable video platforms, which would be a positive and natural outcome of the free market.

4. Net neutrality regulations discourage ISPs from investing in their own infrastructure.

If ISPs can charge more for certain services (like charging Netflix more for its heavy peak-hours bandwidth), they can use that money to lay more cables, broaden their networks, speed up their services and develop new technologies.

5. Net neutrality limits consumer options.

When ISPs are able to treat different types of data in different ways, they’re able to offer different kinds of internet packages. If all you want is Google and Social Media, your ISP could offer a special package for that.

NN advocates argue that allowing ISPs to offer special internet packages for specific services will have negative repercussions. They argue that it will stifle small businesses & innovators by unfairly benefiting established services.

However, it will also legitimately offer consumers a wider variety of internet service options to choose from. In other countries, where ISPs are less regulated, there are more options to choose from (see Figure 1 below).

Figure 1

net neutrality wikipedia

Source: https://en.wikipedia.org/wiki/Net_neutrality

This can theoretically benefit consumers who are only interested in using one form of data or another.

6. Net neutrality regulations can get in the way of innovation.

For example, in India, Facebook created an innovative program called “Free Basics,” to provide free internet to poor people who couldn’t otherwise afford internet access at all. Facebook paid the ISPs, so that the consumers wouldn’t have to. In return, ISPs provided free access to the internet, through Facebook. This was very helpful to poor people who couldn’t afford to pay for internet access.

However, the tech community reacted against Facebook’s initiative, calling it a violation of net neutrality principles. The truth is, it was indeed a violation of net neutrality principles — but in this particular case, it was helpful to an underserved portion of the population. In the end, the net neutrality advocates won out, and the Free Basics program was banned. This is just one recent example of net neutrality regulations interfering with innovative (and potentially important) programs.

7. Net neutrality regulations are bad for lower-income internet users.

Net neutrality laws force ISPs to treat all content equally, and this leads to an unfair burden for some consumers. Wealthier internet users stream bandwidth-heavy 4K video to their big-screen TVs. Others just want to use Google and Wikipedia to do their homework. Since ISPs aren’t allowed to offer different packages for different people, they must charge all consumers equally. As a result, lower-income internet users end up subsidizing the 4K videos watched by wealthier internet users.

What will happen next?

Nobody can say for sure what will happen next.

To read many of the articles & memes going around on social media, it would seem that “the internet is dead”. It is beyond repair, and will never be the same again. ISPs will control the content that you are able to access through the internet. They’ll crush their competitors, throttle all the best websites, and block content that they don’t like. Your wifi will slow to a crawl, and everything will be buffering all the time. You’ll have to pay more for the services that you already use. ISP monopolies will gain more power. Startups will no longer be able to compete with established internet companies. Innovation will grind to a halt, and everything will be, like, totally ruined, man.

If you subscribe to the arguments of Ajit Pai and the ISPs on the other hand, it seems that we are entering a new golden age of the internet. Infrastructure development will increase. There will be more options for consumers. There will be more innovation. America will be great again.

But of course, in this age of political polarization and us-versus-them thinking, it helps if you can see the subtle shades of grey in between the black and white extremes. As with all things in life, the truth may lie somewhere in between. In all likelihood, some combination of the abovementioned possibilities will come to pass over the next few years.

Keeping a Big-Picture Perspective

It also helps to keep a big-picture perspective. Whether you think of the FCC’s decision as the beginning of a golden new internet age or as the end of the internet as we know it, it’s important to keep in mind that these laws only affect the internet in the USA.

Other countries, like China, Canada, and Australia, have radically different laws affecting internet access and service providers in their countries. The internet is bigger than any individual country — it’s bigger than all of us now. No single country’s government can “save” the internet, and no single country’s government can destroy it.

Moreover, even here in the USA, there is substantial pushback to the FCC’s decision to repeal our net neutrality regulations. Some states, like New York and Washington, are trying to set up their own net neutrality regulations. Many states’ attorney generals are banding together to sue the FCC, in attempt to reverse the decision.

Still, the FCC’s decision will likely have a lasting impact on our digital economy, and the way we interact with the internet as consumers. Whether that impact will be positive or negative (or some mixture of both), only time will tell.

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2018-01-04T05:22:45+00:00