Submission: Why You Should Be Glad Net Neutrality Is Gone

By Sam Jenks

This reader submission article is in response to this article: “What’s Net Neutrality?”

In a weird turn of events, the F.C.C. took the internet by storm late in 2017. It seemed like everybody was tweeting about regulations known as Net Neutrality. People passionately debated whether or not the F.C.C. should leave these regulations in place, but many of the most passionate advocates on both sides of the debate didn’t really know what net neutrality really is or its effects on the internet.

So what is net neutrality?

Net neutrality is the F.C.C. regulatory regime, in place from 2015 to 2017, that prevented telecommunications companies from offering “paid priority” to customers or specific internet traffic. Prior to 2015 – a period in which the internet worked wonderfully and was as accessible as it was in 2017 – net neutrality did not exist and paid priority was allowed. Paid priority simply means that I.S.P.s are allowed to give faster data speeds to higher-paying customers. It’s the internet provider industry’s version of a theme park FastPass, often offered at carnivals or haunted houses, which allows customers who are willing to pay an additional fee to move to the front of the line.

The scarcity of internet bandwidth means that it must be allocated, like space in a haunted house, internet bandwidth is not unlimited. Net neutrality gave the F.C.C. the final say in how bandwidth could be allocated. Proponents of net neutrality argue that without F.C.C. regulation, providers would be able to pick the customers who get access to the most bandwidth. They fear that because of this, certain content will be delivered at incredibly high speeds and other content will be delivered slowly or blocked entirely. Essentially, the argument is that the deregulation of the internet will result in an inherently unfair, “tiered” system.

Here’s the thing: a tiered system with paid priority is actually a good thing.

Under the F.C.C.’s net neutrality regulations, those who wanted or needed to use more bandwidth were stuck with the same bandwidth access as everyone else and those who needed to use less bandwidth paid more for internet access than they otherwise would have. For example, 4K streaming requires five times the bandwidth that streaming an HD movie through Netflix does, and streaming an H.D. movie through Netflix takes up more than 15 times the bandwidth of streaming high-quality music through Spotify. Net neutrality regulations mean that all this content must be streamed at the same speed and for the same price, even though 4K is more expensive to stream than Netflix, and Netflix is more expensive to stream than Spotify. In this situation, the 4K streamer receives gets the same access to bandwidth as the Spotify or Netflix streamer, worsening the stream’s quality. In addition, the Spotify streamer, who is using less bandwidth and is, therefore, less expensive to provide content for, pays the same amount as the 4K or Netflix streamers. In order for this egalitarian treatment to remain economically feasible for I.S.P.s, customers who use little bandwidth must foot part of the bill for customers that use tremendous amounts of bandwidth, and customers who use more bandwidth must deal with inhibited quality.

If these Net Neutrality were not in place (i.e. a tiered system was in place), customers who use less bandwidth could pay less, while those who want to use more will have the option to pay for it. Likewise, customers who need greater bandwidth will be able to receive uninhibited access to the bandwidth they need. This means that the customers become the entity that determines how bandwidth is allocated, rather than the government. This market-based pricing structure allows society to better allocate the scarce resource of bandwidth, without resorting to price controls and regulation.

Banning paid priority also stifles competition in the provider market. Smaller I.S.P.s do not have the same resources available to them as large incumbents, but in many cases, they can create a competitive advantage if they can be more flexible than unwieldy incumbents. A small I.S.P. can offer pricing options for internet service that are more tailored to its customers’ needs than the large I.S.P.’s might be able to provide. This could give smaller I.S.P.s a competitive advantage, thus allowing these smaller, more flexible companies to enter the market. Net neutrality regulations prevent this pricing flexibility, acting as a barrier to entry and driving smaller I.S.P.s out of the market. This makes the provider market less competitive. This lack of competition reduces incentives for market incumbents to improve internet speed and price because they do not have to worry about smaller, more nimble providers providing better-priced alternatives to their service.

The internet is a central part of modern life; it is where we find information and entertainment, it allows us access to crucial services, and it functions as a platform for billions of people across the world to connect. The internet’s stunning success and rapid growth took place in an environment free from government interference and regulation. Its continued success depends upon its continued freedom. The F.C.C.’s decision to end net neutrality is a significant step to promote better pricing and more competition in the provider market, which will likely lead to faster, better internet access for the average American.

Sources:

https://www.forbes.com/sites/bretswanson/2014/06/02/the-real-slow-lane-threat-to-the-internet/#2e62f6986243

https://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db0427/DOC-344591A1.pdf

https://www.washingtonpost.com/news/the-switch/wp/2014/05/15/fcc-approves-plan-to-allow-for-paid-priority-on-internet/?utm_term=.76be67216584

https://www.usatoday.com/story/tech/columnist/2017/12/10/youre-buying-4-k-tv-how-much-internet-bandwidth-do-you-need/933989001/

https://www.justice.gov/atr/speech/role-competition-promoting-dynamic-markets-and-economic-growth

 

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