Law & the Courts

Hitting the Refresh Button on Net Neutrality

(Photo: Andrea De Martin/Dreamstime)
Here’s what it does and doesn’t do.

November’s election meant a new Federal Communications Commission, and that means hitting the refresh button on one of the Web’s hottest political items: net neutrality.

The tech community unleashed an online campaign this Wednesday designed to stop a rollback of the Obama-era regulations, and to hear them tell it, “The FCC wants to destroy net neutrality and give big cable companies control over what we see and do online. If they get their way, they’ll allow widespread throttling, blocking, censorship, and extra fees.”

The case for net neutrality has always been predicated on trotting out this parade of horribles. Yet these harms seldom if ever materialized within the hitherto unregulated marketplace of Internet-service providers. Except where criminal conduct has been involved, there are no examples of any Internet-service provider preventing its customers from viewing content online. Comcast attempted to “throttle” or slow down access to certain data packets a decade ago; they were pilloried in the court of public opinion and soon relented. Nonetheless, in order to prevent largely hypothetical problems, the Obama-era FCC went nuclear. It reclassified Internet-service providers as public utilities under Title II of the Communications Act of 1934. In so doing, the FCC granted itself the power not just to do the specific things it had in mind, but to broadly regulate the Web “in the public interest” (whatever the bureaucracy then in power thought that might be).

Net neutrality stands as one of the preeminent examples of regulatory overreach in the Obama administration. But let’s imagine the parade of horribles were real. What if the abolition of net neutrality did herald an era where Internet-service providers will direct you to certain content and “throttle” or slow down your access to other content? The better question may be: How different is that experience from what consumers online already have?

The Web as a freewheeling, democratic platform has been an illusory concept for the better part of a decade. Google has an 88 percent market share of the search-engine market. Facebook, a 77 percent share of mobile social media. Amazon, meanwhile, controls 70 percent of e-book sales, according to Jonathan Taplin, author of a new book on how these firms have “cornered” the Web.

In other words, if you are a typical consumer, your access to online content is already intermediated by the decisions made at a few companies to prioritize certain content based on their view of this information’s importance or its relevance to you. To make money, these firms sell targeted access to you based on data they’ve harvested from everything from your click patterns to the contents of your emails. By 2012, Google made more in ad revenue than all U.S. print media combined.

Google and Facebook are also the largest supporters of net neutrality, ostensible freedom fighters for the open Internet. Pull away the curtains on the high-minded rhetoric, though, and their corporate self-interest is plain. Well-capitalized Internet-service providers such as Verizon, AT&T, and Comcast are the only plausible rivals for their kind of dominance — and net neutrality applies only to ISPs, not to companies that run websites.

Where net-neutrality advocates have a point — sort of — is regarding the architecture of the system. You usually access the Internet through one entry point. Although you may have choices (the “cable” company or the “phone” company — now both broadband companies), you probably have at most two potential high-speed providers, and at any given time you are subscribed to only one. Meanwhile, you can always go to Yahoo if you don’t like Google, or replace Facebook with LinkedIn.

But most people don’t. The practical reality is that the dominant tech firms on the network’s “edge” loom as large in their control over customers as do the providers of the physical architecture through which consumers use the Internet.

This is unsurprising. The Web, in both access to it and in the way it makes information available to you, has similarities to utility and transportation industries whose firms are heavily dependent on economies of scale. These were once all legally enfranchised monopolies, and closely regulated for price and service quality by state utility commissions and federal regulators. Those regulations have gradually diminished in the name of competition, but it is not as if competition has manifested itself in hundreds of successful firms. A national trucking company substitutes for a large railroad, the big wireless carrier for the incumbent landline provider; perhaps someday, Tesla and its solar-and-storage installations will replace your local utility and its grid.

Despite vaunted technological transitions, all of these markets are likely to be dominated by large players aiming for scale. This isn’t necessarily a bad thing, assuming that when a large firm becomes anti-consumer, consumers can topple it. Public policy needs to keep the door open for this potential. If Comcast sucks, Google should have the right to build a rival network — and vice versa. Net neutrality, as a public policy, does not accomplish this, unless it is applied to the digital incumbents also — and even then, it is fitting a round peg into the square hole of a 1930s-era law and doing so relative to a concern that the free market has not been shown incapable of addressing.

The best course of action is to do essentially what the FCC is doing: Repeal net neutrality.

Another option, one that Jonathan Taplin recommends, is to treat the Internet — Google, Facebook, and ISPs alike — as a regulated public utility so that the public interest is protected. This is an even worse idea. This would simply allow whoever is in government to insert their predilections into the business model, and the preferences of these government bureaucrats (and I speak to you as one) do not equal the wants and needs of the consuming public.

The best course of action is to do essentially what the FCC is doing. Repeal net neutrality. Over the next decade, allow Internet-service providers to experiment with new models of delivering content: promoting artists and respecting copyright through a pay-for-premium content model as HBO has pioneered, exempting certain data from monthly data caps, establishing dedicated “fast lanes” when a content provider and an ISP have reconfigured the architecture to allow data to move with fewer impediments, maybe even discounting broadband service for a consumer who chooses to have an experience of the Web curated by the cable company instead of Google.

Congress has a role, too. It is possible that the Web someday will be monopolized to the detriment of consumers. If that happens, don’t rush to an old-school treatment of just one business model as a public utility. Look at the symptom you’re trying to address — which exists at Google as much as it does at Comcast — and fix it through Congress, not regulation.


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— Travis Kavulla is the vice chairman of the Montana Public Service Commission, a former associate editor of NR, and a past president of the National Association of Regulatory Utility Commissioners.

Travis Kavulla is director of Energy and Environmental Policy at the R Street Institute. He is a former president of the National Association of Regulatory Utility Commissioners who held elected office as a Montana public service commissioner for eight years. Before that, he was an associate editor for National Review.


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