Post-Mortem for Net Neutrality and How It Might Affect You

Today, the United States Federal Communication Commission voted to repeal a series of laws set in place by the same commission in 2015. Those laws focused on the identity of the internet as a public utility and the right of all citizens to have equal access to all information broadcast over the internet, regardless of both recipient and origin. The chairman of the FCC, Ajit Pai, released this statement on what the commission calls the "Restore Internet Freedom Order":

Opposition to the Restore Internet Freedom Order has been present since the commission announced the vote earlier this year. Reddit CEO Steve Huffman posted an announcement today that read, "The FCC’s vote was predictably frustrating, but we’re not done fighting for net neutrality." The company and its users have been in an uproar over the plan for the FCC to repeal net neutrality laws.

While the statement by Pai cites the 1990's as an era of growth and innovation for the internet, many of its users remember it a little bit differently. There was a period of remarkable and unchecked growth in e-commerce and speculation in internet business during the mid to late 90's. The internet that Pai is talking about in the video, the one dominated by Amazon, Google, Netflix and the like, is actually what rose from the ashes of the unregulated market that occurred in days of yore. 

What exactly is net neutrality?

This video from the BBC should give at least a general understanding of the underlying principle of net neutrality:

It is, simply put, a set of laws put in place that disallows an internet service provider from decided what information can go where, or at what speed. That means that any two open channels on the internet have to be allowed to exchange information freely at the same speed no matter what content is being shared between them; the only way that the internet service provider is allowed to involve themselves is whether or not the channel is open to begin with. 

Take, for example, Netflix, Hulu, YouTube, and Vimeo. These four companies provide similar services to one another. You may have tried Hulu, but prefer Netflix. Or you might have a YouTube Red membership, which you signed up for personally. Net neutrality laws prevent your internet service provider from choosing which ones you are allowed to use, or the speed at which data is delivered to you from any one of them.

U.S. internet service provider has already run afoul of these regulations earlier this year when they admitted to throttling Netflix and YouTube speeds. This is not a new problem, and in fact, many people became aware of the need for net neutrality because of concerns about the way internet service providers treated some companies that they had competition with. 

What does the repeal mean?

As with every controversial subject, there are two sides to the argument and two possible eventualities. This subject happens to be mired in conflicting evidence that makes a true outcome difficult to predict. There are good reasons to believe that some good and some bad will come of this decision and some far-fetched reasons to think that this is the best or absolute worst outcome.

The statement from the chairman above states that the internet is not a common utility, and it should not be treated as such. There isn't (or rather, there shouldn't be) an entrepreneurial aspect to utilities such as water and electricity. In fact, when the market does grasp at these basic human necessities, you have issues like companies buying public water and then selling it back as bottled water without filtering it as much as it would have been if it had gone through the tap. So, the fact that the internet does have a marketplace involved in it should differentiate it from other utilities.

A big part of why this makes sense is that internet piracy has plagued service providers since the "golden age" of the internet. Napster, Limewire, uTorrent and thousands of other services have allowed internet users to illegally access media from their home computers. Fines have been sent out, DMCA takedown notices issued, and large operations have seen FBI busts that made international news. But there is no stopping pirates: the Game of Thrones season 7 finale this year was the most pirated episode of a television show ever. The repeal of net neutrality laws would allow internet service providers to put a stronger lock on pirates and those who illegally upload and provide that content.

Another benefit to the repeal Pai has suggested is that service providers should be able to decide what outcomes they see as most beneficial for their users. This includes emergency services or entrepreneurial causes getting better reception than the likes of Google or Amazon, thus promoting free trade in a market environment. 

Then why all the opposition?

On the other hand, the repeal will also allow service providers to decide what news sources are allowed to proliferate to users. It will allow them to decide which perfectly legal TV streaming websites you are allowed to use, how much it will cost to use them, and how fast they will move after you pay. It will allow them to throttle your internet if you decide to use Netflix instead of their own personal streaming service. The biggest problem with the repeal of net neutrality in the United States is that the country already has so few options for internet service provision that if you did decide to just "take your money elsewhere," as it is commonly suggested when talking about market forces, there pretty much just isn't anywhere else for you to take your money to.

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In fact, many of the companies Ajit Pai talked about as being the backbone of an internet marketplace opposed the repeal publicly. Notably, Amazon and Netflix both came out against the repeal. Other industry titans have thrown in their two cents, but Comcast sat idly back and claimed that its users wouldn't even notice the difference.

It seems a little paradoxical, giving preferential treatment to someone (who paid you) to promote a free market. But the whole issue is muddied in issues of politics that it's hard to say what the actual intent is. There is currently a motion on the floor of Congress to issue a demand that the FCC reverse their 3:2 decision and reinstate net neutrality laws. More news will be available when Congress has reached a decision.