Net Neutrality Is Bad and Here’s Why

“At the most basic level; if Google, Amazon, and Facebook are for it, it probably isn’t in your best interest.”  — Tim, commenter on The Daily Wire

In less than 2 weeks (Dec. 14), the Federal Communications Commission (FCC) will be voting on whether or not to reverse current Net Neutrality rules. This has a lot of people very worried — mostly those on the political Left, since they are the ones that pushed for Net Neutrality in the first place. They’ve been worried about this since Trump was elected, and they knew he’d be replacing FCC Chair Tom Wheeler, likely with Ajit Pai, which he did. But, I also see some on the center-Right (including some of my friends) pushing the “Save Net Neutrality” mantra, and that‘s what worries me.

I got an alarmist email from my domain name registrar the other day, which included the following:

“What are the implications if Net Neutrality rules are reversed?
•     Censorship and blocking of websites, apps, and services for any reason without transparency or accountability
•     Charging Internet users extra fees just to access sites or streaming services
•     Demanding payments from small business, video creators, musicians, and online services just to reach an audience
•     Slowing internet speeds to a crawl on any platform that doesn’t pay up

These rules are so important to us because they affect our customers. Our customers consist of small businesses and entrepreneurs, so our customers are the ones who will feel the impact most if Net Neutrality rules are reversed.

By rolling back the rules, the FCC is threatening the ability for anyone to start a business and have their voices heard. Also, broadband providers like Comcast and AT&T will be let off from adhering to basic consumer protection laws. We strongly believe that this action by the FCC is fundamentally wrong.”

Sounds pretty scary, right? Except that these are the same fear-mongering talking points that have been used all along, and they are not entirely based on reality. Or, at least, not on probability. I first blogged on this back in 2015, and I encourage people to read that post for more background and explanation of the issue. Consider it Part 1, and this is Part 2. (Go ahead; I’ll wait….)

For more good information, I recommend this 2014 article by Heritage Foundation’s James Gattuso and Michael Sargent: “Eight Myths About FCC Regulation of the Internet”. In short those myths are:

#1 Net neutrality has been built into the fabric of the Internet since its creation.

“Net neutrality is a recent invention, first articulated only a dozen years ago. Some say that the principles behind net neutrality have always been part of the fabric of the Internet. These principles, which say that Internet access providers must treat all content equally, are very similar to an engineering concept known as the “end-to-end principle,” which dates to the early days of the Internet…. David Clark, an Internet engineer who was among the first to articulate the principle, wrote that “the end-to-end principle is not an absolute rule, but rather a guideline that helps in application and protocol design analysis.” …[T]he literature on the principle shows that it always recognized that there would be exceptions. In fact, there were cases in which intelligence in the “pipes” was found to be necessary. [E.g., spam filtering and network security.]”

#2 Without net neutrality, the very start-ups that make the Internet a force of innovation will be throttled.

Prior to 2015, the Internet functioned just fine without any government restrictions on how ISPs handled traffic. “At no time were unchallenged rules in place that limited the behavior of ISPs. In fact, wireless broadband — such as 4G cellular service — was exempt from previous FCC rules and thus was never even temporarily subject to FCC “neutrality” mandates. Rather than suffering reduced innovation, wireless service has been even more innovative than its wired cousin…. Jeff Pulver, a pioneer in Internet telephone service, has stated that potential investors in his venture held back for a decade, fearing that the FCC would use regulation “as a club to force conformity and stop new upstarts.” The constant innovation that has long defined the Internet would be stymied by government regulation, not the absence of it.”

#3 Net neutrality is a David versus Goliath battle.

“Certainly, many of the Internet providers that would be subject to the restrictions are large. Yet the pro-regulation camp represents firms that are as large as or even larger than ISPs, including Google, Microsoft, and Amazon. Nor would regulation necessarily aid “small” firms in their dealings with “big” firms. Many of the content providers that would benefit from such regulations are huge players in the marketplace, such as Netflix, which accounts for 34 percent of peak Internet traffic in America. At the same time, many firms that would be subject to the proposed rules, such as Sprint and T-Mobile, are relatively small players in the field.”

#4 All bits are created equal.

“It is not just a matter of separating out a few classes of content, such as video or voice telephony, that would be permitted special treatment. Even within these general categories, there are differences: What type of video is it? Is it urgent? Does it involve a medical issue or is it a cat video? Did the recipient request that particular content? How much does the end user value quick downloads? How important is that speed to the content originator? Accommodating the variations is not a simple matter,” and regulators are always playing catch-up. “A far better approach would be to allow content providers, ISPs, and consumers — working through markets — to sort out the varying preferences of users and various service providers. Regrettably, these market interactions are exactly what net neutrality rules would ban.”

#5 No one pays for “fast lanes” on today’s Internet.

Paying a premium for a better product/service is common in many markets, and it’s not new to the Internet, either. “[C]ontent generators have long employed third-party networks to expedite their traffic. Companies such as Akamai and Level 3 have long operated such “content delivery networks” (CDNs), with servers installed near or at ISP data centers. For a fee, content providers can store content at these locations, allowing their data to reach the ultimate consumer more quickly and reliably…. These arrangements are clearly beneficial to consumers because they enable users to stream high-quality digital video smoothly and quickly.”

#6 Internet regulation is needed because there is no competition in broadband service.

Former FCC Chair Wheeler painted a misleading picture by speaking of higher-speed broadband (25-50 Mbps), whereas very few people use such services. “The market looks a lot different at more common speeds. At 5 Mbps (fast enough to receive streaming high-definition video), the FCC says 75 percent of consumers have a choice of providers, and 15 percent have three or more. The chairman also excluded wireless broadband from his calculations. If wireless providers are included in the mix, more than 90 percent of Americans have a broadband choice.”

#7 Internet regulation will increase competition.

Actually, Net Neutrality rules “do nothing to increase competition among Internet access providers and could hinder it. No barriers to entry [are] lowered, no costs reduced, and no resources made more available. To the contrary, the costs of operating a network increase, and potential returns decrease. Costs [become] significantly greater and present more of a risk to smaller contestants in the marketplace, who have less ability to bear regulatory burdens. Moreover, [Title II neutrality requirements] create a hurdle for new competitors in the marketplace” and hinder innovative strategies for differentiation.

#8 Without FCC rules Internet access providers would be unregulated.

“In a competitive marketplace the first line of defense for consumers is competition, not government regulators. The ability of consumers to switch providers if they feel they are not receiving what they want is a greater and more effective constraint than any slow-moving bureaucracy. Even if competition is insufficient for some reason, the federal antitrust and other laws provide additional protections for broadband consumers. While not perfect, the existing competition laws are informed by a century of legal precedent and economic analysis on all manner of alleged anti-competitive activity and have a time-tested framework for enforcing them….”

Gattuso and Sargent concluded that the Net Neutrality regulations were — or, would be, at the time — misguided and (would) have the opposite of their claimed effects.

“Rather than a long-standing set of rules that have protected innovators, it is a recently articulated idea that threatens innovation. Rather than a tool to introduce competition in a monopoly market, it would discourage competition in what is now a dynamic marketplace. These and other misconceptions obscure the lack of a compelling case for FCC regulation, and the dangers to Americans that such regulation would pose.”

Harry Khachatrian’s article in The Daily Wire also has some helpful information, beginning with a brief explanation (with pictures!) of what the Internet is and how it works. Building on this, he explains what Net Neutrality rules require and why its effects range from ineffective to stifling. Much of this is due to the fact that huge content-deliverers like Google maintain their own global network infrastructure, so they can peer directly with ISPs at internet exchange points (IXPs). In other words, they are effectively their own ISP and can avoid many restrictions imposed on actual ISPs.

“Google is a huge proponent of Net Neutrality. [They are] privy to the fact that smaller companies, competitors, and start-ups bereft of the resources and capital available to build a global network infrastructure and peer with providers, must instead become customers of higher tier service providers to reach end users.

And what better way to stifle competition in the market, than have these smaller companies subject to a bevy of regulations you’re free of?

Enforcing “net neutrality” does the exact opposite of what its proponents claim. It results in an internet where a handful of large corporations have access to peering agreements with large transit providers (what some people refer to as “the fast lane”), and the rest are subject to far fewer options in terms of services, and even upon growing and gaining market share, will be denied the opportunity to shop around for different ISP plans that suit them best.”

Do you see now why Net Neutrality is not only unnecessary but a bad idea? I hope so. If you are so inclined, then, you might want to let your local lawmakers* know you are in favor of FCC Chairman Pai’s plan to reverse the Net Neutrality regulations.

* Though the FCC is independent, Congress still has oversight (and other areas of influence), so it can exert pressure on the agency.

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