Net Neutrality

(Bloomberg) -- The internet is a global network, a set of values and a giant moneymaking opportunity. In the U.S., figuring out how those go together has led to years of public policy conflict, fought under the banner of “net neutrality.” It’s a slogan that broadly means everything on the internet should be equally accessible. Another way to put it is that those who control the network shouldn’t get to use that power to favor some kinds of content over others. In such general terms, net neutrality has become the kind of consensus notion that even the big companies dominating internet services say they agree with. But they also spent years fighting rules put in place to enforce it. The administration of President Donald Trump has come down on their side, opening the door, critics warn, to an internet curated by big business.

The Situation

In 2017, the U.S. Federal Communications Commission voted to scrap net neutrality rules enacted two years earlier; those old rules lapsed June 11. The regulations had barred firms such as cable giant Comcast Corp. and wireless carrier AT&T Inc. from either blocking any content or singling out any offering for quicker or slower delivery. Internet service providers applauded the FCC’s 2017 reversal and many said that they didn’t plan to discriminate among types of content, though there are now no specific rules forbidding that. The FCC did leave in place a provision requiring companies to disclose any disparate treatment. Supporters of the old rules are pushing to resurrect them at the state level and are challenging the FCC’s about-face in Congress. Ditching the rules was unpopular with voters, and Trump’s political opponents hope to exploit that in congressional elections in November. Elsewhere in the world, net neutrality regulations are spreading. In 2015, the European Union introduced measures requiring that internet companies handle all traffic equally. India’s 2016 rules prevent service providers from charging different rates for different types of content.

The Background

The term “network neutrality” was coined in 2002 by Tim Wu, a law professor and author. He argued that no entity should be able to decide what kind of material was and wasn’t permitted on the internet. Wu also recognized the expense of maintaining the cables, utility poles and cell towers necessary to channel the internet to our computers, phones and other devices. He proposed that internet providers be allowed to recoup their costs by charging consumers rather than producers of websites. Customers would pay based on the speed of their internet connections and would be able to access all material available online at the same delivery rate, or whatever pace the larger network supports at any given moment. Net neutrality means the website for your cousin’s Kickstarter campaign is on an equal footing with that of any Fortune 500 company. It means that movies on a startup channel stream can’t be impeded to run slower than those on Netflix. The FCC adopted adopted Wu’s ideas in 2005, but its subsequent enforcement attempts were blocked by courts, which said the agency lacked the requisite regulatory authority. The 2015 rules fixed that by applying to the internet the same legal authority that underpins regulation of public utilities, such as water or electricity. Those rules have now been overturned.

The Argument

Trump’s FCC chairman, Ajit Pai, says the previous “last-century, utility-style” rules are the opposite of the “light touch” regulation the internet needs. Advocates of minimal oversight argue that it will encourage more internet providers to enter the market, driving down prices for consumers. The providers themselves have long said they should be able to charge websites — especially bandwidth hogs like movie streaming and esports channels — to offset the huge costs of expanding networks to convey their data. Under the new rules, service providers will still be policed for anticompetitive behavior, by the Federal Trade Commission. Pai’s critics say he’s cleared the way for providers to create fast and slow lanes for the internet, with only the biggest websites able to afford first class and costs eventually passed on to consumers. They warn that the companies will become gatekeepers of the information highway, free to block sites for not paying up or for political reasons. People on both sides of the debate say that their position is better for the roughly 30 percent of America’s rural residents who don’t have any access to high-speed internet. Advocates of the new rules say internet providers can expand faster if websites effectively share the costs. Opponents argue that providers will increasingly focus on urban areas, since content providers are more likely to pay for access to high-density, higher-profit markets.

The Reference Shelf

• Professor Tim Wu coined the phrase “network neutrality” in a 2002 paper.
• A Wired magazine article untangles some confusion over “fast lanes.”
• The comedian John Oliver had strong feelings about net neutrality (boring and “hugely important”). 
• CNN Money article on how better rural internet service creates jobs. 
• Bloomberg news talked to Tim Berners-Lee, the “father of the web,” about net neutrality.

To contact the editor responsible for this QuickTake: Anne Cronin at acronin14@bloomberg.net

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