In Defense of Repealing Net Neutrality

As the FCC prepares to reconsider net neutrality today there are millions who are no doubt passionate about this issue. By the time this article is posted, and certainly as you are reading it, we will likely know how the vote went.

This piece will therefore serve as either a cautionary tale or a victory lap. We’ll see in a few hours which one.

This is obviously an issue that many feel strongly about, and for plenty of good reasons. For many in my generation (and younger), the internet is ubiquitous with society.

We grew up on the days of AOL, MySpace, and now Facebook. There are student in high school and college today who have never know a world without the internet. To many of us, the idea that anything could alter that landscape is inherently evil.

Enter, net neutrality.

What Is Net Neutrality?

In a nutshell, net neutrality is the principle that internet service providers (ISPs) should treat all data transferred over the internet equally. Providers cannot change, alter, penalize, or otherwise treat any particular type of data, user, website, platform, etc any differently from the next one.

The concept is not new and has generally been common practice by providers, though it was never codified into law until 2015. Now, the FCC is threatening to overturn those regulations.

Here is why that’s a good thing.

Scare Tactics Abound

The number one claim that is made by pro net neutrality alarmists goes something like this: If the internet is unregulated, then your provider can start charging you different or extra rates for visiting certain types of websites.

The argument is exemplified by images such as the one below which have been making the rounds on the internet for years as an example of what COULD be if we don’t keep net neutrality in place.

Technically speaking, without net neutrality the above is possible. Technically speaking without burger neutrality (this doesn’t exist), McDonalds could break apart their Value Menu and start charging separate costs for the Big Mac, the fries, the drink, etc.

Of course they don’t do this and instead, you just order the #1 at a set price and you get everything you expect to come with it.

The same principle works with internet access. There are already tiered plans for home, work, and mobile internet. While this doesn’t specifically restrict certain websites or types of content; it may indirectly alter your browsing habits.

A data plan of 5gb per month is going to run out a lot more quickly if you stream Netflix every day than if you only check email once a day. If you are consistently hit with low speeds, or run up against your data limit; you either suffer in silence or move up into the higher plan.

The idea, however, that ISPs are all of a sudden going to stop you from visiting ESPN or Netflix until you pay more is not grounded in reality. In fact, when the FCC first attempted to impose net neutrality rules in 2010, they could only find four examples of behavior deemed to be “anti-competitive” and they were minor infractions mostly committed by smaller companies.

ISPs, for their part, have shown no serious interest in segmenting internet plans as the picture above shows. In fact, prior to 2015 it would have been perfectly within their right to do so, none of them did.

The scare tactics of customers all of a sudden seeing their internet bills explode into a pie chart of add-on services is not grounded in reality. The argument for net neutrality in this regard is therefore that we need government regulation to stop companies from doing something they weren’t doing when it was legal for them to do it except for no one did it when it was legal but now if we repeal it and it’s legal again they’re all going to do it so beware.

It’s An Example of Blatant Favoritism

It’s no wonder why large companies such as Facebook and Google are spearheading the charge in favor of net neutrality. These multi-billion dollar companies are not subject to the regulations and benefit greatly from them.

The regulations would prevent your ISP from treating Netflix any differently than the website of your local restaurant even though streaming Game of Thrones uses far more bandwidth than browsing tonight’s specials.

Which brings us to the real reason why Facebook and other large tech companies are on board with net neutrality. They may genuinely believe that the internet should be free and open for all; but that’s punctuated by the fact that making it free does not come at their expense.

Bandwidth, believe it or not, is not an unlimited resource. If and when it becomes one then many of the arguments for net neutrality become meaningless. In the short-term, however there is an admittedly large but not limitless supply.

ISPs would like to charge certain companies, such as Netflix, a premium for carrying their traffic much the same way a toll road charges larger vehicles a higher rate.

Some companies are begrudgingly doing this, though of course they would prefer not to.

And if net neutrality is in full effect, they essentially won’t have to.

To use another vehicle analogy, net neutrality would effectively mandate that a trucking company could not charge a customer more money for transporting a larger, heavier piece of cargo than they could charge me for shipping a bag of feathers, even though the heavier load is more taxing on the vehicle, gas consumption, and the road (hence why trucks pay higher toll rates).

You may argue that this is how it ought to be. Proponents of net neutrality will take the above analogy and respond that the trucking company isn’t forced to treat the two customers the same, they just have to charge them the same rate for carrying their freight. Of course the larger freight will cost that customer more.

However, the other part of net neutrality is the reality of the situation. A private trucking company can choose to carry the larger freight (and get the higher rate) or they can choose to tell the smaller customer that it isn’t worth it to them to carry such a small freight.

ISPs do not have the luxury of treating customers in this way. Not in a world where we demand as much instant access to Netflix as we do our email or the website for the local restaurant down the street. \

What’s more, net neutrality would prevent the ISP from prioritizing traffic based on either real or perceived demand of the customer.

We’ve Seen This Dance Before

Comparing net neutrality to something completely different may be futile, but let’s try it anyway with healthcare.

The Affordable Care Act was a similar attempt to equalize an unequal market and effectively force insurance companies to treat all patients the same. This, of course, did not work and we are seeing the effects of that.

Of course, there are several other factors for why the ACA has not gone according to the marketing but the reality is this: healthcare is expensive. Different people have different medical needs. Different procedures, drugs, and conditions have different costs associated with them.

Whatever else you think about ACA and healthcare, the above paragraph is 100% factual. The reality of the internet is also that different websites have different needs. A streaming video website (such as Netflix, YouTube, etc) does not have the same needs and requirements as a website that I set up tomorrow to sell keychains.

They’re just different. And forcing them to not be has not worked out well.

More Government Rarely Leads to Less Government

It is a rare thing to involve the government (and the FCC, no less) in the name of keeping things more fair, equal, and open. I’m old enough to remember a time not too long ago when many in my generation were protesting to keep the government OUT of internet regulation.

Today, under the false flag of “what if” scare tactics, many of my peers are leading the charge in the opposite direction. In truth, the internet functioned just fine in 2014. Repealing net neutrality regulations would simply turn back the clock to a time when no one was demanding the government get involved.

However, the argument has been re-framed. There is a perception that turning back the clock to a time in recent memory when there wasn’t a problem will somehow herald in the dark days of the internet when ISPs blocked content with reckless abandon. In other words, a time that really didn’t exist.

The reality is that prior to net neutrality, the internet and associated businesses were booming. Growth was substantial. Innovation and investment was substantial. In short, things were good. Why mess with them?

Sure, there will always be incidents one can point to. Isolated though they may be (or perhaps even not). However, the entirety of policy cannot be based upon the actions of a few or the exceptions and not the rule. Do we really need a government regulatory apparatus to stop the occasional infraction?

What’s more, government bodies which are given regulatory power over something rarely cede control once given. If anything, it leads to more control, more regulation, and more government “solutions.”

To circle back to the healthcare argument, some of this is happening there. Because the ACA did not work as advertised, the government (meaning taxpayers) is now subsidizing insurance companies.

To follow net neutrality down the road, if it does not ultimately work as advertised will we need to subsidize ISPs to compensate for lost revenue? Will we need to prop up smaller ISPs to artificially create the competition lost because of net neutrality?

It May Cause More Harm Than Good

Proponents of net neutrality will say that regulation is actually a good thing for the industry and competition. While there may be some truth to this, the realistic result is likely the opposite.

Smaller companies do not stand to benefit in the long-term. With any regulation comes an associated cost of establishing and maintaining compliance. There are also taxes to consider.

Under net neutrality, the FCC is granted almost free reign to impose any taxes they see fit on ISPs. This will not harm the “big, scary corporations” but rather the smaller ones who are struggling to compete.

It’s no surprise then that one study projected that net neutrality would cost as much as $45 billion in ISP investment over the next five years alone.

More regulation, higher cost of compliance, and new taxes do not benefit the small company and increase competition. They benefit the larger company which can absorb the costs and finance the lobbyists who argue for legislation on their behalf.

If the argument is that net neutrality is good for competition and will create a booming ISP market with equal playing fields, ask yourself how likely that is to happen when added taxes, regulations, and compliance costs can more easily be navigate by the larger companies who already control the market.

A Closing Pitch

As the internet becomes more fully ingrained into daily life, there will be pressure to maintain its “free and open” status. However, that is not likely to be furthered by the encroaching arm of a government regulatory system.

Government regulation is rarely seen as a pathway to free and open anything, let alone the internet. If the internet is to truly remain free and open then the best approach is a free market, unfettered by the greedy hands of government wanting a piece of the action.

As long as markets are free, there will always be those who seek to cut corners, commit fraud, or otherwise conduct themselves poorly. However, customers and competitors are quick to take a stand against these instances and the internet should not be regarded any differently in this regard.

The argument in favor of net neutrality is a false one, even though I will freely admit there are reasonable arguments that exist. The one that has taken the general public by storm; the idea that ISPs will suddenly start price gouging and segmenting internet plans, is not grounded in reality.

There will always be costs associated with a finite resource, such as bandwidth. We already have internet and cellphone data plans that reflect this. It should further be noted that the current regulations allow cellphone providers, gatekeepers to the internet that they are, to skirt many of the regulations.

As the FCC under the Trump administration decides today whether or not to repeal the current regulations, proponents of net neutrality should regard this in the proper context.

If the FCC has the power to pass sweeping changes over how the internet is accessed, and if that power rests in the hands of a politically appointed individual or group; is that the best path forward?

In short, if you want to preserve the freedom of the internet, then handing over control of how we access it to a government body (the FCC) that is as partisan and politically charged as any government body is not likely a recipe for success.