The economic case that net neutrality was always fundamentally good for the internet

A comeback to the similarly named (but opposing) article by Quartz.

Net neutrality is up for debate again as Congress is planning to vote on legislation that will allow internet service providers to charge content providers for faster connection to their content. The vote will take place on Dec. 14, 2017.

I recently read an article on Quartz titled, “The economic case that net neutrality was always fundamentally bad for the internet”

While the article presents arguments from both sides, and in actuality seems to promote net neutrality, I would like to rebuke the arguments listed for eliminating net neutrality.

The main reason Katz is against net neutrality, is that he sees likely benefits from paid prioritization, the ability of internet providers to charge companies for faster speeds. Paid prioritization, Katz says, is normal in most other parts of the economy.

The problem is most other parts of the economy behave nothing like the Internet. In a traditional economy, you have an element of scarcity. By transmitting a song on Spotify or an article from the New York Times to a user, no other user is deprived of the opportunity to access that same song or article — and they shouldn’t be. Because unlike physical goods, there is no “supply” of content which will be diminished with higher consumption. That is the beauty of the internet and what makes it so special. Introducing “paid prioritization” introduces scarcity to a situation where there previously wasn’t any in order to benefit the service providers (i.e. Comcast, Time Warner, AT&T, etc.)

According to Katz, low income families who are happy with basic, slower internet would be winners from the end of net neutrality. He theorizes that the most basic packages would likely become more affordable as some of the money that internet providers like Comcast and AT&T, receive from content companies like Netflix and YouTube, would be passed on to consumers. The basic low-cost internet option would entice more households to sign up, and that in turn would be a win for both internet providers and content makers.

No. There is no evidence to suggest the money collected by internet providers from content companies would get passed to consumers. More often than not, a situation like this results in “double dipping” where the internet provider will charge on both sides — content companies and customers. As publicly traded companies, internet providers like Comcast and AT&T are legally obligated to maximize return for shareholders, not customers. I would also argue that price reduction would do little to incentivize more customers to purchase internet. Rather, availability and sufficient speed are more significant factors. And if anything, this will only slow internet speeds, not quicken them.

The argument for net neutrality

“Right now we don’t see companies like Microsoft, Google and Amazon coming to AT&T begging for prioritization,” Economides told Quartz. He said that instead, we see AT&T coming out and saying we want a new revenue stream.

It’s blatantly obvious that attempts to get rid of net neutrality are really an attempt by internet service providers to make more money. That’s it. They’re trying to disguise it as something that will be good for the internet, but in reality, it will only harm it.

The threat

Eliminating net neutrality will allow internet service providers (Comcast, AT&T, Verizon, etc.) to stifle innovation and make it harder for smaller players to compete in the market. It would be akin to banning small shops from doing business in the mall because the mall has limited space. Except the mall is really infinitely large, and there’s no reason the shop can’t move into the mall except for the gatekeepers want to make a quick buck.

The main problem he foresees with eliminating net neutrality is that it will be bad for startups. Right now, they operate on relatively equal footing with more established firms. But without net neutrality the costs associated with obtaining fast internet could make things difficult, and stunt the growth of the next internet unicorn, and Economides says such “startups are very very important for the growth of the US economy.”

‘Nuf said?

The original article can be found here. I am not personally a part of any initiative. I am just a concerned citizen. But if you would like to make a difference and keep net neutrality, Github has made a page to call your representative or you can send your plea. We did it once, we can do it again!

Call to action

#speedsdownbillup