Understanding the Impact of the Net Neutrality Repeal

The 2015 Net Neutrality Rule passed during the Obama administration was repealed last December 14, 2017 through a 3-2 party-line vote under Trump’s Federal Communications Commission (FCC). Three weeks later, the FCC published the repeal order dubbed Restoring Internet Freedom . I know what some of you might be thinking. Net Neutrality Rule classifies broadband internet under Title II (Common Carrier) of the Communications Act of 1934. This means that Internet Service Providers (ISPs) are carefully regulated like other utility providers for telephone, gas, or electric service. The Open Internet Order of 2015 (also known as Title II Order) passed by the FCC expressly banned activities like throttling, blocking, and paid prioritization. Net Neutrality made sure that ISPs treated all online content equally – they can’t slow down their competitors’ content to push their own content forward, block political opinions they disagree with or charge more for preferential treatment (such as “fast” connection lanes). In the same way that telephone companies can’t control who you call and what you say, ISPs can’t censor what you view or post online. The repeal of Net Neutrality rule reclassifies ISPs under Title I (Information Service) which lifts the ban. However, the FCC’s current proposal has a transparency requirement that makes it mandatory for ISPs to disclose blocking, throttling, affiliated prioritization, paid prioritization, app-specific behaviors and the like. This doesn’t mean they will be penalized or prevented from speeding up or slowing down specific types of data, it just means they need to be upfront about it and give a reason. It’s like letting hate crime go unpunished because the offenders confessed to it. Some consumers have questions like this one: The Federal Trade Commission (FTC), under the new FCC rule, can step in, investigate and regulate broadband carriers under the antitrust rule, in the same manner, that it sued AT&T in 2014 for falsely advertising unlimited data. It begs to question though how much “teeth” there is in this proposal when the transparency requirement ensures there’s no deception and the ban on “unfair and anti-competitive practices” has practically been lifted. However, with all eyes on them, cable providers and major trade groups for broadband are unlikely to make immediate and drastic changes that will upset the consumers. In fact, they said that they don’t and will not block or throttle sites or engage in most forms of paid prioritization. Unfortunately, history doesn’t bare this statement out. Comcast moved against BitTorrent in 2008; Verizon moved against Google Wallet in 2011; AT&T attempted to block an early version of Face Time, and Netflix paid Comcast in 2014 to improve degraded services. Now, FCC Chairman Ajit Pai insists that the best gain for consumers under the new Restoring Internet Freedom Order is the Transparency Rule. Since ISPs need to disclose whether they’re throttling or blocking legal content, consumers would know upfront what they’re getting into and can decide to switch providers if they’re unhappy with the current one. This is easier said than done though when more than 56M households have only one or no option at all. Here’s a common reaction to this: In his oral statement , FCC Chairman Pai said that the Internet wasn’t broken in 2015 and Net Neutrality rule was an unnecessary and heavy-handed utility-style regulation that only served to kill free-market innovation in the digital space. “The digital world bears no resemblance to a water pipe or electric line or sewer. Use of those pipes will be roughly constant over time, and very few would say that there’s dramatic innovation in these areas. By contrast, online traffic is exploding, and we consume exponentially more data over time. With the dawn of the Internet of Things, with the development of high bit-rate applications like virtual reality, with new activities like high volume bitcoin mining that we can’t yet fully grasp, we are imposing ever more demands on the network. Over time, that means our networks themselves will need to scale, too. But they don’t have to. If our rules deter the massive infrastructure investment that we need, eventually we’ll pay the price in terms of less innovation.” Pai believes that returning to the traditional light-touch framework that governed the internet for most of its existence (prior to 2015) will create an environment where “Broadband providers will have stronger incentives to build networks, especially in unserved areas, and to upgrade networks to gigabit speeds and 5G.” If you’re a telco company or an ISP, would you spend billions of dollars in capital expenditure and innovation when there’s a rule that prevents you from charging a premium dollar to companies like Google, Netflix, Hulu or the likes, for using your infrastructure-even if they themselves are amassing massive income in advertising and subscription? That being the case, as a consumer, would you be happy with the same broadband speed 10 or 20 years from now? Proponents of Net Neutrality are gearing up for a long legal battle to get the repeal overturned so it looks like there won’t be any change in your internet experience…at least not in the immediate future. The FCC and Net Neutrality advocates both want to promote internet freedom for the users as well as ensure future innovation in the space. Whose position do you think is right?