Say you'd like to get a cheeseburger. So you get in your car, spend a few minutes fiddling with the Bluetooth and starting a good snacktime playlist, then turn on the ignition. You back out of the driveway and hit the road, but which one?
Recently, all of the old streets and highways have been torn up and replaced with roads that run only to individual businesses. McDonalds (MCD) - Get Report pays a high toll, so it has a nice boulevard with ample space and speed limits that would make Andy Green hang up his spurs.
Frank's Burger Joint does not, so its street has one unpaved lane with a speed limit of π, a pothole known as the Void of Destiny and traffic cameras that sell your image for Russian social media bot profiles.
According to the Highway Department there's no problem because both restaurants have a road. Still, while Frank makes the best burgers in town, getting there is an enormous hassle. You haven't been there in months.
Welcome to the post-net neutrality world.
What Is Net Neutrality?
Net neutrality is the principle that an internet service provider (ISP) has to provide access to all sites, content and applications at the same speed, under the same conditions without blocking or preferencing any content. Under net neutrality whether you connect to Netflix (NFLX) - Get Report , Hulu, TheStreet or a friend's random blog, your ISP has to treat them all the same.
I've definitely seen content blocked online.
You have! Websites can be blocked, but in the context of legal action. If a website or something on it is defamatory, criminal or infringes on copyright it can be taken down. This isn't net neutrality because it's not at the discretion of the ISP. The government decides that something has to come down, not the cable company.
Why Does Net Neutrality Matter?
That's net neutrality. It's simple. Why it matters … that's a little more complicated.
Without net neutrality, individual ISPs can provide higher connection speeds to certain websites or throttle access to others. At the most extreme, an ISP could block access to some material altogether.
Comcast, for example, owns NBC. Net neutrality is the reason why it can't block access to competitors like CBS (CBS) - Get Report and ABC or double the speed of videos from NBC.com in an effort to drive viewers.
Or take a more common example: the famous death of Myspace. When Mark Zuckerberg launched Facebook (FB) - Get Report he had a startup website against one wealthy and established. Net neutrality meant that every ISP had to connect users to both equally, giving Facebook an equal opportunity to compete and succeed.
Without net neutrality Myspace could have made a deal to double its connection speeds while cutting Facebook's in half. Users would have seen Myspace fly while every other social media network crawled on a pixelated loading screen. Or, at the most extreme example, Myspace could have made exclusive access deals for ISPs to connect to their website only.
Facebook, despite being a better social network, would have suffered the same fate as Frank's Burgers in our intro.
Net neutrality also means that ISPs can't charge users access fees for particular websites. For example, Netflix accounts for almost 20% of all the internet traffic in the U.S. Without neutrality laws, an ISP can establish tiered access plans with certain "in-network" websites advertised as free and premium fees for accessing out of network sites, video streaming, online gaming and any other high-bandwidth services.
Or the service provider could establish those fees on the business end, charging websites for access to their subscribers. If you're frustrated with the ongoing proliferation of streaming services, picture a day when Hulu only works on AT&T (T) - Get Report , Netflix is a privilege for the Comcast network and Amazon (AMZN) - Get Report Prime only streams to iOS devices.
Or when each streaming service raises its subscription fees based on how much your ISP charges them.
Then, of course, there's politics. An ISP which supports one candidate in an election could slow down or block access to the opposing party's websites. Or, without taking sides, it could charge for access to its subscribers.
The goal of net neutrality is to ensure that businesses can compete freely on the internet without having to pay gatekeeper tolls. Without it consumers would look more like advertising segments than an open marketplace.
Arguments Against Net Neutrality
• Eliminating net neutrality is about free internet.
Proponents of ending net neutrality argue that this is about freeing the internet from government regulation. Ajit Pai, current head of the FCC, has said that the internet needs a "light touch" without heavy government intervention into how online business develops.
Critics of this position have pointed out that while net neutrality does restrict the options of internet service providers, it ensures the options of consumers. Net neutrality regulations allow consumers to access all content equally, giving them the maximum freedom of choice. Throttling speeds to certain websites or allowing access only to some and not others would be the opposite of that freedom.
• Net neutrality is about giving Pornhub equal status with the New York Times.
Professionally wrong pundit Matthew Walther has made this point several times at
. Critics of net neutrality argue that this rule forces ISPs to give equal status to profoundly unequal content and commonly reach for this particular straw man. Here is Walther's take:
The idea that internet service providers should be forced to provide unlimited access to content transmitted indiscriminately whether it is old episodes of Sesame Street, pornographic videos of simulated rape, or a column at The Week, makes as much sense as saying that a brewing company should be able to suck up all the water in a river so long as people like drinking it. We do not force bookstores to stock certain volumes or restaurants to prepare every conceivable dish. The prospect of a segregated internet in which much of the crap now gumming up the works remains legal but available only to those willing to pay a premium to access it is a welcome one.
This is about as accurate as saying the First Amendment was written to protect dinosaur erotica's equal standing with "Pride and Prejudice." Net neutrality protects equal access to all ideas and businesses. "No preference," as in all areas of life, does mean you take the bad with the good.
If critics of net neutrality wanted rules that discriminated internet access by offensive content, they could argue for that. It would be illegal, but it's also not their position. They want ISPs to have the freedom to choose all access for consumers, and the dirty little secret is people like Walther know that.
• Competition will protect consumers.
Critics of net neutrality also argue that consumers have nothing to worry about because competition will protect access and choice. No ISP will be able to deny or slow down access to popular products because then consumers will simply move to another service. This is wrong for several reasons, among which are:
First, net neutrality is about making sure that unknown services can compete equally with popular ones. No one will abandon their ISP if it throttles access to a startup retailer, but that company should have its chance to unseat Amazon.
Second, consumers don't actually have that much choice. Despite the proliferation of ISPs across America, most home addresses only have one or two choices. This is particularly true for city residents, where apartment buildings often have just one service provider.
Finally, no it won't. Net neutrality rules have been the subject of uncertainty and controversy for years. In that grey area ISPs have already throttled access to video streaming sites several times in exchange for access fees from those companies. In 2014, Comcast and Verizon (VZ) - Get Report both cut Netflix's access to their subscribers until the company paid up. Currently ISPs like Verizon, AT&T and others are doing it again with sites like YouTube, Amazon Prime, Netflix and more.
• Providing broadband has gotten more expensive. This will incentivize innovation and modernization.
This is probably the central argument that critics of net neutrality have made. Broadband services have long argued that the explosion of video streaming and online gaming has made it more expensive to provide internet access. Consumers simply need more bandwidth than ever before, and that demand is growing. Ending net neutrality will allow these companies to experiment, innovate and raise the money to expand their networks.
There are several problems with this position. It first and foremost acknowledges that ending net neutrality will lead to higher costs for the consumer somewhere along the line.
Everything else about it is simply untrue. While internet service providers have been slow to upgrade legacy networks across the U.S., this isn't for lack of capital. Comcast alone made more than $4 billion in one quarter from its internet services division in 2018. This is a healthy market with the money to spend on innovation if they had a business incentive to do so.
One of the challenges with net neutrality as an issue is that almost every argument against it has been made in manifestly bad faith. This makes it difficult to present an even-handed case on this subject… because there isn't one.
The Legal Status of Net Neutrality
Currently there are no net neutrality laws in the U.S.
Under the Obama administration the FCC passed several regulations making net neutrality a requirement for internet service providers. Pai, the current Chairman, has spearheaded a move to roll those regulations back. As noted above, this almost immediately led several ISPs to begin throttling access to major video streaming sites.
The most significant legal question on net neutrality is what's known as "common carriage laws." As we wrote previously on this subject:
American law inherited from the British an idea called common carriage, which says that the public always has a fundamental right of equal access to public roads and waterways. Under common carriage you can set up toll roads and ferries, but only on an egalitarian basis. Everyone gets equal access, and if it's for pay, each person pays the same. Later on, Congress expanded this idea to include wire services such as telephones, as they run their lines along or under public rights of way.
The public has the right to full and equal access to anything governed under common carriage law. If broadband Internet cables count as public rights of way (as telephone lines do), then the FCC could regulate them. In fact it might have to.
In 1996 Congress passed the Telecommunications Act of 1996 in which it divided the market into two categories: "telecommunications services" and "information services providers." Broadly speaking, information services providers actually process information while telecommunications services simply move it from place to place. For example, your telephone company actually doesn't create information, it just conveys your conversation from point A to point B.
Accordingly, telecommunication services are subject to common carrier laws while information service providers are not.
While the current FCC has made clear that it has no interest in regulating ISP practices, the common carriage debate is essential to knowing if future administrations can do so. Broadband companies argue that they are information services providers, and so not subject to the FCC's oversight. Net neutrality advocates urge that ISPs should be classified as telecommunications services and regulated according to the same laws that govern all private utilities.
While this will be determined by future FCC administrations, currently several states are considering whether to introduce state-level net neutrality rules. These may have uneven success rates even if states do introduce them, as the federal government will almost certainly challenge their validity in court.