Johnathan Bowes

Net Neutrality? Try Net Freedom

Last Monday, President Obama entered the debate about net neutrality — the idea that, apart from trying to block spam or congestion, Internet Service Providers (ISPs) should treat all information they process equally. Despite the FCC (run by former telecom lobbyist Tom Wheeler) moving towards net non-neutrality, Obama wants the agency to start treating ISPs (e.g. Comcast) like they do telephone companies: as telecommunications services instead of information services. But, even between Obama urging him to change his ways and John Oliver causing his agency’s site to crash over the issue, Wheeler seems ready for a siege.

Net neutrality is an important topic for our Internet-age society. After all, it has proved important to the development of the Internet as we know it. But trying to regulate it any more aggressively than we have in the past, like through reclassifying ISPs, isn’t the answer. It’s a temporary fix to a long-term problem created by the Ma Bell-inspired, monopolistic culture of telecommunication companies. So rather than over-regulating in a way that assumes the ISP monopoly as a given, a better tactic would be encouraging as much competition as possible to collapse that monopoly.

Arguments supporting over-regulation for neutrality tend to forget or ignore that the Internet of today differs fundamentally from the Internet of 2003, when Tim Wu first coined the term “net neutrality.”  Many proponents of excessive neutrality regulation want to prevent ISPs from creating expensive “fast lanes” and cheap “slow lanes” on the Internet, assuming that all Internet data currently follow the same “lane” as in the past. By their logic, having “fast lanes” available only to those who can pay extra (i.e. larger companies like Google or Netflix) would kill competitors to YouTube’s or Netflix’s streaming services.

In reality, “fast lanes” already exist on the Internet, and they seem to cause no major harm to the market. Through peering and content-delivery networks (CDNs) pioneered by Google, many of the 30 companies whose services now take up half of the Internet’s overall traffic have managed to secure faster connections to the ISPs than other companies.

However, those methods haven’t destroyed the concept of net neutrality at all. Rather than fast lanes like over-regulation advocates warn about, they act more like lanes dedicated to extra wide loads. They are less about big companies getting special treatment and more about big companies getting their data out of the way of smaller ones — which could potentially help the proliferation of such smaller startups.

But things differ greatly on the ISPs’ side of the process, where competition has become stifled. It’s perhaps unsurprising (given that ISPs AT&T and Verizon descend from Ma Bell) that we have a de facto Ma Broadband. A culture of monopoly dominates our country’s ISPs — and above all else, that culture is the problem.

An oligarchic handful of ISPs hold an incredible amount of power over the entire market. Currently, the top five Internet companies control 86 percent of the market, and Comcast could soon become the dominant ISP in a majority of states if it merges with Time Warner. Additionally, nearly two-thirds of U.S. people have little to no choice in what company to get their Internet from thanks to the ISPs’ gentlemen’s agreement not to compete in certain areas. In other words, the free market between ISPs has all but died at their hands.

So instead of focusing solely on regulating for net neutrality, we need to focus more so on ways to encourage competition in the market and dissolve Ma Broadband.

Obama wants to use the easiest — and most dangerous — way to attempt that dissolution in reclassifying ISPs. Part of that reclassification would give the FCC the authority to mandate the sharing of physical Internet infrastructure as a way to force open the market. Without having to invest as much capital or time to build up a network, new companies could sprout up to challenge the Goliaths of the Ma Broadband ISPs. While some advocate for that “nuclear option” as the only one that will work, it really should be used only as a last resort; after all, trying to regulate the fast-paced world of the Internet using rules from 1934 would likely slow the process of innovation and cause further problems. Even trust-busting the ISPs, which should be done in a preventative sense with Comcast and Time Warner, would be a less-drastic option than reclassification.

Besides, others are still available to us. Specifically, rather than over-regulating current ISPs, we can instead do everything possible short of drastic regulation to encourage the growth of new ones, whether Google Fiber or otherwise. So far, Google Fiber’s efforts have focused on small-to-medium-sized areas where the cost of implementation fell below a prohibitive threshold; but, how low could that threshold itself fall if building new ISP infrastructure could, for instance, entitle companies to a tax break? Wherever we find barriers to the development and growth of such new companies, whether with taxes or burdensome regulations, we should lower them as much as possible. Such a process could even encourage the Ma Broadband companies to trade scratched backs for stabbed ones and start directly competing with one another in more markets.

The debate about the future of our country’s Internet needs to move forward, and it needs to move towards a freer Internet marketplace.

Contact Johnathan Bowes at jbowes ‘at’ stanford.edu.