On Monday, President Obama spoke in favor of net neutrality. He said, somewhat disingenuously, that keeping a “free and open” internet is critical to Americans. That’s basically what we have and it’s what we would like to keep. What Mr. Obama wants to do, however, is impose a ban on all paid prioritizations – that there would be no “slow” and “fast” lanes, just one lane, and that ISPs would no longer have the right to charge content providers for faster access. A problem: once the camel that is regulation gets its nose under the tent, the rest is sure to follow.
Net neutrality, according to its advocates, means that access to the internet will always be equal. Internet service providers – usually cable, telephone, wireless and some municipal companies – have the ability to speed up or slow down access. For example, large content providers like Netflix and Google that stream large amounts of data can hog bandwidth, so have been charged higher fees. ISPs claim such fees are necessary to pay for the technology that permits faster access for those with large levels of compressed data. Content providers claim they are being gouged. In Europe, cable and telephone companies, as noted in an editorial in yesterday’s Financial Times, compete with other ISPs; thereby providing choices. That is less true in the U.S.
Those supporting net neutrality comprise an odd mixture from companies from Netflix, YouTube, Google and Skype to consumer advocacy groups, from President Obama to those favoring free speech. Those against it are the service providers like Comcast, Time Warner, ATT and Verizon and people who worry about the unintended consequences of government intervention into a business that has worked remarkably well for twenty-five years.
Large bandwidth users, like those enumerated above, argue that service providers are deliberately slowing up data from popular websites, so they can charge more. In addition, the argument is made that higher access fees retard the development of new businesses, which cannot afford the higher costs, so would be uncompetitive because of slower access.
Mr. Obama suggested that cable, telephone and wireless broadband networks be considered common carriers under Title II of the Communications Act of 1934, which would classify them as public utilities. The Federal Communication Commission (FCC) was created in 1934 to regulate the telephone and telegraph industries. Using an 80-year old agency to regulate a 21st Century industry seems odd, but, then, this is government. The FCC is an independent commission. It does not report directly to the President; however its five commissioners are appointed by the President. The chairman Tom Wheeler was appointed a year ago and confirmed unanimously by the U.S. Senate. The Agency is dependent on Congress, which controls its budget and makes the laws under which it operates. Efforts to enact net neutrality over the past decade have failed, but this is the first time the President has leapt into the breach.