Did you know this about net neutrality…
By: Akshay Pardiwala
To provide some background, net neutrality was introduced just two years ago mandating that internet service providers (ISPs) must treat all data on the internet the same. Now the Federal Communications Commission (FCC), with a chairman appointed by President Trump, Ajit Pai, will vote to remove net neutrality on December 14th.
Most of the people who are for net neutrality mention that they support the the idea of the internet treating all content equally. For example, Netflix has the same level of importance as The Wall Street Journal (WSJ) or any other company. They both deserve to have their services and data equally represented online. However, Netflix requires a higher consumption of internet service than WSJ because of the business it is in. The whole debate around net neutrality is trying to determine who should take the burden of websites having heavy internet reliance. Should the internet service provider be responsible for websites like Netflix, which require higher internet service, or should Netflix be responsible for itself.
A common misconception is that the removal of net neutrality is going to 100% hurt the average customer who uses the internet. Let’s assume that net neutrality does get removed. ISPs will be incentivized to make Netflix pay because Netflix requires a heavy use of internet. It will be Netflix’s responsibility to pay ISP’s so that their service remains smooth and efficient. Otherwise consumers of Netflix would switch to Netflix’s competitors. Let’s be real, this isn’t a huge setback for companies as large as Netflix, they generate a net income of $187 Million and this is a cost which they should simply expect in the nature of their business. Another misconception is that this might hurt small local businesses. That just simply is not true, the majority of small businesses throughout the United States which use the internet use it for low consumption promotional purposes. In other words, websites that do not actually require high internet services won’t be drastically affected. What I mean by this is that those websites do not require high internet service, they are just text which help elaborate services.
If you have not gotten the gist of it, all the ISP’s want to do is allocate their resources in an efficient manner. If the online service you provide uses a lot of internet, then that will be something you have to consider as an operating cost. An analogy which I like to use refers to operating costs in real life. An oil company is going to need more land than a video streaming company for operating purposes. However, people in the oil company don’t complain that their costs associated with land is higher than a video streaming company because it is the nature of the business. Just like land, internet service is not free and therefore cannot be thought of as a public good. It would be absurd to think that an oil company and a video streaming company would have relatively similar costs associated with internet usage.
While the intentions are to bring equality on the internet, net neutrality is not helping ISPs allocate their resources in the best way possible. The removal of net neutrality will put the power back into the hands of ISPs. After all if you are offering a service, you probably will be very educated on how to conduct your business. Many also believe that with a power restorement, investment in ISPs will skyrocket. ISPs have more room to make investments to improve the consumer experience rather than make more networks for heavy internet use.
A more pessimistic viewer might view companies as Netflix as greedy and unwilling to pay extra fees to ISPs for higher services. They believe that the greed is what will pass the costs down to consumers. What they aren’t realizing is that the Federal Trade Commission (FTC) has expertise in antitrust laws and consumer protection issues regarding net neutrality.
This is good news for ISPs. They will be able to invest in ways to make the internet better. In the future, we can count on ISPs finding more efficient ways to operate such as updating networks to increase bandwidth. This can help stimulate lower costs for companies like Netflix because there will be a more efficient use of networks. But we can’t expect ISPs to invest in this type of research and innovation without letting them use their resources in their own way. Although it sounds appealing on the outside, net neutrality has many consequences that people fail to recognize. Moving forward for the FCC and the FTC, strict regulation of antitrust and competition laws will allow the removal of net neutrality to spur innovation in ISP’s.
“FTC Testifies Before House Judiciary Subcommittee on Net Neutrality.” Federal Trade Commission, 1 Nov. 2017, http://www.ftc.gov/news-events/press-releases/2017/11/ftc-testifies-house-judiciary-subcommittee-net-neutrality.
“Restoring Internet Freedom.” Federal Communications Commission, 4 Dec. 2017, http://www.fcc.gov/restoring-internet-freedom.