Why Net Neutrality is Important

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On Thursday, after a long-running and heated debate, the Federal Communications Commission passed a measure to ensure that websites have equal access to Internet capacity under new rules known as “net neutrality.”

This landmark move by the government agency, though there are still some uncertainties about final implementation of the rules, was the result of a 3-to-2 vote, split along party lines. It essentially says that network owners must allow access without partiality to users.

That might sound technical, but its implications are enormous. Here’s an explanation of what that ruling means, and why it matters.

What is net neutrality?

If you’re a huge Internet service provider, such as Comcast, AT&T or Verizon, you’re a “gatekeeper” because before any Internet traffic reaches your subscribers, it has to first travel through your network. And because you control the network, it’s tempting to slow down — even block — the content of your competitors, or make extra money by collecting a fee from content providers willing to pay for faster downloads.

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In other words, even though you’re already charging your customers for access to the Internet, if the content they want to see doesn’t make you money, you’d like the option of making it harder for them to see it. For example, if you’re Comcast, you might make it faster to stream your pay-per-view movies rather than those of your competitors, such as Netflix.

While some might argue that Netflix should pay more because its service hogs Internet bandwidth, the problem is that giving free reign to the gatekeepers could ultimately change everything. For example, suppose Comcast came to Money Talks News and said that for a little extra money, our site would be optimized for their customers. Refuse to pay, however, and they could throttle (slow down) our site on their network, or even make it impossible for their subscribers to see us. Agree to pay it, and Verizon could conceivably block their subscribers from this site, because we would be working with one of their competitors.

While this example is admittedly a bit far-fetched, it illustrates the potential for problems and abuse.

Tug of war over the issue

That’s the essence of net neutrality. The companies that own Internet infrastructure want to be able to decide how fast different types of traffic travels through their networks. On the other side of the issue, consumer advocates and content providers (including Money Talks News) say the net should be “neutral,” meaning gatekeepers shouldn’t be allowed to favor certain types of content over others.

The FCC has been studying the issue off and on since 2005, and in 2010, it issued a draft order that required broadband providers (such as Comcast and AT&T) to let subscribers see all legal online content at the same speed, even if that content competes with their own. (The rules were seen as a triumph by some neutrality advocates but insufficient by others because they applied to wired networks only — think cable companies — as opposed to wireless networks.)

In any case, a Court of Appeals challenge by opponents shot down the FCC rules early last year.

That meant that service providers such as Verizon, Comcast and AT&T would indeed have the ability to block or slow competing content, or charge content creators more to move it through their networks. So, for example, a gatekeeper could charge Netflix more, and Netflix could charge you more.

In this round, the FCC invoked its strongest regulatory option, called Title II, to re-establish its authority to maintain neutrality of the Internet, much as government agencies maintain open access to public utilities. FCC Chairman Tom Wheeler described the proposed rules this way in an op-ed published in Wired.

Using this authority, I am submitting to my colleagues the strongest open Internet protections ever proposed by the FCC. These enforceable, bright-line rules will ban paid prioritization, and the blocking and throttling of lawful content and services. I propose to fully apply — for the first time ever — those bright-line rules to mobile broadband. My proposal assures the rights of Internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone’s permission.

The FCC vote Thursday affirmed this move, narrowly, in the Democrat-led commission.

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Comments & discussion

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  • George King

    Well stated Stacy, this has been a decades long battle. We see time after time where peoples’ choices are blocked in what is suppose to be a free market. If you want to cut the cable because you are forced to pay for tons of stuff you do not watch, does not pad profits of the gate keepers or introduces competition monopolies will spend money to block our choices.

    How about an article on how to cut cable and the products and services available. I have installed an antenna and the HD picture quality is much better. I am looking for a DVR purchase to use with my current free broadcast.

    • ManoaHi

      Answer to the second part. Stacy has occasionally had articles about cutting the cable.

      So, net neutrality should only be applied to monopoly providers (I know, nothing wrong with monopolies, just when they abuse the power) and torrents. I generally don’t like government intervention in private enterprise. Often the unintended consequences are overlooked. The US has an extremely poor track record when laws are passed to help the consumer, ultimately making things worse.

      For example, in the past, the US had been pressuring Japan to open up their markets to US computer companies. Then accused Japan of memory chip dumping and levied huge tariffs to protect one memory chip manufacturer (that company has since dropped producing memory chips). That save some 1,500 jobs in the memory chip company. However, this made US computers extremely expensive and uncompetitive. Japanese computer manufacturers bought up those cheap chips, and could bring to market inexpensive computers. Collective lay offs of multiple computer manufacturers in the US shed 25,000 jobs. So, saving 1,500 jobs cost us 25,000 jobs. Japan couldn’t justify paying so much for computers, so they bought locally. Trade officials had no defense against Japanese companies purchasing Japanese computers.

      Another, Asian countries were accused of dumping steel. Tariffs on steel were imposed. Did it protect US steel? No. It hurt every automotive maker and appliance makers since the price of steel skyrocketed, lowering demand for steel overall, so it ultimately hurt the steel industry as well as steel dependent manufacturers.

      Proponents of net neutrality need to look at all possible unintended consequences. Some include heavy investment in infrastructure required by ISPs to improve their equipment to prepare for the supposed onslaught of bandwidth requirements. Who pays? The consumer, be prepared to pay higher prices for your connectivity. There will also be some paring of ISPs who just give up. Thereby giving a chance for fewer competitors, increasing you lack of choices and thus, again higher prices.

      All the above presented by Stacy, is possible, but it is scaremongering. What the providers want is the ability to limit torrents and extremely high users to provide the best bandwidth for the rest of us. What Stacy is stating is a slippery slope fallacy. I for one am glad that it was tabled. It gives time for people to think more rationally and explore all the ramifications of possible unintended consequences. 10 years ago, the unintended consequences don’t apply anymore, there are new ones,

      • http://www.moneytalksnews.com/ Stacy Johnson

        Excellent feedback, ManoaHi and George. And your points are well-taken. You’re right: I was doing a bit of scare-mongering. But that’s OK, because I was trying to illustrate the dilemma. And it’s an interesting one: We don’t want government intervention, but we also don’t want to be abused. My hope is fear of government intervention will prevent oligopolies from taking advantage of consumers.

  • Jack Mabry

    Tom, this is one of the most incredible pieces of commentary I have ever seen. Thank you so much for sharing it. Every consumer should see this!