The FCC Fails Consumers, But Who Wins?

As everyone knows by now, the FCC enacted net neutrality last week by reclassifying it much like a public utility under Title II of the Communications Act of 1934. But after years of buildup, 4 million comments submitted to the FCC (thanks John Oliver), hundreds of articles and even a Vox explainer(!), it seems that most don’t understand what the fight over net neutrality is really about.

People seem to think this is about Comcast throttling your connection to Netflix, or other scenarios where your Internet connection will be slowed. If this is what net neutrality is about, it’s solving a problem that doesn’t exist. That’s surely how many so-called consumer advocacy groups got people to pay attention. It’s easy for news readers like John Oliver to attack ISPs and cast them as the villain—let’s face it, they’re not the most loved companies in the country. And if ISPs are the villain, companies like Netflix are the hero’s.

But the fight over net neutrality has very little to do with consumers, at least directly. It’s a fight between billion dollar corporations—on one side you have ISPs and on the other content providers, fighting over who’s going to pay for the heavy traffic brought on by things like streaming video. The content providers have spent millions lobbying the Obama administration to enact rules that would handicap the ISPs that deliver its content.

What it comes down to is this—who is going to pay for heavy content to be delivered on the Internet? At peak hours, Netflix accounts for 33% of web traffic. The infrastructure to deliver that content and the maintenance necessary costs billions to ISPs. There are two options—Netflix could pay to deliver their content or ISPs could bear the brunt of the costs. In both scenarios, the costs are inevitably passed onto the consumer. In the Netflix scenario, only those that view the content are subjected to increased costs. In the ISP scenario, the heavy video watcher and the grandmother who only uses her Internet to talk with her grandchildren are subjected equally to increased costs. One scenario seems less fair than the other.

Why does anyone want the government regulating the Internet? If net neutrality is supposed to protect the small startup, why would regulating your Internet access be of any help? It seems to me that if anyone wants the small startup to fail, it would be the Internet giants of the world (Facebook, Google, Amazon, etc.) who conveniently just spent millions of dollars lobbying the government to step in and provide new regulations and red tape.

Some might scoff at the notion that the government would step in and begin regulating Internet companies. But Title II allows for the complete regulation of telecommunication services. What is Snapchat or Whatsapp or Yo if not telecommunications services? It’s not hard to foresee a future where the government decides to impose rules on these services as well. Where are the protections for small startups then that have to invest in telecom lawyers?

I’m not the first to point out that aside from the giant Internet content providers, the real winners are telecom lawyers. The net neutrality order from the FCC is 300 pages long, written behind closed doors (though somehow Google and other net neutrality proponents were allowed to tweak the language to fit their needs before being released). Telecom lawyers are jumping for joy at the business that is sure to flood in as companies big and small figure out how to remain compliant with FCC rules and regulations, including privacy and marketing rules that are imposed on telecommunications services.

The potential for reducing new investments for infrastructure and increasing consumer costs is high. According to one study, investment in new broadband networks could drop as much a 20% over the next 5 years. At the same time, now that the Internet is regulated the same way as your phone, fees and taxes could very well increase. A study from the Progressive Policy Institute says that net neutrality regulations could increase the tax burden on consumers by billions.

The FCC’s vote was a win for proponents of regulating the Internet, but it’s a failure for Internet consumers.

Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization.  For more information about the Institute, visit www.theamericanconsumer.org.

 

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