Net Neutrality Hit With Major Setback
NEW YORK ( MainStreet) Yesterday the Federal Communications Commission (FCC) lost on a technicality. In a 2-1 ruling , the D.C. Circuit Court of Appeals struck down an agency regulation governing net neutrality. This loss, following a similar defeat in 2010, has sweeping implications for competition on the Internet and marks a major victory for broadband providers who oppose this form of government regulation over broadband traffic.
Unfortunately it also marks a major loss for the rest of us.
Net neutrality, despite its somewhat technocratic term, is the straightforward legal idea that Internet service providers must treat every website equally. This principle would forbid, for example, Comcast from making a deal to stream Netflix twice as fast as Amazon or Microsoft from paying Verizon to block access to any search engine but Bing. Otherwise known as "Internet Openness" or "Internet Freedom," it's the idea that all websites should compete equally.
To understand fully how important net neutrality is, you have to remember that on the Internet bandwidth is a zero sum game. There's only so much to go around, so making one website twice as fast means slowing down another. Sites which loads faster will work better and attract more users. Startups without the funding to buy into this land rush could never compete on an equal footing. Imagine where we'd all be, for example, if Yahoo had been able to slow Google down to a crawl back when it first began, or pay off Internet service providers (ISPs) to block it altogether.
Without net neutrality, we will almost certainly see an arms race among websites and service providers. It would probably look very similar to the current state of streaming media, with every different company constantly cutting deals that leave your favorite media scattered across a dozen different services.
ISPs argue that competition in the free market would help ensure that companies don't abuse their power. Unhappy customers can leave for greener pastures. In practice, however, that rarely happens. The broadband industry already enjoys rock bottom customer satisfaction and stays afloat largely through a captive consumer base. Users often get locked in by geography, de facto monopolies and apartment buildings wired only for one service.
There is also some irony in relying on the free market to regulate an idea specifically designed to stifle competition.
The recently overturned rule banned broadband providers from giving this kind of preferential treatment. The court ruled on the basis of an obscure classification in the telecommunications industry between "Telecommunications Services" and "Information Service Providers." There's quite a lot of history behind how and why this distinction matters, but the hornbook version is pretty straightforward.
American law inherited from the British an idea called common carriage, which says that the public always has a fundamental right of equal access to public roads and waterways. Under common carriage you can set up toll roads and ferries, but only on an egalitarian basis. Everyone gets equal access, and if it's for pay, each person pays the same. Later on, Congress expanded this idea to include wire services such as telephones, as they run their lines along or under public rights of way.