Roosevelt Institute | Cornell University

Open Internet, Constrained Market

By Arielle TanninPublished March 11, 2015

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As the Internet evolves into an increasingly integral part of our lives, it is important to consider if and how its usage should regulated. Anyone who is active on the Internet is concerned with having an open web and preserving the freedom of expression and activity that has pervaded the digital world. This desire is the motivation for the net neutrality bill passed on February 26th, 2015. Without Net Neutrality, cable and phone companies could take advantage of their vast resources by dividing the Internet into "fast and slow lanes." Internet service providers possessing this much power could enable them to slow down their competitors' traffic or block sites containing opinions with which they disagreed.
By Arielle Tannin, 3/11/15

One of the core matters that has been up for debate is whether all content should be treated equally or if Internet providers should be able to charge content providers to use these "fast lanes" to deliver their content to customers at an expedited rate. The latter would create a system in which the largest deep-pocketed broadband industries would benefit immensely at the cost of inferior service for less wealthy companies. Net neutrality seeks to combat this.

On February 26th, 2015 the Federal Communications Commission voted 3-2 to pass a bill that reclassifies broadband (cable, wireless and telecommunications) data as a Title II service under the 1934 Communications Act. This means that the Internet will be treated as a public utility and is therefore eligible to be regulated by the government. There are three major regulations this net neutrality bill institutes: no blocking, no throttling, and no paid prioritization. These provisions were intended to protect Internet users against censorship and ensure that there is no unjust favoritism on the part Internet providers toward certain types of content (i.e. video or other traffic). Therefore, Internet providers are not allowed to intentionally slow down data from certain applications or charge content providers extra to deliver content at a faster speed to consumers when networks are congested.  This is an effort to equalize the cyber playing field by mitigating the power of large Internet service providers through government regulation. 

There has been a great deal of concern voiced over this policy, as it gives the FCC unprecedented authority in controlling Internet companies that previously operated under relatively few restrictions. Many broadband companies are unhappy with this bill because they fear it hurts investment opportunities within networks, thereby impinging on their ability to innovate. They are also worried that the FCC will force them to share their infrastructure with competitors

Imposing regulations on Internet service providers raises economic arguments about stifling market competition in the broadband sphere. Banning paid prioritization is a good effort to stop companies from assigning priorities to Internet traffic. However, assigning priority to certain services over others is an essential component of free economic activity that is being infringed upon by net neutrality.  While there is a precedent for government imposing restrictions on companies that become too dominant, the question arises of whether this is desirable in the Internet world, which was founded on the principle of freedom. 

Michael Powell, former chairman of the FCC, voiced his opposition to the bill stating that, "The FCC has taken the overwhelming support for an open Internet and pried open the door to heavy-handed government regulation in a space celebrated for its free enterprise." The concern of many involved in the business realm of the Internet is that net neutrality is a "slippery slope" and that the FCC will gain too much power in influencing prices. Smaller start-ups have been generally supportive of the bill however, as lowering the barriers to entry of broadband industries would make it easier for these companies to get off the ground.

Net neutrality as a concept to protect the openness and freedom of the Internet is a worthwhile endeavor. While the recent bill ameliorates many concerns about freedom and fairness, it is gives the government an immense amount of power in an arena in which they have previously been largely uninvolved. Choosing to impose similar restrictions that telephone companies operated under in the 1930s is simply outdated. A more innovative amendment that incorporates the current economic climate of how Internet related companies operate would likely be more beneficial for both providers and consumers. For example, instituting regulations if an Internet service provider has shown evidence of participating in paid prioritization could be preferable to the more invested approach the recent bill gives the FCC. Despite these considerations, this bill is a positive first step toward insuring that impartiality remains at the epicenter of the Internet.