Here’s a
story. There once was a lobbyist named Tom Wheeler. He worked hard to make sure the cable and
wireless industry’s interests were well-heard by policymakers. Heck, he even used to be President of the
National Cable Television Association and CEO of the Cellular Telecommunications
& Internet Association. His work
contributed greatly to the profits of cable and wireless companies alike. With such a background in helping to tailor
policy in favor of these mostly conglomerated oligopolists (and allowing
them to become more conglomerated and market-controlling), he was chosen to
become Chairman of the FCC. Although the folly of such an appointment is
apparent at first glance, it has only been recently that the general public has
been uproarious. This is due to the
issue known as Net
Neutrality, and is the topic of this post.
Net Neutrality,
for the underinformed, basically is the idea that the Internet is a medium
through which all content should be equally available. That is to say that the speed at which your
computer would be able to access this blog post should be the same speed at
which your computer can access all other parts of the internet, good and bad. There should be no preference for any type of
data access over any other type. This
has been the standard since the birth of the Internet. The reason Net Neutrality has been in the
news recently is because FCC Chairman Wheeler plans to allow Internet Service
Providers (read: the cable and wireless companies he used to lobby for) to
charge fees to content companies for preferential treatment through their
pipes, drastically changing the landscape of the Internet we’ve come to know. He wants to allow an internet fast lane
service, with fees payable to Internet Service Providers.
The debate
at hand is multifaceted: should the FCC protect Net Neutrality against
corporate interests, or allow the free market to dictate Internet speeds for
various content? Is it governmental
overreach, or a moral imperative that the FCC step in and regulate the
activities of Internet Service Providers (ISPs), and in what way should they
regulate? As has become the norm in US
politics, this debate is lopsided. Giant
corporations back their interests with loads of money which drowns out both
their smaller competitors’ and the general public’s opinions and interests. For the sake of this post, when I refer to “ISPs,”
I mean those constituents of the US oligopoly, mostly Comcast, Road Runner,
SBC, Verizon, and Cox, whose combined share of the market totals 63.37%, and whose interests are
threatened by Net Neutrality. Further
destroying the level playing field, the Chairman of the FCC has built his
career being on one side of the argument.
This is once again a seemingly hopeless battle, and I am once again
compelled to share my beliefs in hopes of raising awareness and tipping the
scale in the proper direction.
Let’s
start by examining the reasons some people believe Net Bias (the antithesis of
Net Neutrality, represented here by the decision to allow a paid fast lane for
certain content) is a good idea. The
most compelling argument, I think, is that certain heavy-bandwidth content is
expensive for ISPs to offer. They must
spend money to improve their infrastructure to allow for more and more users to
come online and have speedy access to things like ever-clearer streaming HD video,
online gaming, and video chatting. Why
should my grandma, who only uses her internet connection to send and receive e-mails,
have to pay as much as a constantly-streaming movie buff, if her impact on the
system is so minimal? If the ISP can
charge Netflix a fee for the bandwidth they hog (30% by some
measures), that money can go toward infrastructure improvements needed to
keep up with the demand.
Economically,
this system only half makes sense. It
makes sense that there is a certain cost of providing bandwidth, and, as is
seen in ISPs’ tiered services, if users want access to faster internet speeds,
they have to pay a higher price. Here is
where logic stops. If heavier users are
already paying prices proportional to their (maximum) usage, there should be no
sudden need now for another market factor to supply the money necessary for
infrastructure improvements. If an ISP
has not factored into their internet pricing scales the cost of infrastructure
improvement for projected demand growth, an ISP with better foresight should
have a market advantage. The extra cost
should not fall to content providers or consumers.
Let’s imagine a similar situation
with a 100% wind energy electric company.
Each windmill costs a certain amount to place in service and maintain,
has a certain lifespan, and is estimated to produce a certain amount of
electric energy. In their business
model, they expect demand for their electricity to grow at a certain rate. With these variables in place, they can
charge an appropriate dollar amount for their service to ensure a profit margin
large enough to support the continued growth of their infrastructure to meet
market demands. I find it very difficult
to believe ISPs did not think about the issues surrounding demand and
infrastructure when pricing out their service, and even if they all didn’t, I
have no pity for their bad business practices.
If ISPs are really struggling (and let’s be honest, they aren’t), the fast lane
idea is a bail-out program that costs end users more money. I believe that this argument is a farce meant
to allow higher profits for the companies at the expense of users and content
providers alike.
It is
also difficult for me to believe that United States ISPs are doing their very
best to keep the infrastructure up at a pace with market demand. Let’s look outside the US for some
perspective. The Ookla Net Index
measures the month’s mean Internet speeds worldwide. There is a running list of the top-speed
countries, and the United States is on it…in
31st place! The United
States has the second-largest
internet-using population in the world, accounting for over 10% of total
internet users, and our speeds are slower than Spain’s, whose users account for
only 1.3% of the total. There is a force
that has slowed the improvement of our internet infrastructure, and I say that
it is the oligopoly’s interests lying in the opposite direction of
progress. The United States’ oligopoly is
the slum lord of the internet, maintaining as little as possible, improving
next-to nothing, and its existence is supported only by market demand combined
with a stark lack of competition and regulation.
Another
argument against Net Neutrality is that supporting a free and open internet interferes
with the free market, that the government has no right to regulate the internal
policies of ISPs. Let’s introduce a
broader concept with a question: why do we even have any regulation, and are there
any effective examples? Answers: The FDA
regulates the food and drugs deemed fit for human consumption, the point of
which is to ensure the health and safety of the populace. The EPA
regulates the pollution of our land, water, and air, the point of which is to
ensure the health of the populace and environment. The FTC
(supposedly) regulates business, the point of which is to protect consumers
against anticompetitive practices such as coercive monopoly.
Now then, is the internet a service
that needs regulating? What is at risk
if it is not regulated? Answers: Some
activity on the internet is illegal or threatening to the privacy and safety of
consumers. With Net Neutrality, ISPs
have to give equal access to hackers exploiting security holes like Heartbleed (btw, change
your passwords, folks), people downloading Breaking
Bad illegally, and kids enjoying the website for Dora the Explorer. I know that even with a Net Bias policy in
place with an emphasis on mitigating against such activity, there would still
be ways to exploit security holes, download media illegally, and otherwise use
the Internet in malicious ways, which would not be traceable by the ISPs. Even if the ISPs have the power to slow down
activity they know to be “bad” internet activity, they would not be effective
in stopping these activities.
Whether you believe the FCC should
enforce rules like Net Neutrality or Net Bias (either the anti-crime version or
the preferred content version, or a combo of both), there is a catch. Any argument that the FCC should be more
involved in regulating ISPs goes pari passu with the January 14, 2014 DC
Circuit Court determination
that the FCC has no authority to enforce Net Neutrality rules because ISPs are
not “common carriers,” like telephone companies. ISPs are classified under a different section
of code, Title I of the Communications Act of 1934. A common carrier designation would mean, as
eloquently described by Google,
that “Just as telephone companies are not permitted to tell consumers who they
can call or what they can say, broadband carriers should not be allowed to use
their market power to control activity online.”
Without regulation, ISPs have the
power to decide what can and cannot be done on the internet, and what is fast, easy,
high quality content, and what is slow, frustrating, pixelated
infuriation. In my opinion, and in
yours, if I’m convincing enough, ISPs are close enough to a coercive monopoly
(being an oligopoly already) that there should already have been much more
regulation from the FTC to prevent their power from growing to this point. I agree that the government should not punish
companies for being successful, but only as long as that success is merit-based,
driven by innovation, hard work, great customer service, and the like. The ISPs’ success stems from their oligopoly
status. Now that they have all their
power, it is also my opinion that they should not be able to profit just from
the fact that they’ve accumulated all the power, and Net Neutrality regulation
would protect against that kind of profiting.
The weakest argument, and one that
I won’t spend too much time on because of its vulnerability, is that a
precedent against Net Neutrality has already been set. Comcast slowed down Netflix, holding their
access to normal bandwidth at ransom until Netflix agreed to pay fees. Comcast artificially slowed down the Netflix
stream, and has been doing so with other types
of data in direct competition with their services as well, unless those content providers pay a fee. These accusations may be refuted by Comcast,
but the facts
and logic dictate that their version of the story (that the quality of Netflix
streaming reduced suddenly and significantly due to increased demand) is
impossible. So, now that Comcast has
gotten away with this activity, they argue that it is the way the world should
be. To be clear, corrupt actions are no
less corrupt if there is no punishment.
The idea of setting a precedent is inherently problematic in a society
whose governmental system is one of revision and amendment. Proclaiming that a precedent has been set in
this situation should be as effective as proclaiming that the precedent has
been set for the legitimacy of slavery.
Now let’s dive into more arguments against Net Bias and the path which the
FCC is on. The focus here is on a
self-serving system which has the power to suppress any opposition. This situation is very similar to a monopoly,
but much more robust. Let’s explore.
First, let’s think about the
interests of every citizen. The United
States is, after all, supposed
to be democratic. Some people work directly
for ISPs or at jobs in which the success of ISPs is proportional to their own success. On the other side of the equation, the rest
of us (the consumers) do not profit from ISPs success. We pay for the services they provide, and
benefit from receiving the cheapest and best service available. The exact opposite is true for the ISPs: they
benefit from providing the most expensive and worst (least costly to provide,
but reliable enough to keep customers and beat their competition) service
possible. In this system, without
regulation, there could be a happy equilibrium at which compromises are made on
both sides, and the market naturally dictates the growth and improvement of the
Internet.
Unfortunately, this is not the case
in the real world. ISPs have
conglomerated, centralizing their power and mustering lobbyists backed by
millions if not billions of dollars.
Free market rules which would dictate fair prices and natural growth do
not apply, because this market is not free.
There are aspects of the market that tip the scale in favor of the
ISPs. In this (real) case, we need
regulation to ensure the consumers’ interests are protected against these more powerful
adversaries. Without this regulation,
ISPs will be able to continue to provide sub-standard quality of service for an
above-fair price. Furthermore, with the
paid fast lane in place, ISPs will be able to profit at least thrice: once for
the consumers connecting to content (our monthly internet bill), again for the
content providers’ competitive access to consumers (the fast lane fee), and a
third time with the advantages that come from being on both the ISP side and
the content provider side of the market (their affiliated
content companies incur less cost for fast lane treatment). More profit in the hands of the ISPs means a
tighter grip on the market, and further deviation from a system which is fair.
One force that could throw a wrench
in the ISPs’ plan would be the arrival of a better, smarter, cheaper competitor raising the quality of
service bar. However, this eventuality
could be prevented through the economics of the oligopoly which is allowed by
policy. There is no better way to
influence policy than to have a member of your own team making the policy. This is exactly what is possible when a
former lobbyist for the cable and wireless industries is allowed to take a
leadership position at a regulatory agency.
The dissonance of a regulator governing his former colleagues is a
recipe for bad policy, yet the FCC is not the only entity which has had vested interests
towards the top. Such situations do not
lend themselves to fair progress through the innovations of new companies. They do lend themselves to increased profit
for the oligopolies, such as the ISPs.
It is abundantly clear to me that
money talks in American politics, and these ISPs have lots of it; more than
enough to outbid any grassroots-funded campaign set against them. It is clear to me that the state of the
Internet in the US is drastically worse than what it should be. It is clear that without Net Neutrality
regulation, companies like Comcast, AT&T, Verizon, and more will be able to
put systems into place that provide themselves substantially more profit for
substantially less merit-based improvements.
What can we do now to fix this problem?
At its root, the problem is this:
money can buy you policy, which can make you more money, which can buy you more
policy, and so on. If money was not as
powerful a speaker as public opinion (and, more importantly, scientific fact),
the role of lobbyists would change. They
would not be money mules, delivering cash from corporations to policymakers,
but fair representatives of people’s opinions.
Perhaps lobbyists would not be needed at all. With equal and abundant access to resources
like the internet, everyone has a chance to voice their opinions to their
policymakers.
And that means you, dear
reader. The FCC has opened
their proceeding number 14-28 for public comment on this matter. Before we tackle the problems of income
inequality and enhanced access to the legislature of those people and companies
with the most money, we must attempt to revitalize respect for that ideal of
Democracy: That the opinions of all the people matter, not just those of the
wealthy. To do so is an uphill climb,
and we may not win this battle, but if you add your comments to the discussion,
as I am here in this blog post, you will at least be able to say that you did
not sit idly by while an oligopoly of ISPs attempted to further ruin the
Internet for their own profit, and at your own expense.
Note: Please feel free to use my
language in your comments to the FCC or to your Congress people. I'd prefer if you'd write something like "I agree with what this guy wrote" at the top, but I don't have the authority to enforce what you do on the Internet.
No comments:
Post a Comment