'Whopper Neutrality' and the Argument over Net Neutrality

In December 2017 the Federal Communications Commission passed a bill called Restoring Internet Freedom that revokes the net neutrality order that has been in effect since 2015, the Open Internet Order. The titles of the two dueling regulations make it clear that the whole issue is deeply political. However, potential consequences are great--to the internet itself, to companies that rely on the internet for their business and their employees, as well as to all users of the internet. That makes it worthy of discussion in classrooms where various aspects of internet marketing are taught. This post is an attempt to lay out the issues in an objective manner for coverage in the classroom.

While it is by no means objective, the prank video by Burger King on the subject is an easy-to-digest (pun intended) explanation of the effects of ending net neutrality which immediately went viral. The 3-minute video could lead into a class discussion of the subject. It is also worth asking why BK, which is about as far as possible from being a telecommunications company, would make a video on this subject. The answer seems to be in Burger King’s audience objective; its ongoing attempt to attract more Millennials to the brand.

Few articles and posts on the subject are free of ideological bias. Here is one of the relative few that are critical of the Burger King effort. Here is a much more typical explanation of the harm that ending net neutrality could cause.

What Was Net Neutrality?

The so-called net neutrality regulation was intended to ensure that all internet traffic was treated equally. Internet service providers were classified as telecommunications services. That made them common carriers who could not discriminate on the basis of how the broadband services were used. All all types of content as well as all websites and platforms had to be treated equally in terms of both service and fees. The term “open internet” is synonymous.

In practice net neutrality meant that ISPs cannot block or slow certain traffic. It cannot charge more to services like Netflix who want their services delivered faster—so-called ‘fast lanes.’ The practices prohibited by net neutrality are generally described as follows:

No Blocking. Simply put: A broadband provider can't block lawful content, applications, services or non-harmful devices.

No Throttling. The FCC created a separate rule that prohibits broadband providers from slowing down specific applications or services, a practice known as throttling. More to the point, the FCC said providers can't single out Internet traffic based on who sends it, where it's going, what the content happens to be or whether that content competes with the provider's business.

No Paid Prioritization. A broadband provider cannot accept fees for favored treatment. In short, the rules prohibit Internet fast lanes.

Note that the regulation specifically applied to broadband providers.

Who are the Large Internet Services Providers?

To understand the arguments pro and con net neutrality one must understand the market structure. The chart shows clearly the increasing market concentration and the results as of the end of 2017. Comcast slowly but steadily increased share from 2011 to 2017. Charter, on the other hand, shot from an also-ran to second in 2016 with the acquisitions of Time-Warner Cable and Bright House Networks. Concentration was clearly ongoing during the period of net neutrality.

ISP Market Share    https://www.statista.com/statistics/217348/us-broadband-internet-susbcribers-by-cable-provider/

The second salient fact is that many of us have little choice in ISPs. Using 2017 Census data a research firm showed that 50 million of the 118 million US households lack access to the internet at 25 Mps, which is the FCC standard for broadband speed. Using a different metric (census tracts vs. households) the FCC itself found that roughly three-fourths of the US lacks access to high-speed broadband.

One of the FCC arguments for revoking net neutrality is that it stifled innovation and repeal would encourage more competition in that market space. The data in the chart shows that concentration was ongoing, both before and during net neutrality. Is it inevitable? Will the repeal of net neutrality accelerate it? One thing is certain; it’s isn’t easy to establish successful new ISPs. A post on the subject from Ars Technica was subtitled, “Creating an ISP? You'll need millions of dollars, patience, and lots of lawyers.” That pretty much summaries the argument. There is potentially another way, described in the last section of this post.

What Does the End of Net Neutrality Mean?

The rules against blocking, throttling and paid prioritization are now gone. Regulation has been shifted from the FCC to the FTC which has always moved against bad actors, primarily violators of data privacy regulations. Proponents of net neutrality argue that the large telecoms are now free to make any changes to existing practices that they wish, as long as they notify users of what they are doing. Industry leaders and associations have released statements indicating that current practices will continue, but that could change.

Small business owners are especially concerned that a “pay to play” environment will emerge in which small firms cannot compete with the financial power of larger competitors.

ISPs do not have to block websites to make them less popular. They can place them behind paywalls like existing premium cable TV channels. One option would be to “bundle” popular sites like social media platforms into a paid offering. In October Congressman Ro Khanna tweeted an ad that shows packages of various internet services, from social media to music, available for subscription in Portugal. Medium, in a scathing critique of current internet practices, says that nothing prevents US ISPs from doing the same thing, with or without net neutrality.

Another concern is the potential sale of even more subscriber data to third-party data services. Again, that would only expand what is now occurring.

It is also possible that, without regulation, the ISPs could slow certain traffic for whatever reasons they choose. It appears they would have to notify users, but beyond that they can do whatever they like—or whatever the market permits them to do without serious backlash from users. And that’s true of all the actions they might take. That is what makes the concentration of the industry so troubling.

Are Local Networks the Answer?

Local networks have been under construction for a number of years, motivated by a number of factors chief among them network availability and speed.  Fast Company has a good non-technical description:

Using affordable, off-the-shelf hardware and open-source software, hundreds of communities around the world are assembling small, independent, nonprofit wireless networks, often organized as so-called “mesh networks” for their weblike, decentralized design, in which each node–a phone, for instance, or a sophisticated wireless router–relays the connection onwards to the next node. This is the same principle used in mesh Wi-Fi routers for homes that are large or otherwise have problems getting signals from conventional routers to all areas of the home.

Interactive Map https://muninetworks.org/communitymap

Fast Company offers a number of examples from the education and arts communities. Localities that lack internet access at acceptable speeds provide another example. Detroit, where an amazing 40% of the population lacks any internet access at all, is undertaking the building of a network as a DIY project. There are a growing number of other communities that own private networks of their own and technical services agencies that supply them. I investigated the map for my own state of Massachusetts and found two, both in the rural western part of the state. One is Holyoke with a population of 40 thousand plus. It is an educational center and a tourist destination that has competing ISP and mobile providers. The average download speed appears to be about 15 Mbs although business plans with higher speeds are listed. The other is Mt. Washington, a community in the Berkshires with a 2010 population of 167. Internet service is available from several ISPs with download speeds that vary from 1 to 7 Mbs.

So if you believe competition is the answer, there is a potential solution.

If you believe that restoring net neutrality is the answer, there are numerous efforts underway.

About the only sure thing is that this argument is not going to go away soon. To know whether the predictions might come true, one must wait and see.

See the infographic with additional data here.

Related Updates
States supporting net neutrality
End of net neutrality
Somewhat confusing but important Supreme Court decision supporting net neutrality