Net neutrality is the concept that companies which provide services through the internet, either should not be allowed to pay, nor forced to pay for faster access to the internet. Internet service providers prefer to present this issue from the point of view of consumers, and point out the potential problems with additional regulation of the internet. They also claim that all of the parties are in agreement. The actual conflict is between content providers and internet service providers.
On February 26, 2015, the Federal Communications Commission (FCC) declared that internet service providers would be subject to the same rules which are applied to telecommunications companies under Title II of the Telecommunications Act. I believe that any Net Neutrality rules enforced by the FCC should contain provisions for payment to internet service providers from large asymmetrical users of their networks.
The internet is only a group of interconnected networks. Except for some government-owned networks, most of these networks are privately owned by internet service providers. Internet service providers generate revenue by charging for access to their networks. In many instances, internet service providers are also content providers. Because internet service providers are also content providers, they have an incentive to restrict competing content providers such as Netflix and Amazon from full access to their networks.
Internet service providers typically have agreements with other internet service providers, which allow them access to their networks. Typically, this access is symmetrical. Approximately the same amount of data is flowing in both directions. When a content provider such as Netflix accesses the internet, most of the traffic is flowing in one direction. If content providers are able to provide asymmetrical data to networks, they receive an unfair advantage. They in effect do not have to pay for fifty percent of the data sent over the network as other internet service providers would be required to do. In her article for the online magazine Slate, titled 35 Percent of Total Bandwidth Usage in the Evenings Is From Everyone Watching Netflix, Lily Newman wrote, “A report from Canadian broadband company Sandvine, surfaced by Quartz, shows that ‘34.9 percent of downstream traffic in peak evening hours’ in North America is from Netflix use…14 percent is from YouTube, 2.58 percent is from Amazon Instant, 1.41 percent is from Hulu.” These statistics show that content providers account for over 50 percent of downstream internet bandwidth in the evenings, and for the most part they are not paying for that traffic.
Netflix represents a paradigm shift in how content is delivered. The online video-streaming company made a deal to produce its first original series, outbidding HBO and AMC for the rights to House of Cards. Much of Netflix’s success online is because they are able to distribute their content to anyone with a high-speed internet connection, and in many instances, they are not required to pay for delivery of that content across their competitors’ networks. Over time, internet service providers will have no choice but to pass the costs associated with providing network bandwidth to companies such as Netflix, to their end users. Unfortunately, they will end up charging each user for these additional costs, which is unfair because not all internet service provider’s customers are also Netflix customers. If Netflix were required to pay the cost for access to the networks they use to distribute their content, they could then pass the costs on to their customers, which is where that cost belongs. I and my family are heavy users of Netflix and Amazon video. Is it fair for my neighbors to pay for the additional bandwidth I use?
In my experience with internet connections over the past 10 years they have become faster, less expensive, and in many markets there is competition. I believe the quality of the internet will continue to improve. All net neutrality will do is to allow content providers to pass the cost of the bandwidth they consume to internet service providers. I do not believe that additional regulations are required at this time. In general, I like additional regulation when it makes sense. But I think it is important to recognize that some industries do not require additional regulation. Unnecessary regulations can cause more harm than good. Additional regulation of internet service providers is not going to decrease pollution or somehow contribute to the greater good of citizens. Deregulation of the telecommunications industry, while painful, was and is, a very good thing. Turning back the clock and adding additional regulation on internet service providers will have unintended consequences. The primary consequence will be the growth of content providers which do not pay for their bandwidth, at the expense of the customers of internet service providers which are not also customers of the free riding content provider.
I work in an industry that could be severely affected by the new rules Title II imposed by the FCC. Enforcement of these rules has the potential to stifle investment in our nation’s networks and cause network bottlenecks. The products I sell depend on fast and stable network connections. If internet service providers are forced to allow unlimited asymmetrical traffic on their networks, they will resist these regulations in the courts and on their networks. Network outages and brownouts could occur. An internet service provider has less incentive to make investments in network equipment for which they believe they will not receive adequate compensation.
I agree that some regulation is necessary. Internet service providers should not arbitrarily block legitimate traffic for their users. Although the FCC may claim that the primary purpose of the new Title II regulations are to prevent internet service providers from picking and choosing what traffic they want on their networks, I believe that the primary purpose is to prevent internet service providers from charging content providers for making unfair use of their networks. This will have unintended consequences and may affect the quality of service provided by internet service providers. As a result, the poor quality of service provided may severely affect both the businesses and the consumers who have come to depend on fast reliable internet connections.