The Internet Service Providers' Triumph

Yesterday, the Court of Appeals for the D.C. Circuit struck down the Federal Communication Commission's "net neutrality" rules, probably opening the door for Internet service providers (ISPs) to start charging different customers different rates to send their web terrificness to your computer. I say "probably" because there's a good amount of uncertainty over what is going to happen now, which I'll get to in a moment. Chances are you're only marginally interested in the details, and it can get pretty arcane rather quickly, but I do want to point out the absurdity of the arguments the big ISPs like Verizon and Comcast make about net neutrality. This was a very big win for some of the most unpopular companies in America, but how soon they're going to try to destroy everything you love about the Web is hard to determine. There are some reasons to be worried, though.

Briefly, the principle of net neutrality says that everyone providing content on the Internet should be treated the same, no matter who they are. An ISP shouldn't be able to slow down Netflix and speed up Hulu, or charge more than to get to customers. Three years ago, the FCC instituted a rule that basically embodied the principle of net neutrality. The big ISPs filed suit to get the rule overturned, and now they've won.

This case turned on a technicality, albeit an important one. Back in 2002, the FCC decided to regulate ISPs as providers of "information services," not "telecommunication services." If the ISPs were telecommunication service providers, they would be "common carriers," which means that they would have to treat everyone who uses their pipes the same. Since phone companies are common carriers, they can't charge you different amounts for talking on the phone if you're discussing certain topics; they have to be neutral about what flows through their system. But the court said that since the FCC classified ISPs as information services, they couldn't impose net neutrality, which is the Internet version of the common carrier principle.

So that was the FCC's mistake, a mistake they could in theory now undo, but that isn't too likely to happen given the power of the telecom companies (here's an explanation of that whole issue). So now, it would be permissible for Verizon to strike a deal with Microsoft saying that every time you search on, the search will be completed at regular speed, but every time you search on Google, your results will take ten times as long to load. Or it could decide to charge Netflix much more for access to its customers, thus forcing them to raise prices. Those are somewhat extreme hypotheticals, but under this ruling, they'd now be legal.

The ISPs' argument is this: We'd never do that kind of thing, because then we'd lose customers. The only problem is that they'd have to work really, really hard to lose customers, since most customers have so few options. And that brings us to the state of Internet service in America today.

Is net neutrality the reason that here in America we have some of the most expensive Internet service in the world, at speeds that have consistently lagged other highly developed nations? No. The reason our broadband is so expensive and yet so mediocre is simple: ISPs operate as virtual monopolies, with most Americans having only a couple of choices for broadband service, but we don't regulate them like monopolies, meaning they can keep raising prices all they want. It's the deadly combination of low competition and low regulation.

Here's a map of where in America you have three or more options for wired broadband (it's a little hard to see, but if you go here to the FCC's National Broadband Map site, you can see it full size and make your own):

As you can see, most of the country has fewer than three providers, and in a lot of places you have just one choice: the local cable monopoly. But despite that, the ISPs claim that net neutrality has hindered "innovation" in the ISP business. Because if there's one thing you think of when I say the name "Comcast," it's innovation. Back in reality, the big ISPs that filed this suit make lovely profits, and there's nothing to keep them from innovating other than the fact that they're quite happy making us all pay through the nose for middling service.

It's unlikely that next week your ISP is going to start dramatically slowing half the web sites you visit. But what they may do is begin experimenting here and there, in ways you might not notice at first, to see if they can get some fees from big companies that can afford to pay more to have their content go through quickly. If that happens, then the smaller companies without the ability to pay will be at a disadvantage. How that changes the character of the Internet is something it may take a while to figure out, and by the time we can tell whether it has changed for the worse, it'll probably be too late.

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