FCC should retain net neutrality for sake of consumers
© Greg Nash

Not even a week after being named the new chairman of the Federal Communications Commission, Ajit Pai introduced a plan to remove transparency rules for Internet service providers with fewer than 250,000 subscribers and begin to reverse net neutrality. These moves should send a clear message to Americans: the battle for a “free and open Internet” is back on.

After ten years of back-and-forth between the telecom and cable TV monopolies on one side and the rest of the U.S. business sector and consumers on the other, network neutrality rules were adopted by the FCC in 2015 and upheld by the D.C. Court of Appeals in 2016. These rules guarantee that news and information flowing through the Internet reaches consumers and businesses without artificial delays imposed by telecom and cable companies.

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Network neutrality guarantees a level playing field for companies that deliver information through the Internet, and practically every business sector uses the Internet to disseminate information.

 

The Internet has been run since its inception on the principle of network neutrality and, as we all know, the Internet is one of the things that “makes America great.” Regulations of the FCC codified the working principles of network neutrality, ensuring a fair, level playing field; they did not make business difficult or cumbersome. In fact, many would be surprised that a rule not to impose artificial delays was even necessary.

Who would like to create delays and why? Not consumers and not the 99 percent of U.S. businesses that use the Internet. But telecom and cable companies with market power want to manipulate the timing of information delivery because it gives them the ability to make extra money. For example, if Yahoo pays AT&T and Google does not, AT&T will make sure that Yahoo search results will reach AT&T customers before those of Google. In this way, AT&T can collect significant fees from search providers. And then AT&T can go to each sector and use the same proposal to get money from its participants. AT&T can also apply this to news organizations threatening delay to The Wall Street JournalThe New York Times, or The Washington Post, if they do not pay.

You may say, “at least without network neutrality consumers would receive some information faster.” Not true. AT&T does not need to deliver anything faster than before. All AT&T needs to do is make some information (of those who do not pay it) arrive slower. Delaying or threatening to delay some information is enough for AT&T to make money. No investment needed, and no improvement to users. Violating network neutrality will make consumers and 99 percent of businesses worse off. The only winners will be telecom and cable companies. Their profits will increase without any investment or improvement of service.

Besides helping existing businesses, network neutrality is crucial for startups that would never be able to pay the fees to avoid being delayed if net neutrality is not there. U.S. growth and worldwide dominance of high technology would be significantly challenged without network neutrality.

Given the detrimental effects of violating network neutrality for everyone except for telecom and cable companies, I wonder why the FCC is even considering abolishing network neutrality. The FCC mandate is to promote the public interest, not the interests of the industry it regulates. Network neutrality is one of the things that “makes America great.” Gutting it would be a very serious and costly mistake, both financially and politically, especially given President Trump’s promise to “drain the swamp” of lobbyists and special interests.

Nicholas Economides is an economics professor at New York University Stern School of Business and executive director of the NET Institute.


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