What may happen to the internet in America

By G.E.

THE internet has supposedly changed overnight in America. On December 14th the Federal Communications Commission (FCC) voted 3-2 to rescind regulations, imposed by the same body under Barack Obama in 2015, that were designed to ensure that internet-service providers do nothing to privilege some types of online content over others. The three Republican-appointed members of the commission, including Ajit Pai, the chairman, argued that the “net neutrality” rules posed an unnecessary burden on internet providers, without being of help to consumers. Activists and many Democratic lawmakers argued that a repeal could bring an end to the open internet (two Democrat-appointed commissioners voted to keep the rules in place). What will actually happen, now that net-neutrality rules have been repealed?

To get a sense of what might happen, it is important to understand what net neutrality is and why the Obama-era FCC rules were chosen. Put simply it is the principle that all internet traffic, whether from Netflix, Tinder or a news website, is treated equally by the “pipe” companies carrying that traffic, like AT&T or Verizon. In the early days of the internet this principle was not really necessary as the pipe companies could not see differences in the content they were carrying (part of the reason they are called “dumb pipes”, at least by some). Crucially, services like Netflix that consumed far more internet bandwidth than the others, putting a strain on broadband and wireless infrastructure, did not exist. With the rise of Netflix and its ilk in streaming media, broadband companies began to suggest that they may have to charge more for some types of traffic, or slow down some services (“throttling” them). Net-neutrality activists argued that if providers could discriminate between different types of traffic, they would have far too much power over the internet. They could privilege their own services over competitors’, or they could even throttle or block some services they did not like. The Obama-era rules were designed to prevent that.

Are such rules necessary or harmful? It is difficult to prove either side of that question. Internet-service providers might choose not to charge more for using broadly popular services like Netflix. And repealing net neutrality does not make it legal for internet-service providers to censor content or discriminate against companies they do not like. The FCC will be responsible for policing internet-service providers for abuses. But, activists argue, they could throttle unknown upstarts, companies that would otherwise become the next Netflix, Amazon, Google or Facebook (if that were conceivable). And policing the behaviour of broadband and wireless companies, heretofore not known for their transparency, will be a challenge. In the end the argument about net neutrality boils down to whether internet-service providers should be regulated before they have shown they might abuse their power, or only after they have actually done so. The current FCC has just opted for the latter.

In the immediate future, consumers will start to see more deals on their internet plans, including “zero-rating”: the pipe companies can offer certain internet-preferred content for nothing while charging for other data. They will also persuade some internet services to pay to be included with the faster traffic. But it is unclear how consumers might benefit in the long run. Broadband companies have long argued that if they could charge more for some traffic, they would be able to offer the internet more cheaply to consumers who are less bandwidth-hungry. They also say they would be able to invest in better broadband infrastructure. The hole in this argument is that most broadband providers in America enjoy regional monopolies and high pricing; they are not forced by competition to improve their infrastructure or pricing. If consumers are to get much lower prices for their internet, they will need a lot more help than net neutrality can offer.