Net Neutrality is dead—“the world as we know it will fall apart.” Overwrought is humbled by the frenzied reactions to the Federal Communications Commission repeal of Net Neutrality.
Basically what the FCC, led by its Chairman Agit Pai (appointed to the Commission by Barack Obama) did, was to revert to pre-June, 2015 rules.
The Obama Commission, pushed by the White House, in 2015, decided to regulate the prices internet carriers could charge at the urging of the “Bigs”—Google, Netflix, Amazon, and Facebook. Downloads from the Bigs, use well over half of network capacity. And, when prices are regulated innovation suffers.
The Bigs did not want to compete against each other by purchasing network elements that would enhance user experience. In short, the networks, the life blood of transmission quality, were not incentivized to improve because they couldn’t earn a return on investment.
The Bigs used late-night comedians and excellent branding (neutrality) to scare people who had thought little about telecommunication’s networks and their configuration. In recent weeks the untethered emotion got so bad that Chairman Pai had to have a security detail and his children had to endure hateful demonstrators and their signs.
Currently, the United States is well behind in delivering bandwidth speed to homes and businesses. Wikipedia reports that as of the fourth quarter 2016, South Korea had the fastest average internet speed in the world. The U.S. was 11th. In part, this disparity has resulted from controls on providers. Plus, in South Korea, the government invested heavily in communications infrastructure. In the U.S., with modest exceptions, we have depended on market forces for our communication’s infrastructure quality.
Indeed, there are wide disparities across the wireline and wireless network spectrum. One of the fastest internet networks is supplied by Google Fiber in several rapid-growth cities. My digital subscriber line (DSL) service provided by Verizon is only 1.6% the Google Fiber speed of 1 gigabit. Admittedly, I live on a farm.
A generation ago, when I was helping to prepare Secretary of Commerce-designate, Robert Mosbacher, for his confirmation hearing, I analogized network links to oil pipelines. Mosbacher was in the oil business. In essence, the larger the pipe or communication wire or wireless link (sped by ingenuous use of electronics) the more rapid the flow of oil or data. Many Americans only have a slow service option.
Net Neutrality, if applied to our highway system would have allowed truckers to use the highways without extra charges regardless of how they beat up the road. The Heavy Highway Vehicle Use tax generates several billion dollars in annual revenue. Anybody for a Heavy Broadband Use Tax?
Turning from oil pipelines and highways back to communications, consider the generational changes in Apple’s iPhone. The first generation was priced at $499, and the just-released iPhone X is priced at $999. Apple, beginning with the iPhone 4, marketed each succeeding generation by bragging on “blazing fast processor speeds.” Packaging and marketing services and devices by wireless network companies brought down the device cost for most consumers. But, Apple’s newest feature-packed smart phone is just one option of many with prices varying accordingly.
Returning to the implications of the repeal of Net Neutrality, the public needs to keep in mind that there is enormous headroom for network improvement. But, we must depend on market incentives that will provide the revenue streams for research, development, and deployment.
The repeal of Net Neutrality means market incentives and disincentives will happen. There is a powerful disincentive for network providers to charge more for the service we now get. On the other hand, there will be powerful incentives for both network and service providers to offer new high-speed services that will accelerate growth.
And, to put it mildly, there is absolutely no incentive nor would there be any political support for network owners to censor service providers.
I began my career in the communications business as a radio broadcaster in 1977. Measuring today from yesterday’s experiences, progress seems almost miraculous. But I know because I was there, that on numerous occasions the incumbent companies wanted to use regulation to protect their market positions.
Net Neutrality was a brilliant marketing campaign to protect giant companies like Netflix and Google (parent: Alphabet).
The only way forward for us is the American way–to let market forces advance America’s future. Along the way, there will be work for the government, but it will need to be surgical—Net Neutrality was a blunt instrument.
Al Sikes is the former Chair of the Federal Communications Commission under George H.W. Bush. Al recently published Culture Leads Leaders Follow published by Koehler Books.
Barbara Denton says
This is an excellent explanation of net neutrality and how it does nothing for the everyday consumer. Many who had access to free movies, downloads etc. lost all of this due to net neutrality.
Hugh (Jock) Beebe says
it’s encouraging to hear from a bona fide expert on this important subject who offers insight into potential benefit from undoing net neutrality. Your explanation of this complex subject is illuminating, thanks.
I’d like to request a follow up from Mr. Sikes in answer to a question:
One of the arguments in favor of maintaining net neutrality is a theoretical worry that higher cost for faster speeds would follow and create a serious problem for schools. The advantage of true broadband with high speed will be increasingly important as high school and college level education adopts interactive web-based elements to the standard curriculum.
If it costs more to get the requisite service supporting that, it’s likely there will be many public schools, already struggling with inadequate funding, that fall behind. Thus, it is argued that the loss of net neutrality may exacerbate the quality gap between adequately funded and under funded schools putting students at a disadvantage where their school lacks the ability to meet higher cost.
Is this a significant concern and was it overtly addressed in process of making the decision to abandon net neutrality?
Al Sikes says
Thanks for the thoughtful response. Education services delivered by the Internet, if compelling, scale quickly and should be available at much lower prices than say books used in schools. My experience with a reading program in NY suggests inertia is a problem. In short electronic services are added without subtracting any analog or placed based ones. But, I do not approach this reaction as an educator because I am not one.
Hugh (Jock) Beebe says
Apparently I didn’t make clear the basis for my concern about harm to schools with the demise of net neutrality. It is not about downloading books, which has been easily done since dial up days. The concern is about INTERACTIVE web based programs that require high speed true broadband to function and to enable simultaneous access by a cohort of participants. The radical change potential for on line education has been firmly established over the past 10 years by MOOCs. Leading top tier universities (think Harvard, Stanford, Duke, NYU, etc.) and increasingly progressive high schools, now provide on line courses with communities of students and faculty interacting and by live video conferencing – and it’s for credit. Without high speed broad band it simply doesn’t work. This is the way of the future and it costs money.
If the United States government persists in ignoring the need for investing in widely available broad band infrastructure, our work force will continue to fall behind for lack of the educational opportunities being realized by other more progressive countries. Understanding that need is now seen throughout Europe and some Asian nations, and it is yielding prompt adaptation by their governments. Leaving it to the whims of profit motivation in the hands of private commercial interests, as seems now to be the U.S. Congressional decision, seems less likely to enhance our ability to compete in the global economic arena.
Al Sikes says
Let me just conclude my part of this exchange by saying that pre neutrality investment was more robust. Although I will quickly add that the post neutrality period is rather short to make any kind of conclusive judgment. But, there will always be public needs that go beyond private sector investing. Check out the FCC’s E-Rate program for pubic investment in education.
Hugh (Jock) Beebe says
A final comment: In response to Mr. Sikes’s suggestion to “check out the FCC’s E-Rate program, I did so and was astonished at the bureaucratic clutter and apparent dysfunction. E-Rate Central (https://e-ratecentral.com/default.asp) describes the cause, “…The level of discord among the Commissioners — leading to a vote along strictly party lines — was beyond historic precedent. The entire process, as expressly noted by one Commissioner was “ugly.” Our hope is that future decisions on E-rate will not be driven by the same rancor.”
Mr. Sikes notes that the post neutrality period has barely begun, a wise observation. We should temper theoretical concerns and wait for some observed reality.
Willard T Engelskirchen says
I am sure that Verizon, Atlantic Broadband, AT&T, and all the telecoms have my best interest at heart. All I need to know to prove this is to look at my bills. Gimmee a break.