Who Loses And Who Wins When Net Neutrality Rules Are Repealed By The FCC?

by Richard Cameron


To make an accurate assessment of the effects of the Federal Communications Commission (FCC) plans of reversing the previous safeguards of the common carrier provisions in the Title II Communications Act, it is necessary to unravel not only the claims and counter-claims, but to outline the underlying facts. Net Neutrality – the default condition of the internet for decades, was formalized by the FCC in 2015.

There are two competing narratives regarding Net Neutrality. One is that the warnings of what will result from the lifting of the rules amount to nothing more than what Comcast’s David Cohen called “scare tactics” and “hysteria.”

photo of group protesting the cancellation of Net Neutrality rules

On the other side, supporters of Net Neutrality are predicting that the average consumer’s experience on the internet will be radically reshaped in a manner that will advantage broadband providers and disadvantage the end users and many content providers.

Before we examine either premise, let’s establish the definition of terms. Net Neutrality means in essence, that all data flowing through the broadband networks (let’s think of them as ‘pipes’), should flow at the same speed – particularly as it arrives at the end user’s connection to their broadband provider – the “last mile”

Or, to illustrate it in a more apt manner, we could compare it to the Toll Roads system in Orange County, California – especially since data traveling over the broadband networks are thought of as ‘traffic’.

photo of the congested public access lanes and next to them, the sparsely occupied toll lanes along State Route 91 between Orange County and Riverside County
the congested public access lanes and next to them, the sparsely occupied toll lanes along State Route 91 between Orange County and Riverside County.

The Orange County Transportation Authority operates a toll road along the 91 Freeway corridor and has other exclusive toll routes intersecting with it.

The lanes are on publicly owned land, taxpayers pay for the maintenance by a state agency (Caltrans) and of course, you, even as a state resident, cannot travel on it unless you pony up, for example, an additional $12 dollars during rush hour just to travel at freeway speeds (65 Mph) for 10 miles – compared to an average of 15 Mph on the standard all access lanes.

So think of a possible re-organization of the national broadband infrastructure as a network of freeways that your monthly access fees have paid to expand and now will be turned into special access lanes that you or your content provider will have to pay more money to traverse at normal speeds. The broadband provider – fiber or cable, in this illustration is the toll collector.

Because of mergers and acquisitions spanning the past 21 years, just a handful of corporations control the grid system the internet is situated on. Further complicating matters, is that in many areas of the United States there are only one or two broadband providers licensed by the local or regional governments to serve particular communities.

The implications of this limited competitive environment, say opponents of lifting Net Neutrality regulations – are that the corporations that dominate the particular distribution avenues which provide your broadband access (Tier 3 ISPs), will turn them into something that looks like the toll-road systems in O.C. – fast lanes and slow lanes, based on what you are willing or able to pay for. That would be a violation of the longstanding principal of “common carriage” that protects open access and in the case of ISPs – views them legally as utilities.

Critics of the Net Neutrality rules, say that no such thing will ever happen. But could they? Without regulation of the telecoms and other entities that control their sectors of the broadband pipes (fiber optics, mostly) – there is really nothing to prevent them from setting up the internet version of the toll system I described.

Is there an incentive to re-calibrate the speeds of various content over the internet? Yes, a significant incentive. In many cases, the very companies that sell you internet access are also producers of entertainment content, as in the case of Comcast which owns NBC-Universal. Content that you stream from either a subscription service, such as Netflix or another ubiquitous provider like YouTube, is thought of by these telecom and cable giants as competition to their streaming TV services. 

Solution? Either throttle (slow down) the download of that content or assign an additional fee for the data that comes from those sources. 

graphic showing how many content providers and cable networks are owned or controlled by Comcast, AT&T and Verizon

If, for example – you have a cap on your data, which is the case with many cellular plans, Verizon and AT&T could (and currently often do), let their content move through their network without counting that data against the cap. On the other hand, if it was entertainment that they have no proprietary interest in, that data would count against it.  Now the playing field is slanted to favor them.

But this is just a singular example of how internet service providers (ISP’s) could additionally monetize the post-Net Neutrality era.  Beyond the category of video and audio content, are information and social media sources ranging from Facebook to Google to online media, like news websites, scientific journals and consumer resources, just to name a few examples.

Once ISPs are unleashed to apply the “fast lane / slow lane” access model, an environment will emerge in which the largest players will be able to sustain the increased costs of providing content and the smaller players – entrepreneurial start ups and other small businesses often, will not.

Of course the telecoms swear up and down they have no such plans.

“We have stated on numerous occasions that we believe legally enforceable rules should continue to include strong transparency, no blocking, and anti-discrimination provisions,” wrote Comcast executive David L. Cohen“We don’t prioritize Internet traffic or have paid fast lanes, and have no plans to do so.”

However, Comcast and the other opponents of Net Neutrality have shown that their actions do not match their words. If the existing protections of Net Neutrality have no effect on their present and future plans, why would they spend enormous sums of money lobbying to sunset it?  Let’s follow the money here, shall we? 

Maplight, a non-profit that tracks the circulation of dark money used to influence public policy, produced a study showing that “Comcast, AT&T, Verizon and the National Cable & Telecommunications Association (NCTA) have spent $572 million on attempts to influence the FCC and other government agencies since 2008.”  That is over a half-billion dollars, putting this industry lobbying group in the rarified air of Big Pharma and Big Oil, during the same time period.

This clearly shows that Net Neutrality is getting in the way of bigger profits these companies feel they are entitled to based on their natural monopoly status.

It is important also, to reflect on the promises Donald Trump made during his campaign in election rallies. One of his major selling points was to “drain the swamp”.  He hasn’t.  And in the case of the FCC, he and his cohorts on Capitol Hill, have created new ones.

One of the new swamp dwellers is the new Chairman of the FCC that is spearheading this drive to eliminate Net Neutrality.  Incoming FCC Chairman Agit Pai was employed by Verizon Communications as Associate General Counsel – one of the players that we’re supposed to believe Mr. Pai is going to act as a public guardian against! Which makes statements of his like this, suspect:

“Under my proposal, the federal government will stop micromanaging the internet. Instead, the FCC would simply require internet service providers to be transparent about their practices so that consumers can buy the service plan that’s best for them and entrepreneurs and other small businesses can have the technical information they need to innovate.”

One further red herring the telecoms and cable giants are propagating is the assertion that if they are subject to being regulated as a utility, they will not be able to afford to invest in growing the delivery infrastructure. But here again not only do the facts contradict this, but the underlying argument contradicts their assurances that they will not violate the principles of Net Neutrality if left to govern themselves.

Regulation, it turns out, did not impede their profits or their ability to invest in modernizing the networks. And this, as a matter of fact, is by their own admission. “It really hasn’t affected the way we have been doing our business or will do our business,” Comcast Cable’s then-CEO Neil Smit told investors in May 2015. “And while we don’t necessarily agree with the Title II implementation, we conduct our business the same we always have.”

When considering policies such as Net Neutrality, one must bear in mind that when it comes to the various ‘industrial complexes’ including the communications industry, business plans revolve around legislative and regulatory models. The designated loser in these models is the consumer. The referees in this rigged game are lawmakers and regulators bought and paid for by the industrial complexes they are supposed to be acting as watchdogs against.

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