There are so many policy issues that are analyzed, politicized, lobbied and discussed these days. A fair number of discussions seem to revolve around technology. One of the issues that has been bantered about over the last two years is net neutrality. This topic probably affects more people than are knowledgeable about the topic. To begin, some background or historical context, read my previous blog article on the subject.
The Issue. Ultimately, it is the free and unencumbered access to the Internet without blocking or moderating the transmission speed (high vs. low-speed lanes) of information and data.
Competitive Environment. Internet Service Providers (ISPs) provide Internet connectivity to residential and commercial customers. For residential customers, it is usually (unless you know something I don’t know) the major telecommunication conglomerates. As of 2013-Q4, 71% of the total market for Internet service was controlled by six companies. The attempted and successful acquisitions of various telecommunication companies (Charter Communications, Time Warner Cable, Bright House Networks, Comcast) has only created more of a monopolistic environment.
What Does It Mean? Well, as analogy … net neutrality has been described as a phone company regulating what you say on your phone calls. However, that may not really describe it objectively. Because these telecommunication companies also distribute, promote and market content … they could theoretically slow down the transmission of their competitor’s content being requested by consumers and transmitted through their Internet service distribution infrastructure. In theory, creating a somewhat restraint of trade, anti-competitive environment.
Example: If a library could select and choose what books and content to include in their inventory, the distribution and content generation “system” would be compromised. And if the libraries received its revenue source from their own content generation, that would integrate a competitive advantage to a library … that’s why they are called free libraries.
The FCC “Acts”. In 2015, the FCC reclassified the rules associated with Title II Telecommunications Service by reclassifying broadband under the original 1934 Communications Act. Now to remain detached by the potential politics of the FCC’s action … but no matter what side your organization, trade group or stakeholder supports … it is interesting that a Federal agency can “rewrite” an act that was approved by legislation. The FCC’s 2015 order can be accessed here … especially if you need something to help fall asleep!
Where Are We Now? Well, a new administration. A lot of lobbying, discussions and chatter by the same groups outlined above. Honestly, there is a lot at stake here. Business. Market share. Control. Free access. A lot! The current FCC Chair, Ajit Pai, has (not surprisingly) targeted the net neutrality issue as a focus of his leadership. Specifically to the FCC’s 2015 order to classify broadband service as a utility … establishing increased governmental regulation and supervision over this product. Recently, Mr. Pai has stated that he is inclined to overturn this declaration.
What Should Happen? Generally, I believe deregulation is a better market environment. At the same time for public good and to avoid people from being harmed, some issues (utility rates, public health, etc.) need to be monitored and guided (notice I selected my words well haha).
The effect of the Internet is at best mixed. Excellent, positive and progressive outcomes have been gained throughout our culture and business environment “but for the fact” of the Internet’s creation. At the same time, there are many years between 1934 and today … laws and public policy need to remain in “lock step” with societal changes (competitive, market, technological, etc.).
Framing this discussion objectively … first with the library discussion. But also the discussion in a previous article relating to movie studios. As movies became popular, the studios (that created the content) also owned the theaters. Does that sound familiar? What do you believe happened from that ownership structure? Anti-competitive practices. Why? Movie studios implemented “preferential treatment” for the movies that they produced being shown at exclusively at their theaters. And, coincidentally, preventing other studios’ movies from being shown at their theaters.
When this occurred, the US Congress took leadership to prevent studios from owning theaters; thereby, controlling (or locking) the content generation and distribution channels.
So the telecommunication companies who sell products such as pay-per-view, movies, (AKA, studios) are also the distributors who regulate the distribution/viewing of content (AKA, theaters).
Does that make sense? You decide!
Changing lanes, at a stop light or was it pulled over by a police officer?
Article Updates
April 2017… FCC Chairman Ajit Pai has kicked off his campaign to kill the agency’s net neutrality rules.
December 2017 … FCC Repeals Net Neutrality Rules
Blog Post Update
Supporters of the current FCC position on Net Neutrality say that the market will arbitrate and control any nefarious actions from the communication companies. However, how many companies provide internet service in the US? What is their market share? Based on these recent market statistics (Graph1, Graph2), the top four internet service providers serve 95% of the market. So if three or four of these companies collude to “squeeze” the bandwidth of other media companies who may not “pay to play” … where do you go? Then, others will say that new market entrants could self-regulate the industry. Right … ok, let’s chat about the barrier to entry for the wired broadband market. Others will say that the smartphones also have broadband access which expands the market and creates innovators. One guess … who are the top two providers of home internet service?
I am a supporter of market-based competition for most markets and industries. But after reading these facts, you decide!