Imagine attaching a wireless router to your cable modem and being charged with a federal crime for doing so. Before the principles of network neutrality were enunciated by the FCC, AT&T did just that. The telephone company repeatedly warned customers that using Wi-Fi for home-networking constituted “theft of service” and could be considered a federal offense.
Nearly all Americans (99.6%, at last count) receive broadband service from either a phone company or a cable company. This, in antitrust terms, is a duopoly — a virtual monopoly that restricts consumer choice and provides no incentives for competition.
1. A History of Discriminatory Conduct
Incumbent telephone and cable operators, who maintain a government-regulated monopoly for hard-wired connections to the home, have a sordid history of discriminating against content providers that they deem “unacceptable” or threatening to their business models. Only the continued vigilance of individual users, non-profits, and corporations, all of whom oppose network discrimination, will prevent further biased conduct on the part of the cable-and-telco monopolies.
In 2004, a telephone company was fined by the FCC for blocking the Vonage VoIP service. In 2005, Canadian telecom giant Telus blocked access to a pro-labor union website. That year Time Warner’s AOL service blocked all emails that mentioned “dearaol.com”, a campaign that opposed AOL’s pay-to-send email scheme. And in 2007, Comcast began degrading subscribers’ BitTorrent traffic — without warning — by forging packets to simulate dead connections.
The Wall Street Journal and other communications carrier apologists repeatedly argue that regulation of their network management tactics is unnecessary. The Internet has never required regulation, they argue, yet the very cases above testify to behavior typical of government-regulated monopolists. And FCC officials routinely conflate network neutrality with excessive regulation when, in fact, it aims to eradicate a raft of regulations, prevent discrimination, and ensure free speech for all.
2. What Is Net Neutrality?
Net neutrality simply means “no discrimination.”
It prevents network operators from blocking, speeding up, or slowing down content based upon:
- or destination
Let’s use the so-called “Fairness Doctrine” as an example. Some Congressional Democrats espouse resurrecting an equal time “principle” that would regulate speech on radio, television (broadcast, cable ,and satellite), and the Internet. The doctrine mandates that commercial content distributors (e.g., radio stations) present opposing viewpoints whether the market supports such activities or not. In the past, content distributors chose to avoid all controversial material for fear of running afoul of regulators. The doctrine had the net effect of suppressing free speech and was subsequently eliminated by the Reagan administration.
The Fairness Doctrine equates to network discrimination — the very opposite of net neutrality — whereby the government or its proxies, in this case the telco and cable monopolies, dictate content rather than letting the market decide.
For example, consider a hypothetical telco monopoly called AT&V. Let’s pretend that AT&V created its own search engine. While not nearly as efficient as Google or Yahoo!, AT&V figures that for reasons of “Fairness,” it should be able to discriminate against other search engines. For that purpose, the provider decides to slow down Google and Yahoo’s search results so that AT&V’s inferior search appears to work just as quickly or even “faster.”
Consumers might choose the AT&V search not based on the merits of the product, but because of the cozy relationship with the government-sponsored monopoly. AT&V could choose to enter any online business in a similar way, leveraging a discriminatory “Fairness Doctrine” to ensure that other content providers are rendered ineffective and non-threatening to the monopoly’s business models.
3. Free Markets Require Net Neutrality
Free markets require net neutrality for two reasons.
First, neutrality supports a level playing field, which translates directly to innovation. This is supported by the dramatic and explosive growth of online applications (e.g., Google, Facebook, YouTube) that emerge from dorm rooms in California and garages in Israel.
Second, neutral networks support free speech and the attendant First Amendment principles.
Network discrimination, the aim of the government-regulated monopolies, degrades both innovation and free speech.
Allowing the incumbent carriers to control what people see and do online would eradicate the underlying principles of non-discrimination that have made the Internet an entrepreneurial bonanza.
Without neutrality safeguards, Internet applications would be forced to serve the business models of the broadband carriers, not consumers. Craig Newmark of Craig’s List uses this analogy: “Imagine if you tried to order a pizza and the phone company said AT&T’s preferred pizza vendor is Domino’s. Press one to connect to Domino’s now. If you would still like to order from your neighborhood pizzeria, please hold for three minutes while Domino’s guaranteed orders are placed.”
Without net neutrality, the Internet would morph into a cable TV-style smorgasbord of “preferred” websites. A small number of immense conglomerates would control content, access and distribution, deciding what consumers can see and do on the Internet, and how much everything will cost. It is likely that the Internet monopolists would levy tariffs on major industries — financial services, health care, retailing, to name but a few — to ensure fast, secure Internet connections.
And this approach runs counter to much of the innovation that has historically occurred on the Internet. Innovative companies appeared from whole cloth without significant capital investment and with little more than a great idea. Net neutrality guaranteed a competitive landscape for all companies, big and small.
4. The Dangerous World of Wireless
Net Neutrality is still a pipe dream in the emerging world of wireless data services. The incumbent carriers resist neutrality because they can. They are, in effect, virtual monopolies because there is very little variation between carriers and their rate plans are disturbingly similar.
The U.S. mobile carriers have continued to monopolize wireless spectrum (for example, Verizon won the recent and highly desirable 700MHz auction, which ensures more of the same) to ensure innovation is kept to a minimum.
For example, phones frequently are ‘locked” to a single carrier’s network; two-year contract terms with onerous minimums are typical; outrageous fees for text messaging remain in force despite miniscule costs for operating the infrastructure; impossible certification protocols are enforced that ensure most devices will never be approved to operate on the carrier’s networks; and “walled gardens” that restrict the use of certain applications or content providers.
The mobile world is discriminatory and we can see from the behavior of the carriers why net neutrality is so important.
5. Net Neutrality and the Framers
The principles of network neutrality are the tenets of the Framers: free speech, free markets and innovation. And eradicating those principles puts power into the hands of a chosen few overseers: the government-regulated monopolies of cable and telephone.
Consider your incumbent telephone company and cable provider the Fannie Mae and the Freddie Mac of broadband. A minimal amount of regulation that prevents discrimination among content providers is the least Americans must demand. Anything less constitutes a “Fairness Doctrine” for the Internet. Anything less puts our technological leadership and, by extension, our national security interests at risk.
We must demand network neutrality.