Net Neutrality: The Battle Rages On

What kind of Internet user are you? Do you primar­ily use the Net to do a little email and online bank­ing? Or are you online all day, watching YouTube videos, downloading music files, or playing online games? Do you use your iPhone to stream TV shows and movies on a regular basis? If you’re a power Internet or smartphone user, you are consuming a great deal of bandwidth.

To manage all the data flowing over the Internet, it will be necessary to build new networks. Internet service providers (ISPs) assert that expanding their networks would require passing on burdensome costs to consumers. These companies believe differential pricing methods, which include data caps and metered use-charging based on the amount of bandwidth consumed—are the fairest way to finance necessary investments in their network infrastructures. However, metering Internet use is not universally accepted be­cause of an ongoing debate about net neutrality.

Net neutrality is the idea that Internet service pro­viders must allow customers equal access to content and applications, regardless of the source or nature of the content. Until recently, the Internet has been neutral, with all Internet traffic treated equally on a first-come, first-served basis by Internet backbone owners. However, this arrangement prevents tele­communications and cable companies from charging differentiated prices based on the amount of band­width consumed by the content being delivered over the Internet.

Net neutrality advocates include the Electronic Frontier Foundation; data-intensive web businesses such as Netflix, Amazon, and Google; major con­sumer groups; and a host of bloggers and small busi­nesses. They argue that differentiated pricing would impose heavy costs on heavy bandwidth users such as YouTube, Skype, and other innovative services, preventing high-bandwidth startup companies from gaining traction. Net neutrality supporters also argue that without net neutrality, ISPs that are also cable companies, such as Comcast, might block online streaming video from Netflix or Hulu to force cus­tomers to use the cable company’s on-demand movie rental services.

It was thought that the issue of net neutrality had been definitively settled by the 2015 ruling of the Federal Communications Commission (FCC) under the Obama administration, which considered broadband Internet services as a utility under Title II of the Communications Act. This ruling gave the FCC broad power over Internet providers. Internet service providers could not discriminate against any lawful content by blocking websites or apps, slow the transmission of data based on the nature of the con­tent as long as it was legal, or create an Internet fast lane for companies and consumers who pay premi­ums and a slow lane for those who don’t.

All that changed under the Trump administration, which opposes net neutrality as part of its push for government-wide deregulation. In December 2017, the FCC voted to repeal its net neutrality rules for Internet providers. Trump’s FCC chair, Ajit Pai, has asserted that before net neutrality rules were put into effect in 2015, service providers had not engaged in any of the practices the rules prohibit. Pai believes that ending net neutrality could help lower prices for consumers, because Internet service providers could offset their costs with the use of paid prioritiza­tion deals with websites for faster delivery of their content.

Pro-net neutrality groups immediately countered, predicting that repealing net neutrality would lead to a faster, pricier, and more confusing Internet. Deregulation could create a “two-tier” Internet, in which Internet service providers will start charging fees to websites and apps, and slow down or block the sites that don’t pay up. As a result, users will have unfettered access to only part of the Internet, with the rest either inaccessible or slow.

Consumer advocates have further argued that if net neutrality rules are eliminated, broadband pro­viders will begin selling Internet services in bundles, similar to how cable television is sold today. For ex­ample, if you wanted to access Facebook and Twitter under a bundling system, you might have to pay for a premium social media package. Consumers could suffer from pay-to-play deals. A fast lane could be occupied by big Internet and media companies and affluent households, while everyone else would be relegated to a slow lane.

Some small businesses worry that repealing net neutrality would create an unfair playing field favoring industry giants. Websites and services of e-commerce startups might run slower than those run by the big Internet players such as Netflix or Facebook. Remote workers of all kinds, including freelancers and franchisees could similarly face higher costs to do their jobs from home.

Opponents of net neutrality have countered that the biggest barrier to a company becoming the next Google, Facebook, Netflix, or Amazon isn’t the end of net neutrality but Google, Facebook, Netflix, and Amazon themselves. These compa­nies are already spending vast sums of money to push their ever-higher bandwidth content to consumers. Many lawsuits challenging the FCC’s new Internet policy have been filed since the new FCC rules took effect. The battle for net neutrality is not over.

Source: Laudon Kenneth C., Laudon Jane Price (2020), Management Information Systems: Managing the Digital Firm, Pearson; 16^th edition.