Net neutrality: Good for a few, but bad for most

14 Oct Net neutrality: Good for a few, but bad for most

Editor’s Note: In the second of two columns on controversial new FCC rules enforcing net neutrality principles, Iintellectual Property attorney Christopher Davis makes an argument against net neutraility. In his first column, Davis laid out some of the reasons net neutraility may just be a good idea after all. Two sides of a timely debate.

The Federal Communications Commission, on September 21, proposed rules that would prevent Internet service providers (“ISPs”) from treating different sources and types of data differently. These rules would enforce “Network Neutrality.” More to the point, the proposed rules entrench the way that ISPs have always handled data traffic. While enforcing the FCC’s existing guidelines, the new rules would prevent ISPs from trying new billing structures and managing their own network traffic.
Previously, I made an argument in favor of net neutrality, but I noted that there were rational and principled arguments to be made against the FCC’s rules. Those arguments are, essentially: the rules are unnecessary government interference and that, due to competition and a few consumers who soak up extraordinary amounts of bandwidth, ISPs need more flexibility in how they manage their networks.
The primary argument against the FCC’s new rules is the simplest: the rules are a waste of time and energy. The internet has existed in its current commercialized form for over 20 years without such rules. Net neutrality advocates fear that ISPs will institute draconian measures that slow down service or censor certain types or sources of data. They fear that without government intervention, customers will be impeded or blocked from reaching perfectly legal content. That concern is clearly overblown. Free market principles prevent any rational company from arbitrarily blocking its customers. Those customers would simply go to a competitor without such blocks. The government’s only role should be to insure that such a free market exists, unhindered by monopolistic behavior, collusion, and the like. Otherwise, the government should not be telling companies how to run their business.
Similarly, net neutrality advocates worry that ISPs will essentially blackmail content providers and other ISPs by threatening to lower the priority of their data packets unless the source pays for higher priority. They fear that this would turn the internet into a ghettoized crazy-quilt of cross-licenses, fees, and inefficiency without actually raising revenues for anyone. While such a scenario would be a nightmare, ISPs are not likely to engage in such behavior because the ISPs do not want that outcome any more than consumers. The internet already runs on a spirit of mutual cooperation because every network wants to provide better and faster service for its customers. Different networks are joined together at giant facilities called “Internet Exchange Points” or IXPs. These IXPs are usually co-funded without any charges between the member networks for traffic. They exist solely to give each network faster access to the other networks in the IXP. Given the amount of effort that ISPs have put into providing faster and more direct access between networks and to content providers like Google/YouTube, it seems unlikely that those same ISPs would suddenly start throwing up roadblocks. While such behavior is not currently illegal, it simply does not happen. With regards to source-based data discrimination, network neutrality is a solution without a problem.
Network neutrality will also prevent ISPs from differentiating their products for consumers. As the growth of broadband installations slows down because of market saturation, ISPs are looking for more ways to attract customers from rivals. Data discrimination would allow a network to offer priority data delivery to customers willing to pay a premium for such service. Data priority is quite different from bandwidth. For example, most internet games, especially first-person shooter games, send and receive very little data. The instantaneous nature of the game depends heavily on how fast that small amount of data reaches the game server. Gamers would gladly pay a premium to decrease the delay between them and their preferred servers (Known as lowering their “ping”). Video conferencing and other real-time interactions would similarly benefit. On the other hand, ISPs could offer cheaper lower-priority access to users who use the internet less frequently or for applications that do not require immediate response. ISPs already offer varying amounts of bandwidth. But the FCC’s new rules would ban data prioritization and deny ISPs another way to differentiate their service for their customers.
Furthermore, the FCC’s proposed rules remove a valuable tool from ISPs in addressing a significant and growing problem: over-consumption of resources by certain users and applications. AT&T estimates that 5% of its users consume 50% of its bandwidth. Similarly, Sandvine reports that 44% of all internet traffic comes from peer-to-peer file sharing. Take these numbers with a grain of salt, as they come from an ISP seeking to throttle certain users’ usage and a hardware vendor who sells routers to do that throttling. The numbers do, however, provide an illustration of the issue. If certain users or certain applications are over-consuming and slowing down other users, the ISP should be able to lower the priority for those applications and users during peak times. The alternative for the ISP is to implement a hard limit on total consumption; but many users dislike that solution even more. Peak-time prioritization would still allow the all-you-can-eat service that Americans have grown accustomed to without interfering with other customers’ use of the internet. The new FCC rules preclude these smarter measures and leave only the unsophisticated club of monthly download limits.
Consumers will best be served by ISPs that can offer plans to fit different customers’ needs and manage their networks intelligently. Everyone wants a better internet. The FCC’s new rules, while well intentioned, protect users against a non-existent harm and interfere with ISPs’ management of their own networks without providing any real benefit to the majority of consumers.
See also: Net neutrality: Good for you and good for the Internet