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Last summer, I argued that U.S. President Barack Obama’s unwillingness to push for “net neutrality” might end up being “the biggest technology-related failure of [his] presidency.” Net neutrality is the idea that Internet service providers (ISPs) should treat all traffic that goes through their networks the same, not offering preferential treatment to some websites over others or charging some companies arbitrary fees to reach users. Obama had supported the concept during his initial presidential campaign, but stood by while his own appointees to the Federal Communications Commission (FCC) adopted a different position, one much closer to that of vested interests in the telecommunications industry (who care more about increasing profits than maintaining an open Internet).
Last week, however, the president finally stepped up to the plate, releasing a video and a detailed plan calling on the FCC to adopt the “the strongest possible rules to protect net neutrality.” He said the commission should embrace bright-line rules, without loopholes, and on the strongest legal authority (Title II of the 1996 Telecommunications Act), so that it doesn’t lose in court on this issue for a third consecutive time. It was, in short, the most accurate, well-informed, and important statement ever issued by a public official on the topic of Internet freedom.
Net neutrality sounds wonky and technical, but is actually quite simple. It would keep the Internet as it has always been—cable and phone companies would remain mere gateways to all sites, rather than gatekeepers determining where users can go and what innovators can offer them. Judging from the four million comments the FCC has received from individuals, small businesses, and web titans, this issue pits most of the population against a handful of powerful cable and phone companies and their vendors and allies. And if the FCC were to follow the approach the president outlined in his recent comments, the resulting policy would bolster free trade, reduce communications costs, and help preserve an open and uncensored Internet.
On the Internet, speed matters. According to research by Microsoft, Google, and others, if a website is even 250 milliseconds slower than a rival, people will visit it less often. Were phone and cable companies allowed to charge for the use of “fast lanes,” the companies that purchased such access would receive a clear competitive advantage over their rivals, one unrelated to the quality of the products or services in question. Both U.S. and foreign telecommunications companies would then be able to discriminate against non-domestic sites in ways that impact free trade. In the United States, Apple’s iTunes radio could purchase a fast-lane deal helping it against, say, Sweden’s Spotify, or Zynga could purchase an advantage against Finland’s Rovio. Political pressure, cultural trade policy, and overlapping business relationships could lead to a protectionist spiral in which local champions get preferential treatment in local markets over foreign competition, and consumers everywhere suffer as a result.
Allowing phone and cable companies to impose fees on web companies, moreover, would likely result in a return to “sender pays” arrangements. Prior to the advent of the Internet, international phone calls were incredibly expensive. Providers in one country (such as AT&T) would pay providers in other countries (such as Telmex or France Telecom) high fees to carry calls. The system was known as “sender pays,” and it was based on idea that calls from relatively rich Americans could provide subsidies to foreign telecom providers, particularly in the developing world, so they could build infrastructure.
Today, telecommunication companies in developing nations still call for sender pays—only this time, for the Internet. They want Google, Netflix, and Facebook to pay for sending data to users in countries other than the United States. Up to now, the Internet has been governed by a different model, which mostly involves direct interconnections without payment (known as peering) with local telecommunications companies paying (rather than being paid) to connect their users. However, if Americans could auction access to fast-lanes or charge for providing services to remote websites, foreign telecommunications companies would eventually engage in similar practices, extracting fees from popular American senders.
Failure to pursue strict net neutrality, finally, would probably lead to a balkanized and censored Internet. Right now, with some notable exceptions in non-democracies, users everywhere access the same Internet, regardless of the ISP they use. Absent net neutrality, however, some sites will load well on some ISPs and others will not. That would fragment the market and sap the power of a single, global interconnected network. It would also provide an excuse for more foreign censorship. Once Washington blesses the notion of fast and slow lanes, others will follow—and not be unduly chastened by the notion that politically or economically motivated discrimination is different from or worse than purchased discrimination.
Some parties to this debate have tried to confuse the issue by agreeing with the need for a free and open Internet, but arguing that Obama’s preferred approach is harmful because it calls on the FCC to use authority in Title II of the Telecommunications Act. Such major assumption of regulatory power, the argument runs, would encourage both excessive regulation and foreign overreach.
But this claim doesn’t stand up to scrutiny. Almost 85 percent of the Latin American market is subject to net neutrality rules and the European Parliament already favors strong ones. Following recent legal judgments, Title II is the only jurisdictional authority available to U.S. telecommunications regulators to adopt meaningful nondiscrimination rules. Even Supreme Court Justice Antonin Scalia, hardly an Obama lackey, concluded in a 2005 dissent that, as written, Title II applies to high-speed Internet access service. Title II also happens to be extremely flexible, allowing the FCC to “forbear” from any and all unnecessary provisions, and already applies in the United States to the Internet services offered to all businesses and to two million rural Americans.
If the case in favor of Obama’s Internet policy is so strong, why is it so controversial and so difficult for the president to enact? Because a gutting of net neutrality would be extremely profitable to telecommunications companies (which could charge for access) and major existing Internet businesses (which could afford to buy protection against smaller, pesky competitors).
FCC Chairman Tom Wheeler has appeared unwilling to move against the interests of cable and phone companies on this issue, and has the bureaucratic autonomy to resist the wishes of outsiders, including those in the White House. At this point, however, the issue is in play, and both Wheeler and Obama may ultimately be able to point to a truly significant and noble legacy—the preservation of the freedom and openness that has made the Internet such a revolutionary force in the world.
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