AMSTERDAM, May 6, 2014 — Recently, the FCC announced that it plans to allow providers to create so called “fast lanes” on the internet. This would mean that internet service providers (ISP’s) can give priority to data if the content provider, e.g. Netflix or Google, is willing to pay extra.
This decision by the FCC puts net neutrality in the U.S. at risk.
Net neutrality is widely seen as an important principle that made the internet to what it is today. More and more countries are enshrining net neutrality into law. The European Parliament adopted a bill including net neutrality on April 3, and Dilma Rousseff, the President of Brazil, signed a bill on April 23 on civil rights for the use of the internet – including net neutrality.
Yet with this move, the FCC is taking the opposite direction.
Net neutrality means that a company that is responsible for data transmission to the end user, or is involved in this process, is not allowed to distinguish between data based on content, application, originator or receiver. Those companies have to turn a blind eye to the data and treat all data equal, in all aspects.
The new regulation came due to pressure from ISP’s, mainly broadband players such as as Comcast and Verizon. They had challenged the previous FCC regulations in court.
Whereas ISP’s have lobbied hard for the fast lanes, most internet companies oppose any threat to net neutrality. Fast lanes will create a two-class internet, where some content will be delivered first and faster and the rest is relegated to second citizen status.
FCC chairman Tom Wheeler, a former lobbyist for the cable and wireless industry, responded to allegations that the FCC proposal undermines net neutrality. In his blog, he argues that the FCC can still enforce neutrality as the proposed regulation allows the FCC to stop ISP’s from conduct that the FCC founds not to be “commercially reasonable”.
The vague term “commercially reasonable” opens the door for lawsuits. Additionally, this addresses only vertically integrated ISP’s like Comcast, which are not allowed to favor content from own affiliates above others.
The FCC, however, missed the main concern: the content is limited by the bandwidth that is available. The more bandwidth is used by fast lanes, the less is available for the rest of the data.
With the rules proposed by the FCC, President Obama will drop also one of his promises during the 2008 campaign, when he announced that he “will take a backseat to no one in my commitment to network neutrality”.
The principle (pay for it and it will be delivered fast) might sound reasonable, but now it will be not the consumer but the content provider that will choose what the consumer gets to see first. This is limiting consumer choice and not a market principle.
Furthermore, the new rules will stifle innovation on the net. All current giants on the net started as small, loss-making outlets. The services are often provided for free and it takes years to generate enough revenue to be able to pay for fast lanes. The FCC proposal will make it hard for a new Google, Facebook or Amazon to survive. Fast lanes favor incumbents above new entrants and big business above small outlets and start-ups – where most innovation comes from.
With classifying ISP’s as telecommunication servicers, the FCC has all the instruments needed to ensure that the internet remains the open source of innovation it is today and that the U.S. is not falling behind other countries.
Hopefully, it will take advantage of that opportunity.