What happened with net neutrality?
What happened with net neutrality?
A market has blossomed
On Saturday night, I released Thursday’s post on SOPA and PIPA. Something I noticed while talking to people about the two bills over the past few days is that conservatives and libertarians really like drawing parallels between SOPA and PIPA and net neutrality. I like to think of the backlash to SOPA and PIPA in 2012 to Donald Trump’s election in 2016 as the high-water mark of the power of tech companies in American politics. Their failure to prevent the FCC from removing net neutrality rules is a symptom of the decline in their influence.
Net neutrality is the idea that internet service providers (ISPs) must handle all data equally. Proponents claim that without it, ISPs will either preference their content over data from other companies or will charge extra to have all data move at the same speed. Skeptics claim that net neutrality raises the cost of internet connections for consumers and makes rural broadband prohibitively expensive.
Net neutrality era (2010-2017)
In 2010, the FCC rolled out a series of rules on Title I of the Communications Act of 1934 to promote net neutrality. This made ISPs unhappy and they sued. In 2014, Verizon prevailed in its court case against the FCC and rolled back those rules. If you really want to read Tatel’s decision it can be found here.
This made tech companies unhappy because content on Netflix, YouTube, etc. could be slower compared to similar services from ISP-owned companies.1 This would be bad for their bottom line. So, tech companies and their allies swung into action promoting net neutrality. This video by CGP Grey is a good representative of the talking points at that time. He speaks of a once-in-a-generation struggle to prevent a dystopian future.
In response, the FCC redefined the kind of service that internet service providers are to bring back net neutrality. For obvious reasons, this made ISPs and their friends in Washington unhappy.
Post-net neutrality era (2017-present)
In 2016 Donald Trump was elected. A new president means a new majority on the FCC. Trump’s pick as chair was Ajit Pai. Pai is a former lawyer for Verizon and was quick to state his intention to roll back net neutrality.
Tech companies went into overdrive to try to stop this. John Oliver ran a segment on net neutrality that encouraged his audience to leave public comments in opposition to the rollback. The sheer volume of traffic bucked the FCC’s website. But, this had no impact on the FCC’s decision and the strong net neutrality of the Obama-era was a thing of the past.
We are living in a post-net neutrality era and none of the dystopian visions have panned out. Public Knowledge and the ACLU document some negative things that have happened. There have been reports of throttling of rival services and Frontier Communications appears to be acting scummy, but this is peanuts compared to the apocalypse that was suggested in 2014. I was an advocate of this position and the empirical evidence shows that nothing much has changed for most consumers. In 2019, the prediction was that the blocking and throttling were just around the corner.
At the same time, the major investments that Ajit Pai predicted did not pan out. According to the broadband industry, the capital expenditures of broadband providers have gone up. But there were rises in expenditures before the repeal happened in December 2017. The whole issue seems to be more of a wash than proponents and skeptics would like it to be.
What happened
I think what I missed is that broadband is much more of a market today than it was in the past. I leaned into how wired broadband is a monopoly or duopoly for most American households. This is most often from the phone company and possibly the cable company. For example, these are the options where I grew up.
What I missed is that WiFi from cellular data has gotten much better. I used to think of these kinds of routers as cheap pucks that overheat when you try to stream a movie on Netflix. We upgraded our router the other day to this AC router that connects to the 4G network here in Denmark. The ethernet cable in the back is going to my network storage drive, not a modem.
These are less common in the United States than they are here in Europe but they still exist. It would make your cell phone company mad, but you could “bring your own device” to their network and put the sim into something like this. For many normal internet users, this would probably work; I doubt the average person uses more than 50 GB of data a month.2 T-Mobile and Verizon have noticed that some people were doing this and are offering home internet as one of their products as 5G rolls out. There is also a new startup called Starry which is working in the same space. StarLink is a new satellite internet provider that has the possibility of shaking up the old satellite internet duopoly.
This puts tremendous pressure on the traditional wired ISPs — Comcast, AT&T, CenturyLink, Verizon, Charter, Frontier, and Cox — to not degrade popular services. People really like streaming Amazon Prime, Netflix, Hulu, YouTube, and Disney+. Reddit, Tumblr, Facebook, Instagram, Wikipedia, etc. are used every day. Making any of these websites slower by a noticeable amount would result in consumers switching to another internet provider.
I think Ajit Pai got lucky. To my memory, in the repeal fight, people rarely pointed to this. I think that the net neutrality rules were needed in the Obama years, but conditions changed. More people got smartphones, slow 2G became fast 4G LTE, and routers like mine entered the market. The apocalypse never came because a non-market finally started to act like a market and service providers understood that. In the end, that is in the best interest of consumers. Prices fall and services increase.
AT&T’s merger with Time Warner did not happen until 2018 but imagine that HBO (owned by Time Warner) was constantly faster on AT&T than Netflix.
My wife and I go through about 300 GB a month, but I think we are outliers