Techsplanations: Part 3, What is net neutrality?

Written by Stan Adams


In the last two posts, we talked about what the internet and the web are and how they work. In the next two posts we will look at the concept and principles of net neutrality and some of the ways to preserve them. As before, please refer to this glossary for quick reference to some of the key terms and concepts (in bold).

What is this “Net Neutrality” you speak of?

Net neutrality is the idea that the net (as in the internet) should be neutral towards the information crossing it and should not treat some traffic differently based on what kind of traffic it is, who sent it, or who will receive it. The concern is that access networks like ISPs will use their position (between you and everything else) and their ability to control how traffic flows into, out of, and across their networks to influence or control competition among providers of goods and services online. Because most of these providers connect to the internet, like you do, at the “edge” of an access network, they are sometimes called “edge providers.”

Acting as a gatekeeper, an ISP has the ability to pick and choose which content crosses their network, and at what speed and price. Because access networks are the only way for edge providers to reach customers over the internet, they have been called “terminating access monopolies.” This is not because the ISP holds a monopoly from the customer’s perspective; customers may have a choice of access providers. But from the perspective of an edge provider, there is only one choice to reach their customers online: via whichever access network the customer uses. This position gives greater bargaining power to the network operator and puts edge providers at a disadvantage.

Ok, I get that ISPs can control traffic on their networks, but why do they care what edge providers do?

In addition to the ability to control how traffic flows across their networks, ISPs also have several incentives to do so. First, ISPs can create an additional source of income by charging edge providers for access to you. That is, rather than just charging you for the ability to access and retrieve information from the web via the ISP’s access network, the ISP could also charge web entities for delivering to you all the information you requested from them. Second, ISPs can charge edge providers higher prices for more favorable treatment of the traffic they send across the network. This practice, known as paid prioritization, lets some edge providers pay ISPs to move their traffic more quickly than others across the ISP’s network. If you want to learn more, check out one of our past posts on paid prioritization. Finally, many ISPs own or are affiliated with some edge providers. This creates an incentive to give those providers better treatment and to disadvantage their competitors.

Before we move on, a point of clarification: net neutrality relates to the practices of network operators, but not to the practices of edge providers. Therefore, only network operators can violate net neutrality principles. Although similar principles could apply to platforms and device manufacturers, it is important to think of (and treat) them separately because the differences between their positions on the network (edge versus gatekeeper) and the lack of choices for internet access (you’re lucky if you have a choice) give ISPs greater leverage to use discriminatory practices to their advantage.

From what I’ve heard, net neutrality is pretty popular. Wouldn’t competition among ISPs lead to them offering neutral network access?

In theory, maybe. It’s true that the vast majority of people support the concept of net neutrality, regardless of political affiliation. However there currently is not, and potentially never will be, enough competing ISPs to prompt the largest ones to offer neutrality as a perk. This is partly due to the nature of network structure and the cost of building one. Basically, they are too big and too expensive to create an incentive to build multiple, overlapping network systems (especially if that means burying conduits or cables). In a high-density neighborhood, there might be enough potential customers living close enough together to support two or more competing networks, but for many locations, it just doesn’t make sense to build a second or third network. Beyond the practical limitations on network deployment, the financial incentives inherent in an unregulated two-sided market are significant. In other words, if ISPs can charge both customers and edge providers for carrying traffic between them, they have more ways to make more money.

Not that there’s anything wrong with making money. The problems start when ISPs use their position in ways that affect competition outside the market for internet access. This potential for market distortion is troubling when more well-funded companies can buy an advantage over their competition, rather than competing based on the merits of their offerings. A pay-to-play system helps cement established businesses in place and makes it very difficult for new businesses to compete. It is even more troubling when vertically-integrated ISPs give their own affiliated edge offerings better treatment than other similar offerings.

So, net neutrality is about competition? Is that it?

Many of the concerns about the future of the web without neutrality center around competition policy, but there are other problems. For instance, ISPs have the ability to block access to specific websites or to otherwise censor the content or applications their subscribers may access. In the past, ISPs have prevented customers from using popular apps like FaceTime and have blocked certain peer-to-peer file transfer protocols. Although there may be fewer financial incentives for blocking, other incentives, such as a desire to influence political views, may exist. Regardless of motivation, the potential harms to free expression and competition online are sufficient to justify some kind of regulation.

Isn’t there already some kind of regulation?

There was. However, the FCC recently reversed its position on regulating ISPs and removed all the rules. Let’s quickly cover the history of net neutrality regulation before we get to where we are now. Basically, the Federal Communications Commission (FCC) has been working on protecting consumers from undesirable practices of network operators for decades, and has been working on protecting internet openness and net neutrality since about 2005. Then, the Commission issued a Policy Statement with a set of four principles to “foster creation, adoption, and use of of Internet broadband content, applications, services and attachments, and to ensure consumers benefit from the innovation that comes from competition.”

Between 2005 and 2010, the Commission incorporated those principles as conditions for telecom merger agreements. In 2010, the FCC lost a court case against Comcast because the Court found that the Commission did not base its action against Comcast in the right source of authority. So, later that year the Commission issued its first Open Internet Order, which relied on part of Title I of the Communications Act to turn the Policy Statement’s principles into actual rules against blocking and unreasonable discrimination. Verizon sued the FCC and won because the Court found that the rules could only apply if ISPs were officially classified as “common carriers.”

The Commission went back to the drawing board and quickly returned with a new regulatory proposal: classify ISPs as common carriers and then put rules against blocking, throttling, and unreasonable discrimination in place. The Commission adopted this approach in 2015 in its second Open Internet Order. Then the ISPs sued again, but this time they lost. The court found that the FCC had grounded its rules properly in its authority under Title II and upheld the Commission’s strongest net neutrality regulation to date. A few months later, we elected a new president and the balance of the FCC shifted in the ISPs’ favor. The Commission immediately began to unmake the rules it had finally succeeded in making. Which brings us to now.

The FCC has adopted its Restoring Internet Freedom Order, repealing all of the previously adopted rules and leaving the Federal Trade Commission in charge of protecting consumers from unscrupulous ISPs. CDT is among a sizeable group of petitioners currently suing the FCC to undo the repeal. At the same time, there is an effort in Congress to use the Congressional Review Act to reverse the repeal. So that’s where we are.

So that’s it? We had rules, now we’re throwing them out…the end?

No, not the end. ISPs are unlikely to voluntarily abide by the rules they worked so hard to get rid of, and net neutrality advocates are unlikely to stop fighting for effective regulations. In one venue or another, the fight will continue. In our next post, we will talk about some of the possible regulatory approaches we may see in the future and sift through some of the rhetoric around those approaches.

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