Net Neutrality Explained: What Does It Mean for the Consumer?

Written By Alex Avakian

 

The Federal Communications Commission (FCC) voted to repeal net neutrality laws on December 14th. By a 3-2 vote, the decision, as explained by Chairman Ajit Pai, will help consumers by promoting competition and creating an incentive to build networks in underserviced areas.

Background

In 2015, under the Obama administration, and former FCC Chairman Tom Wheeler, the FCC passed a regulation that classified broadband services, like the internet, as a utility under Title II of the Telecommunications Act. This allowed the FCC to have broad powers to regulate internet service providers (ISPs).

The Telecommunications Act

In 1934, under its Commerce Clause authority, Congress passed the Telecommunications Act (Act), establishing the FCC. The FCC’s purpose was to have authority over radio and other telecommunication networks. Its purpose, or policy rather, was to prevent discriminatory practices by communications companies and provide access to these networks at a reasonable price.

In 1996, the FCC expanded the scope of the Act to cover broadcast television and the internet.  One of the main goals of the Act was to promote more competition by preventing monopolies. The networks were controlled by the big companies. For smaller ones to provide services to their users, primarily in rural, underserviced areas, they had to use the networks of the bigger companies. The Act served to ensure that bigger companies would not limit access to smaller ones, but instead, would provide them a network at a reasonable cost.

The Act also recognized that the internet played a major role in the way individuals worked, lived, and learned. Title II of the Act found it a United States policy, in pertinent part, to promote unbridled user control of the internet and to prevent similar discriminatory practices by ISPs.

Why Is There A Push For Net Neutrality?

A push for net neutrality stems from how the consumer uses the internet. With more traffic towards streaming and social media sites, ISPs know what the consumer wants. Without net neutrality, ISPs have the power to either help these high traffic companies succeed to the detriment of others, or to raise prices on these companies. ISPs know that these companies will pay to use their services, and the consumer will absorb those costs to access sites.

What Has Net Neutrality Done?

Under net neutrality, ISPs have not been able to discriminate by blocking apps or websites they deem unfavorable or contrary to their visions. If the content of the application or website is lawful, the ISPs have had no authority to control them. Title II recognized this as a user right.

Similarly, the providers have not been able to slow the transmission of data based on the nature of the content, and they have not been able to offer companies faster bandwidth to the detriment of other companies. Essentially, net neutrality has mandated that ISPs like Comcast and AT&T cannot discriminate between websites and the content of those websites.

What Could Repealing Net Neutrality Mean?

Under President Trump’s administration, which strongly supports less governmental regulation, the FCC repealed net neutrality. According to FCC Chairman Ajit Pai, this is better for the consumer because it creates more competition among ISPs and forces ISPs to strengthen their business in underserviced areas.

However, repealing net neutrality could also affect how the consumer accesses the internet. Consider the application SlingTV (Sling). Sling allows a consumer to watch TV, live or recorded, on a mobile or handheld device. To access Sling, a consumer pays for a package of channels, which range from basic to premium. Basic could contain channels like ABC and ESPN, whereas premium packages could contain Food Network and Spike. This is very similar to how cable television operates. A consumer can pay for a basic package of channels, or the consumer can upgrade to premium packages consisting of HBO and Showtime.

Without net neutrality, ISPs are not prohibited from creating similar payment structures and website packages. Hypothetically, an ISP could create a ‘social media package’ consisting of Facebook and Twitter, a streaming package consisting of Netflix and Hulu, and so on and so forth. In order to access both Facebook and Hulu, the consumer would have to either buy two packages – social media and streaming – or pay for more for a premium package that includes both.

In addition to website package-style deals, consumers also face the potential handed-down-costs of bandwidth speeds. Hypothetically, bigger content companies could pay for more bandwidth speed, which would then slow down access to other websites, while passing off the cost of the upgrade to the consumer.

To illustrate this even further, if ISPs did create these package deals, then if a consumer only purchased the social media package, and then typed “Netflix” in the URL, the consumer could receive a message that says, “You need to upgrade your package to access this website.”

Contrary to these points, FCC Chairman Ajit Pai stated that these hypotheticals were not the case before net neutrality, and there is no indication that something like this will happen without net neutrality. Indeed, FCC Chairman Pai said the FCC wants to return to the regulating times of President Bill Clinton, as he believes that the regulations currently imposed by net neutrality and Title II have been “particularly serious for smaller Internet service providers. They don’t have the time, money, or lawyers to navigate a thicket of complex rules.”

“Returning to the legal framework that governed the Internet from President Clinton’s pronouncement in 1996 until 2015 is not going to destroy the Internet,” FCC Chairman Pai said in a statement. “It is not going to end the Internet as we know it. It is not going to kill democracy. It is not going to stifle free expression online. If stating these propositions alone doesn’t demonstrate their absurdity, our Internet experience before 2015, and our experience tomorrow, once this order passes, will prove them so.”

While it may be too early to consider this the dawn of a new internet, it is something that should be monitored to know what is changing and how it impacts the consumer, both legally and financially.

 

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Sources Cited:

Cecilia Kang, F.C.C. Repeals Net Neutrality Rules, N.Y. Times (Dec. 14, 2017).

47 U.S.C. §§ 151, 230–232 (2012).

Keith Collins, Why Net Neutrality Was Repealed and How It Affects You, N.Y. Times (Dec. 14, 2017).

David Goldman & Jose Pagliery, Net neutrality is here. What it means for you, CNN (June 13, 2015, 1:11 PM).

Rebecca R. Ruiz, F.C.C. Sets Net Neutrality Rules, N.Y. Times (Mar. 12, 2015).

FCC Repeals ‘Net Neutrality’ Rules For Internet Providers, NPR (Dec. 14, 2017).

Photo Courtesy of Phone2Action.

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