Seven Myths About Net Neutrality Regulation

Zack Christenson Research Fellow, American Consumer Institute
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After years of being the issue that only “techies” and interest groups cared about, last week President Obama brought the net neutrality debate onto center stage. In his address, the president called on the Federal Communications Commission (FCC) to reclassify Internet service providers (ISPs) as a public utility. This would likely change the face of the Internet, and set the stage for pages of new policymaking. But the arguments for using a public utility framework to impose net neutrality regulations are being propped up by a host of myths. To clarify any misunderstanding, here are seven popular myths debunked:

Myth #1 — Internet service is a monopoly

Actually, options for internet service are broader today than ever before. New technologies like satellite internet, power line internet, and wireless broadband supplement traditional cable and telephone-based ISPs. Innovators, like Elon Musk and his microsatellites, are dreaming up even more options for access every day. Instead, the extensive regulatory costs and taxes that would result from treating ISPs as a public utility would discourage new innovators, investors and rivals from wanting to compete in the market. Public utility regulations preserve monopolies.

Myth #2 — Limited ISP options demand government intervention

In those communities where indeed internet service options are still limited, the real culprits are local governments that have been creating their own ISPs, charging taxpayers to setup the infrastructure, creating impossible barriers to entry, and running up debt to price out their competition. As Berin Szoka points out, “Localities are scared of losing revenue, but those revenues are really hidden taxes that are ultimately borne by broadband users.” The list of municipal broadband failures is long, and it is a financial burden for taxpayers and the consumers of other utility services. Without local interference, the very premise of Net Neutrality (that monopolistic ISPs will force users into content they want to promote) wouldn’t exist. Municipal broadband limits consumer choice.

Myth #3 — The Internet is a utility, just like water

Well, for starters, the internet isn’t something that we simply tap into. Its infrastructure is complex and distributed amongst millions of users, servers, Content Delivery Networks, ISPs, and others. In addition, the Internet is still growing, and growing fast. By reclassifying the Internet under Title II of the Telecommunications act of 1934 (like a common carrier), regulators would be handicapping the growth and innovation of a fast-moving industry, much like what we observe from the old, stodgy public utility.

Myth #4 — The Internet is currently equal

The Internet has never been free and equal. Netflix, YouTube, and countless others pay billions each year to get any bandwidth advantage they can get. As Suderman writes:

Not only have these deals not ruined the Internet experience for the average person, they’ve enhanced it, allowing traffic-intensive services like streaming video sites to purchase enhanced capabilities. Those deals have made it possible for startups to handle massive traffic spikes without crashing. And the money involved has helped expand, upgrade, and maintain the Internet’s permanent infrastructure overall.

Myth #5 — The Internet is, by default, neutral

The fact is that the internet is a complex ecosystem, each part subject to inequality. An effort to create “neutrality” online isn’t even utopian, it’s impossible. There will be winners and losers, but what makes the internet different than other markets is that it’s perfect. Consumers vote with their clicks and their dollars.

Myth #6 — Net neutrality addresses a current problem

When we look at history, though, we see only a few small instances of proven throttling. In almost all examples, the throttled-back data consists of illegal file sharing. In one instance, Comcast was quick to adjust its policy to consumer demands and eliminate its throttling program. In order to deliver high-latency data (movies and VoIP) as a priority over low-latency (email) data, Comcast rewrote its plan to satisfy its customers without sacrificing the perception of “equal treatment.”

Myth #7 — Treating data equally is inherently good

Under net neutrality, data hogs will slow access to all content equally. Netflix traffic peaks at more than 30 percent of the total data, and if you included YouTube — 50 percent. It is estimated that illegal piracy represents another 24 percent of peak traffic. However, many emerging technologies would be rendered completely useless without the ability to prioritize packets. One great example is something called “telemedicine,” which represents a handful of new technologies that allow rural and under-serviced communities access to the same level of care found in major metro areas. But, as we all know, medical treatment requires precision and quick decision-making. So long as packets of the new Hunger Games movie are treated equal to a surgical consultation, the risk of internet lag could mean the difference between life and death.

In summary, as the debate over net neutrality goes further into the mainstream, the myths surrounding it are sure to get more perverse. The world of journalistic dilettantes, bloggers and the 24-hour news cycle means we’ll likely never see beyond a surface-level understanding of this issue. Hopefully though, policymakers will take the time to dispel these common myths before taking what would a rash decision; one that may indeed change the face of the Internet in an irreparable way.

Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research, an educational and research organization. For more information about the Institute, visit www.theamericanconsumer.org.