Who Pays For Net Neutrality?

Scott Cleland Contributor
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Net neutrality has devolved into who pays.

Currently, consumers pay a market price for the broadband speed and usage they need, want and can afford.

Meanwhile in Silicon Valley, the world’s largest corporations, like Google-YouTube, Facebook, Amazon, and Netflix, demand an FCC-mandated, permanent, zero-price for their downstream Internet traffic no matter the speed or how much Internet bandwidth they use.

Think of net neutrality as a Washington beltway tale of those who pay and those who won’t.

Net neutrality proponents won’t be honest about what they really are asking for from the FCC when they demand “no fast lanes” or “no paid prioritization” net neutrality, because they know openly demanding a permanent zero-price for Silicon Valley’s downstream Internet traffic, paid for and subsidized by consumers, is a political loser and indefensible as deceptive.

The deep deception here is the public claim that it would be unfair to entrepreneurs and Silicon Valley giants if any business voluntarily could pay for faster Internet speeds and for more usage – like consumers already routinely do. Thus the supposed “fair” policy would be “equal” corporate welfare from the FCC in the form of a permanent zero-price for downstream Internet traffic.

If you doubt that the net neutrality debate has devolved into this, read the 2009 white paper entitled: “Subsidizing Creativity through Network Design: Zero-Pricing and Net Neutrality,” written by Tim Wu, the law professor who invented the “net neutrality” term and concept in 2003.

If you still doubt it, please ask a “no fast lanes” net neutrality proponent if it is ever okay in their view for an ISP to ever charge a Silicon Valley giant anything for delivering their exceptionally large downstream traffic to consumers?

They will likely refuse to answer, because the truth is that this debate at core is about the FCC banning a two-sided free market from evolving by mandating a permanent zero-price for downstream Internet traffic.

Consider how perverse this net neutrality debate has become when the FCC is more focused on equality between entrepreneurs and Silicon Valley giants than what is best for consumers?

In the past when implementing universal service, the FCC was emphatic that if there were to be subsidies, that businesses would pay more in order to subsidize lower prices for consumers and even lower prices for low-income consumers via its life-line program. How bizarre is it now that the FCC is fighting to force consumers to subsidize the world’s largest corporations and entrepreneurs?

It gets even worse for consumers from here.

If the FCC applies 1934 Title II “telecommunications” utility regulations to the Internet, in order to mandate a permanent zero-price for downstream Internet traffic, consumer broadband bills will go up.

“Outdated Regulations will Make Consumers Pay More for Broadband” — a recent study by Robert Litan and Hal Singer of the Progressive Policy Institute entitled — quantifies the extra taxes and fees that apply to Title II utility telecommunications service, but not Internet service. The study conservatively estimates that new Title II utility regulations would increase broadband taxes and fees $17 billion or roughly $85 per American household per year.

Now all of this comes in the context of a front-page Wall Street Journal story that shows that rising health care costs, and the new costs of smart-phone and tablet use, are squeezing the flat incomes of the American middle class.

So, if the FCC has not forgotten the American consumer, why is the FCC considering net neutrality and Title II utility regulation proposals that will purposefully and unnecessarily require consumers to subsidize Silicon Valley giants’ exceptional broadband usage, and also pay significantly more in broadband taxes and fees?

Apparently, the FCC is letting Silicon Street special interests trump Main Street consumer interests.

Sadly, net neutrality has become perversely anti-consumer.

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.