New FCC Leadership Sigals a Different approach to Net Neutrality

Its only been a few weeks since new F.C.C. Chair Ajit Pai has taken office, but he’s already signaling a drastically different approach to regulation than his predecessor Tom Wheeler.

The first thing that Pai has done is to classify the F.C.C’s net neutrality rules, passed two years ago, as a “mistake.” Net neutrality is the concept that internet service providers (think Google Fiber, Time Warner Cable, etc.) should provide consumers with equal access to all content regardless of company ownership. The main idea is to stop internet service providers (ISPs) from providing “fast lane access” to certain content providers. For instance, Netflix could pay Time Warner Cable to ensure that its streaming video content was delivered at twice the speed of Amazon Prime. Or maybe AT&T could artificially slow streaming video to make its DirecTV satellite cable service more attractive to consumers.

This problem is exacerbated by the monopolistic stranglehold that many ISPs have on certain communities. 48% of Americans only have one choice for standard broadband internet speeds, meaning that if your ISP begins to throttle your streaming video, your only real choice is to suck it up and deal with it.

Due to the enormous costs associated with expanding broadband access, its unlikely that these monopolies will come to an end any time soon. Therefore, it is clearly in the consumer’s best interests to protect net neutrality through regulation. Unfortunately, the F.C.C no longer agrees. Pai has gone about this in a number of ways. First, he has reversed the net neutrality rules the F.C.C passed two years ago. Secondly, he has ended an investigation into “zero-rating” plans. Zero-rating plans are data plans provided by cell carriers that exempt certain services from their restrictive data caps. For example, you could be limited to 2GB per month, but any streaming through Hulu would be exempt from these caps.

Pai notes that since these regulations have been dropped, multiple cell carriers have come out with competing unlimited data plans – something he attributes to the free market. However, it is disingenuous to compare cell carriers to internet service providers. Even with the number of companies in the cell service industry has dropped rapidly over the past two decades due to acquisitions, there are still multiple wireless carriers competing all over America. The same cannot be said for ISP’s. With AT&T’s previous acquisition of DirecTV, and its looming merger with Time Warner Cable, net neutrality becomes even more important to the average consumer. Around North Carolina, the average consumer can at best choose between Time Warner and AT&T for the internet service. Soon, that choice will no longer exist.

Its clear that Pai and the F.C.C think a “light touch approach” is best when it comes to internet regulation. He’s also stated that net neutrality regulations have caused a downturn in broadband investment (although it has actually been up 9% since the rules passed).

Although Pai might be correct about the “free market” protecting consumers against internet fastlanes, the argument itself is based off a faulty premise: for most Americans, there is no free market for internet service.