End of the world? No
US net neutrality reversal Juliet Samuel
Of all the issues liable to cause mass hysteria, the arcane regulations governing US internet service providers (ISPS) were not on my list of risks. But considering the power of Silicon Valley tech companies to promote political causes, perhaps they should have been.
Last week, the US Federal Communications Commission (FCC) voted to repeal the Obama-era regulations known as “net neutrality” rules. The lead-up to the vote had been accompanied by dire predictions about how it would herald the end of the internet as we know it. Hollywood actors and celebrities whipped themselves into a frenzy, with the singer Cher screaming on Twitter that it would mean that “Trump can change the internet!!”. Another Twitter user declared: “The Library of Alexandria is burning again.”
All of this hysteria is focused on a rather geeky regulatory change. Contrary to the hysterical rhetoric, what the FCC actually did last week was reverse a regulatory approach that has governed internet provision for only about two years. It does have important ramifications, but it’s hardly a revolution in the way consumers get online.
The FCC’S vote reversed the application of a package of regulations known as “Title II” to ISPS. What that means is that instead of classifying internet providers as sluggish public utilities, subject to special and onerous rules, it moved them back into the sphere of normal service providers. When Title II was introduced to ISPS in 2015, it imposed a sledge-load of additional regulation on them, the most eye-catching of which is the requirement to provide consumers with access to all websites on an equal basis. In other words, ISPS were not allowed to charge consumers different amounts to access, say, Google over Yahoo, nor were they allowed to slow down or “throttle” internet speeds for particular sites or services. They had to provide network access in a neutral way.
Net neutrality is certainly an appealing idea. Its supporters argue that without these regulations, ISPS will be free to rip off consumers by demanding fees from websites in order to provide speedy access to them, manipulating users’ experience to suit their profit margins. Naturally, Google, Facebook, Twitter, Amazon and various other Silicon Valley giants hate this idea, because it could require them to pay ISPS in order to get their sites to the front of the traffic queue. Some consumer advocates argue that without net neutrality, web users will get skewed access to information based on the ISPS’ commercial interests, rather than other factors (it’s rather a leap from here to “Trump can change the internet!!”, but never mind).
These are important questions, but the FCC’S decision last week isn’t actually as big a change as Twitter et al would like you to believe. All the FCC’S decision actually does is shift US regulations back to the status quo two years ago, before the Obama-era regulations were brought in.
Importantly, it also restores the role of the Federal Trade Commission, the US’S primary competition regulator, in monitoring and enforcing cases against ISPS. The FTC has long experience in dealing with ISPS that abuse their competitive position to “throttle” traffic, deceive consumers or abuse their privacy (this last function, in fact, was not even taken over by the FCC and was just left hanging).
What’s so odd about the net neutrality regulations, which all these celebrities now claim are crucial to the internet’s existence, is that there wasn’t actually much evidence that consumers were badly served by the previous regime. The FTC was not afraid to take action and “throttling” or skewing internet access was not a widespread issue.
What net neutrality did do was require compliance with hundreds of pages of pre-emptive regulations. Far from promoting consumer choice and competition, this – like all big regulatory burdens – has hit small ISPS hardest, which is probably why 62 of them wrote a letter to Congress supporting the FCC’S changes. What the FCC recognised is that the key to consumer experience is investment driven by a competitive marketplace, not regulations that fiddle around with the existing, inadequate provision of services. The US’S biggest internet problem isn’t the “throttling” of broadband speeds; it’s that 34m of its citizens have no access to a decent connection at all. In some ways, the FCC’S move back to 2015 rules actually puts it a little more in line with the approach taken by the EU, and therefore by the UK.
The European approach is, increasingly, to lump together competition and other (eg privacy) regulation of ISPS. This makes a lot of sense – it’s best to have expertise on internet provision built up in one institution rather than split between different regulators.
Where the EU approach is more stringent than the US is that it also imposes pre-emptive regulation on ISPS, in addition to using the threat of ex-post competition enforcement to police behaviour. Fortunately, the EU rules are not quite as burdensome as the US’S 2015 net neutrality rules.
For Britain, Brexit could see us offered a choice of regimes – assuming we don’t tie ourselves into EU rule-taking. The question before us will be whether to follow the hands-off US approach, trusting ISPS to innovate and serve consumers through competition, whacking them only with enforcement actions if they break competition rules. Or, should we go along a more preemptive route in addition to competition regulations, staying closer to the EU model.
The good news is that the US provides us with a test-case. We’ll be able to watch exactly what happens to competition in rural broadband, how consumers fare, and whether investment levels rise or fall.
What we should not do, however, is to allow anti-trump hysteria to model our response to a technical question of how best to serve consumers.