What is net neutrality? How the FCC repeal vote will affect your wallet and internet experience

ByJames Dennin

The internet is potentially about to get a lot less consumer friendly. On Thursday, the Federal Communications Commission voted 3-2 to repeal Title II restrictions that require internet service providers to meet certain standards, importantly: net neutrality.

If you’re not familiar, net neutrality prevents the service providers who build and maintain the internet’s infrastructure from unfairly restricting the flow of data to and from websites. In other words, your ISP — likely a cable company like Charter or Verizon — can’t pick and choose the activity it allows through, even if some of that traffic is more costly than others. Net neutrality advocates point out potential harm to streaming services like Netflix (and their customers), because of a pre-net neutrality dispute between the streaming company and the ISPs after Comcast refused to accommodate all of Netflix’s extra traffic.

Net neutrality became the law of the land in 2015, when the FCC voted to apply “Title II” restrictions — which normally apply to public utilities — to internet services companies as well. The Title II classification is important because it gives the FCC the authority to regulate ISPs in the same way it does the basic services Americans rely on that provide phone service, for example.

These regulations are broadly popular, with about 83% of Americans opposing the repeal, according to a University of Maryland survey. But critics of net neutrality regulations, like the current FCC chairman Ajit Pai, argue these restrictions have kept ISPs from expanding their networks. As he explained in a Wall Street Journal editorial, investment declined about 6% after the net neutrality rules were put in place.

“[This] is not going to destroy the internet, it is not going to end the internet as we know it, it is not going to kill democracy,” Pai said during the meeting, ahead of the repeal vote. Pai, a former attorney for the telecommunications giant Verizon, and his fellow GOP commissioners argue that repealing neutrality is simply a return to “normal,” a restoration of how it was before the 2015 change, when upstarts on the internet still thrived.

But advocates of net neutrality argue that these arguments are misleading. For one, for much of the internet’s history, it traveled through regular phone lines protected by Title II restrictions. They point to a 3-1 FCC vote in 2002 deciding cable modems were under the FCC’s jurisdiction, as evidence that today’s action is not a “return to normal,” but instead — as Harold Feld, an attorney and senior vice president at the advocacy group Public Knowledge, put it — a “dinner bell for every ISP who has wanted to do things consumers hate.”

Not all of the FCC commissioners agreed net neutrality should be repealed. “This decision and the process that brought us to this point is ugly,” said FCC Commissioner Jessica Rosenworcel in her dissent. “It’s ugly in the cavalier disregard this agency has demonstrated to the public, the contempt it has shown for citizens who speak up, and the disdain it has for popular opinion.”

What’s the big concern? For one, by stepping back from its regulatory role, the FCC leaves cable companies and ISPs to be exclusively regulated by the Federal Trade Commission. But advocates say the FTC is not equipped to handle this role, and any intervention would end up being too little too late. “The FTC would be coming in at the back end, and only when there’s anti-competitive behavior,” said Christy Gamble of Black Women’s Health Imperative said. “You’re waiting until there’s an infraction, and then only if they rule it as anticompetitive behavior will something be done. We need this on the front end, we need preventative measures so we don’t have to worry about people not being able to reach people.”

The FCC’s net neutrality decision is very likely to be contested, but here’s what we know for sure about how losing neutrality might affect consumers.

1. The internet could get slower and less secure

Feld argues that the pre-net neutrality “golden age” never happened, and that before the rules, consumer abuses were common.

“We are not going back to the golden age of 2014, but even if we were, the two worst abuses of ISPs occurred in 2014,” Feld said. “One was the shakedown of Netflix from the four ISPs. ... They were all saying that if Netflix wanted to get through they had to pay. So they just let all the traffic congest.”

To be fair, waiting longer for your shows to buffer isn’t exactly the greatest injustice in the world, but Feld said that these disputes don’t just affect the people trying to stream. If, for example, Comcast refuses to accommodate all the extra traffic Netflix drives when people get home from work, other sites will have longer loading times during those hours as well.

But it’s not just a slower internet — Feld also says that without Title II protections, the internet could become less secure as well.

“There is a provision of Title II that includes privacy provisions specific to telecommunications,” Feld said. “These are referred to as the CPNI rules, they’re basically what protects your phone privacy right now. Once the FCC reclassified broadband as Title II, broadband became suspect to these privacy protections.”

Without that protection, the fear is that ISPs would be free to install so-called “supercookies,” which track online behavior without notifying their customers. Last year, Verizon paid a $1.35 million settlement for its use of supercookies, with the FCC citing the net neutrality rule.

John Minchillo/AP

2. Costs could be higher

Advocates of the repeal, including Pai, object to the notion that repealing net neutrality will lead to higher costs. “People are scaring people,” Dan Rayburn, a media analyst and consultant, said. “You’re not going to charge people more based on a site they’re watching. It’s not how products are sold. They’re not going to say ‘it’s $100 a month for your ISP triple play, but if you want to watch Netflix, it’s $110.’”

But there is some evidence that losing net neutrality rules could lead some consumers to pay more. Critics of the repeal like Feld strongly disagree with Pai, and cite one or two examples of relevant upward pressures on costs.

One of the most notorious examples was back in 2012, when Apple rolled out a version of the iPhone with FaceTime. AT&T wanted to make FaceTime exclusively available on its more expensive “shared data plans.” AT&T eventually backed out of the plan after public backlash — but customers on lower tiered plans were still blocked from using FaceTime for months.

The main concern is that if ISPs can create fast and slow lanes, and use preferential pricing schemes to increase costs on internet-based businesses, it’s likely some companies will simply pass those higher prices onto customers — especially if those consumers don’t have better options.

3. History suggests a free internet really requires tough laws

Proponents of lifting the restrictions would tell you that AT&T’s reversal on FaceTime restrictions are proof that the free market can do the work of regulating ISPs itself. And tech industry advocates argue freedom from regulation is better for business, and that the U.S. already has the FTC to protect consumers. “Our position has always been that this proceeding is really not about net neutrality, it’s first and foremost about the FCC’s authority over the internet,” said Berin Szóka, president of TechFreedom, a tech policy think tank that backs lifting the restrictions.

But the early history of the electricity industry is illustrative of why stricter regulation might be warranted for industries that resemble utilities. Utilities like electric and cable companies have enormous upfront “fixed costs” — installing all that infrastructure is expensive — but extremely variable costs. In other words, it’s expensive to get wires in the ground, but it’s fairly cheap to keep them running and collect customers’ utility bills.

In their early days, electricity companies were largely unregulated and thrived in this environment, and as a result there were lots of them. By the late 1800s, there were some 29 franchises in the Chicago area alone. But while all that competition was great for a time, eventually they bid the prices down so much that companies could only cover their variable costs. Since no one could make any money, all the “little guys” soon went out of business, and monopolies emerged that could raise costs indefinitely.

Regulators concluded that the best arrangement for delivering electricity through the free market was through a highly regulated oligopoly, one where the utilities could still make money, but with careful limits on what they could charge consumers.

4. A slower internet hurts vulnerable people

Net neutrality advocates of all stripes — from libraries to members of the public health community — have emphasized the issue is one of social justice. Gamble said she is concerned about how repeal might affect the rise of tele-medicine, whereby people use video chat to communicate with doctors.

Gamble said in a phone interview that when people rely on the internet as a public service, even temporary and brief outages can have more serious consequences than, say, falling behind on your TV shows or not being able to post your latest food pic to Instagram — as Pai recently assured viewers they would continue to be able to do in a video for the Daily Caller.

“People can quickly lose their enthusiasm and energy when it’s difficult to access something,” Gamble said. “We’re seeing this with the opioid crisis. Can you imagine someone who’s addicted, it’s difficult enough to get them to seek treatment — but when their access to online counseling is unreliable and inconsistent?”

Chip Somodevilla/Getty Images

The same issues of access apply to low-income or underserved people who need web access to find work and more: “Access to the internet is a fundamental need,” Jim Neal, president of the American Library Association, said. “We see people using the internet for learning, accessing health information, accessing information about community services, filing their taxes, applying for jobs.”

Interest groups like the ALA and the BWHI both fear that corporate-controlled internet will put their groups at a disadvantage when seeking these kinds of services.

5. Entrepreneurship and innovation could be stifled

Another group that’s particularly concerned about net neutrality’s repeal are small business owners who worry that tiered internet plans and other anti-consumer behavior could put them at a disadvantage. Back in 2015, before the rules were introduced, more than 100 small business owners and startup CEOs including the heads of Etsy, Imgur, Kickstarter and Yelp all signed a letter to the FCC in support of the net neutrality rules.

“We believe that the [rules] encourage competition and innovation by preventing ISPs from using their gatekeeper power to distort the internet market,” the letter reads. The neutrality “plan is the best proposal we have seen to date for protecting the open Internet.”

The major fear is that if you are an entrepreneur, say, with a small ecommerce website competing with big players like Amazon, it’s important that your web pages can load as quickly as those of your peers: Mobile site visitors who have to wait more than three seconds for a page to load give up 53% of the time, according to one study by Google’s internet ad-serving subsidiary.

The cable companies and Pai also argue that relaxing the rules will actually spur innovation among the internet and network providers. But Feld said the argument about innovation is insincere. ISPs aren’t really innovators, just like electricity companies weren’t really innovators. The utility companies pumping power into your home didn’t pioneer the answering machine, he explained, just as the cable companies didn’t pioneer direct video recording — startups called PhoneMate and TiVo did.

“This discussion goes back to when the internet was born,” Feld said. “Did you want the network to be a smart network that helped decide what services went through, because that’s how we’d develop innovation, or a universe where it was end to end, where it was ‘dumb pipe,’ and people on the edge would innovate. You don’t have a lot of innovation from the large networks, it’s not what they’re good at. It’s not how they make money.”

For their parts, Feld, also an attorney, and the American Library Association’s Neal said they planned to be involved in what will likely be a long legal battle to preserve net neutrality through the courts. Feld also said that a legislative solution is possible as well, pointing to early GOP lawmaker defectors as a sign that the popular opinion to keep neutrality might prevail.

“I have to tell you that I’m looking forward to going to court and taking this thing down,” Feld said of today’s decision, adding, “I think there’s not a member of the GOP in Congress who after [Tuesday night] is not at least a little bit worried about their seat... [they are] not looking forward to going home and saying, ‘I backed the cable companies.’”

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