Law & Public Policy Blog

Ajit Pai’s Defense of Net Neutrality Repeal Fails to Make Good Arguments

Devon Roberson, Law & Public Policy Scholar, JD anticipated May 2019

“The FCC just voted to restore the long-standing, bipartisan approach to protecting Internet freedom.” This was the official word from the Federal Communications Commission’s (FCC) Twitter account, announcing the repeal of the 2015 regulation codifying “net neutrality” into law. “The internet wasn’t broken in 2015,” FCC Chairman Ajit Pai said. “We weren’t living in a digital dystopia.” This is true. But what Mr. Pai seems to be forgetting is that the Internet wasn’t broken in 2015 because the net has always been neutral, long before the 2015 regulation.

Net neutrality is the principle that those who provide Internet access (Internet Service Providers, or ISPs, such as Comcast and Verizon) have to treat all web traffic equally. For example, Comcast would not be allowed to block CBS’s streaming service because it competes with NBC, which Comcast owns. It also means ISPs cannot create “fast lanes” for websites who can afford to pay more. Verizon cannot ask Netflix to pay a fee to get their content to be delivered to consumers at higher speeds.

In his defense of repeal the net neutrality rules, Mr. Pai said, “At the dawn of the commercial Internet, President Clinton and a Republican Congress agreed that it would be the policy of the United States ‘to preserve the vibrant and competitive free market that presently exists for the Internet . . . unfettered by Federal or State regulation.’” But this ignores the very basic fact that the Internet was still, as a practical matter, neutral all through the 1990s and early 2000s. The Internet didn’t require federal regulation because it was simply impossible to discriminate against different types of web traffic. That technology was not developed until 2003, when internet security companies created a “firewall” that could filter out harmful viruses.

Almost immediately after this technology was developed, ISPs discovered a new use for it: they could now block websites that competed with their own services. In 2004, Madison River Communications was fined by the FCC because they blocked customers from accessing Vonage, which provided internet phone services that competed with Madison River’s own phone company. This technology also allows ISPs to “throttle” different sites, either speeding up or slowing down the speed at which the content is delivered. Several ISPs have been accused of throttling Netflix, for example.

Mr. Pai obviously believes that a non-neutral net is what is best for the future of the Internet. Why, then, did he choose to be deliberately misleading, rather than just making his case? The fact is that there are real and legitimate arguments against net neutrality. This “heavy-handed regulation”, as Mr. Pai calls it, increases compliance costs and raises the already high barrier to entry for new companies. In an industry devoid of competition, preventing new start-up ISPs could be detrimental in the long-term.

There’s also the fact that just a few sites, like Netflix and YouTube, make up the vast majority of web traffic. On our highways, we ask 18-wheelers to pay higher tolls because they cause more wear and tear on the roads. Why shouldn’t ISPs be allowed to charge Google and Facebook for the cost of their infrastructure?

Proponents of net neutrality argue the Internet should be a “dumb pipe” that merely gives access to the Internet without caring what content you view. Analogies are often made to electricity: electric companies don’t care what you use electricity for, they just send it to your house. However, electricity companies still charge consumers for how much electricity they use. Today, a heavy Internet user pays the same as a light user. Why should a grandmother who only uses the Internet to send emails to her grandkids have to pay the same amount for Internet as a person who streams content and plays online video games from multiple devices simultaneously? Wouldn’t it be better if grandma can just pay for the services she uses instead of subsidizing the Internet for other people who use more bandwidth?

These are just a few of the very real and legitimate arguments against net neutrality that have become lost in the outrage. Instead, Mr. Pai focused on increasing investment. At a time when companies like Comcast are more profitable than ever before, Mr. Pai thinks the only thing stopping them from investing is net neutrality. If only Comcast could charge Netflix millions in fees to speed up their content at the expense of other content, then Comcast would at last invest in building infrastructure.

Mr. Pai and others seem to think that even if there are bad actors after net neutrality is gone, there are two important ways to punish bad-behaving ISPs: the Federal Trade Commission (FTC) and the free market.

Mr. Pai “retweeted” an FTC commissioner, expressing the sentiment that the FTC has been restored as the rightful watchdog of uncompetitive practices. This is problematic for several reasons. First, after-the-fact enforcement can do real damage to Internet start-ups. If a new website has their site blocked from users, it may take months before the FTC can get around to punishing the wrongdoer. By that time, the new start-up could be out of business. Additionally, if websites are slowed down or sped up, consumers may not notice that it is because their ISP is throttling the content. This leads to frustrated consumers and delayed enforcement. Lastly, the FTC does not specialize in telecommunications services like the FCC does. Thus, the FCC should be the agency regulating these companies.

The free market is also not an adequate remedy. Millions of households have no choice of ISPs. Because building Internet lines to homes is so expensive, not many companies can afford to build them. This means only a small handful of companies (Comcast, Verizon, AT&T, and Charter) control virtually all of the Internet access in the country, creating an oligopoly. Chances are that if one of these companies starts blocking websites or throttling content, the others will follow. Even if consumers have a choice between two of these big companies, that choice may not matter if all companies determine it is in their best interests to be non-neutral.

The FCC and Mr. Pai are wrong about the effects of repealing net neutrality, but the 2015 rules also don’t adequately address the good arguments against it. Ultimately, this issue demands Congressional action. There are several possible solutions, and Congress owes it to consumers and companies to investigate the issue fully and debate solutions that balance the interests of consumers, content companies, and ISPs. They should focus on ensuring predictability in the market to encourage investment, guarding against anti-competitive practices, increasing competition, and protecting consumers. They should look to policies like “local loop unbundling”, which drastically increases the number of ISPs and makes net neutrality a non-issue in other countries. This is an issue where the American people should demand the most of their lawmakers. Congress should hold hearings and listen to experts, consumer groups, content providers, and yes, even the ISPs. The only solution is the one everyone can agree on.