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Net Neutrality Does Not Equal Net Utility

Netflix buffering on a TV screen
photo by John Pasden

The most strident proponents of “net neutrality” want the Federal Communications Commission to declare broadband a utility, so the government can ensure that everyone gets equal access to the best Internet service that today’s providers can offer.

Had they gotten this wish back in 1999, there is a good chance we would all get online today using state-of-the-art dial-up modems.

The FCC is trying to walk a fine line in its regulation of broadband. By a 3-2 vote earlier this month, it advanced a proposal that seems to be a reasonable attempt. The proposal would allow large traffic generators, like Netflix, to enter into deals with Internet service providers to ensure the fastest possible service, and thus underwrite the infrastructure that their service requires. At the same time, the proposal would prevent broadband vendors, like Comcast, from blocking or severely slowing traffic from competing websites that do not pay extra to use the fast lane. New Internet sites would reach consumers at whatever speeds consumers paid vendors to provide.

Tom Wheeler, the chairman of the FCC, has emphasized that the commission’s goal is “an open Internet” and has argued that the rules respect the principles of net neutrality, suggesting that the definition of the concept is not necessarily self-evident. Ajit Pai, the senior Republican on the commission and one of the two dissenters, said that all the members shared common ground in wanting to protect a free and open Internet despite the split vote, according to The New York Times. The dissenters argued that Congress, not the FCC, should establish policy for regulating Internet traffic.

In essence, then, the dispute comes down to what “free and open” means. As Seattle Times columnist Brier Dudley observed, those opposing the FCC’s proposed rules are disingenuous or naive if they claim that the Internet is currently neutral and free. “Since the rise of the commercial Internet,” he wrote, “it’s been a place where you pay more to get faster and better service, whether you are a consumer or a company on the other end of the pipe.”

Differentiating types of Internet traffic is actually necessary in order to provide a smooth user experience. Bandwidth is not infinite, and companies that provide broadband services not only can recognize that not all Internet traffic is created equal, they should. Data packets that carry your voice call or the next frame of your streaming high-definition video must arrive exactly when expected, or you will notice the difference. The packet carrying part of the homepage of your favorite news site - or an ad appearing on that homepage - is not so time-sensitive.

This sort of logic has already played out, to some degree. Netflix has made agreements with Verizon and Comcast to allow the service to bypass congestion at hubs connecting ISPs and transit providers, despite arguing that the FCC should ban such payments. Ars Technica reported that Netflix performance speeds on Comcast improved by 65 percent after the deal.

Federal regulation preventing broadband providers from sorting high-priority traffic from less urgent demands would be counterproductive for those of us who want the state of Internet connection technology to continue to improve. And it is neither unreasonable nor unfair to want companies that push the demand for higher speeds and more bandwidth to shoulder some of the costs involved in providing it.

This is not to say broadband providers should have no regulation whatsoever. In particular, the prohibition against blocking or disrupting competing vendors’ content is an essential consumer protection. Differentiating types of traffic is useful, but protection to make sure it isn’t discriminatory due to the traffic’s content is wise. While recognizing this, the FCC seems to be taking care not to clamp down on ISPs so severely that they are inhibited from investing in new or improved services.

The FCC’s proposal will draw a big pile of comments for the next few months, while it remains open for public reaction. A lot of those comments will be critical. Net-neutrality advocates have already called the proposed rules “a stake in the heart for Internet openness” and “an insult to those who care about preserving the open Internet.” Online and offline protests have sprung up, based on distrust for broadband providers or the idea that a “fast lane” must necessitate a “slow lane” that is substantially worse than what most users see now.

But perhaps the most telling sign, to an outside observer, indicating that the FCC’s proposal is a compromise is that it has already drawn criticism from both sides, not simply the most extreme defenders of net neutrality. Verizon issued a statement warning that subjecting broadband to strict regulation “would lead to years of legal and regulatory uncertainty and would jeopardize investment and innovation in broadband.” The FCC is caught in the middle of fight in which everyone claims to want the same thing: faster, better Internet.

There may well be room for improvements in the FCC’s proposed rules, but the proposal is still a good start. If we want vendors to keep investing in ever-faster and wider pipes, then the parties who do the most to fill those pipes must at least be allowed to help foot the bill.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business."

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One Response to "Net Neutrality Does Not Equal Net Utility"

  • Will Beasley
    May 27, 2014 - 11:50 am

    WOW Verizon is threatening innovation to ensure their best interest is being met. Who’d of saw that coming? Here’s a question for Verizon, what’s your excuse for the lack of innovation over the last decade? In all reality we have terrible connection speeds relative to most of Europe. The reality is net neutrality isn’t the reason these companies aren’t pushing to be the fastest it is lack of true competition. How many internet providers can you name off the top of your head, 3 maybe 4? Now on top of that there are numerous companies who put a data cap on you. I don’t think very many people realize how fast you can eat through 5GB. Download a movie or two. Watch a season of 30 Rock on Netflix. Play your PS4 for a couple hours. GONE. No more data for the month. These companies disgust me.