From the readings, what exactly is Net Neutrality? Explain in your own words the arguments for and against Net Neutrality. After examining the topic, where do you stand on the issues surrounding Net Neutrality?
If you are in favor of Net Neutrality, explain how you would implement or enforce it. How would you respond to concerns about possible over-regulation, burdening corporations, or preventing innovation?
If you are against Net Neutrality, explain why it is unnecessary or undesirable. How would you respond to concerns about providing level playing fields or preventing unfair discrimination by service provides?
In either case, discuss whether or not you consider that “the Internet is a public service and fair access should be a basic right”.
The debate surrounding Net Neutrality is framed by the analogies used to describe it, all of which attempt to paint the underlying economics in a specific way. The core argument is centered around the concept of data being “treated equally.” In essence, Net Neutrality protections prevent internet service providers from granting preferential speeds to data from certain sources, and the removal of those protections legalizes the practice. The most common analogy is one of “fast lanes” and “slow lanes:” without Net Neutrality protections, ISPs can place data from certain sources into the slow lane while leaving their own data in the fast lane. In order to ensure that their data remains in the fast lane, corporations need to pay ISPs for access to the fast lane.
This is problematic, from certain perspectives, for a few reasons. The largest is that some data, such as streaming video and online gaming, drastically loses value to the customer if not delivered in a speedy fashion. If Netflix loads a movie at a snail’s pace, then the Netflix customer experience is substantially depreciated. This is especially alarming when many ISPs offer their own streaming video services that compete with Netflix but are delivered in the aforementioned “fast lane,” thus ensuring a better user experience.
On its own, this is not a singularly disturbing phenomenon: after all, corporations often strive to differentiate products on their “home turf,” such as Apple with Apple Music, Facebook with Messenger, and even grocery stores with integrated gas stations. Such synergy between services is often a boon to users, as it results in a superior product. The issue arises when competition is not present. According to broadband.gov, 96% of Americans do not have access to more than 2 ISP options to choose from. This means that, if both of your potential ISPs decide to place Netflix in the slow lane, you have no alternative but to switch from Netflix to an alternative service. Netflix knows this, which is why they were extorted into entering into an expensive deal with Comcast to ensure that speeds remained strong (http://arstechnica.com/information-technology/2014/04/after-netflix-pays-comcast-speeds-improve-65/).
In an ideal world, Net Neutrality protections would not be needed, because there would be a multitude of ISPs to choose from, and they could differentiate on service speeds, i.e. “Join WebNet for the fastest Netflix speeds around!” The pretense of Netflix is felt as a market force driving the product toward user satisfaction, and users win as a result. Without competition, the situation flips, and instead Netflix and other streaming services must compete for the favor of the ISP, who often offers a competing service as well. As a result, the ISPs get rich off of deals with services such as Netflix without needing to improve the product for the end user. To many economists, this is an example of rent seeking, since the monopoly (or duopoly) ISPs hold prevents the end consumer from access to a better product.
Typically, the government should seek to eliminate situations of rent seeking, since they reflect specific market situations, reduce the overall efficiency of the economy, and concentrate the flow of wealth artificially. Rent seeking also reduces the ability for new entrants into the market: a competitor to Netflix that can’t afford the fast lane is artificially excluded from entering the market by the rent-seeking efforts of the ISP. This, of course, hurts consumers.
There is an economic counter-argument to Net Neutrality protections, however. It begins with the understanding that, if ISPs need to treat all data equally and some services (such as Netflix) send a lot of data, infrastructure improvements will be necessary. The cost of implementing these improvements will be passed on to end consumers, since Net Neutrality protections prevent ISPs from charging data services companies for faster speeds. Thus, as Net Neutrality protections set specifications for how an ISP can use its network, they end up raising the cost of an Internet connection for every user, and not only those who subscribe to Netflix or other data-hungry services. This ends up having the opposite effect than the ideal goal of providing an egalitarian Internet for all, since fewer people can afford a more expensive connection.
Then, further government intervention might be offered as a solution: if the government dictates the price of an Internet connection, then everyone can have an affordably-priced, equal-footing connection. However, this solution drastically reduces the ability for new entrants into the ISP market. Large ISPs with entrenched infrastructures may be able to handle the revenue loss from dictated prices, but smaller ISPs may not. These large ISPs would become de facto government utility providers. This is a dangerous consequence, because it suppresses further innovation in the ISP space. A new ISP that relies on a nascent technology may be more expensive but offer other benefits (such as connectivity flexibility), but in a price-dictated market, such a business would be precluded from being profitable. For example, it is argued that the progress of solar technology has been artificially hampered by price regulations on electricity: if the price of electricity were not as low as the government makes it, solar panels would be a far more attractive option, and research into the field would have been more substantially funded (by both revenue and investors seeking to disrupt the market.) For this reason, society should only dictate price on those goods that we are confident cannot be improved upon, because otherwise we halt the progress of innovation. I am not confident the Internet qualifies as such a mature good.
Zach's Ethics Blog 