The Net Neutrality Ruling

You’ve almost certainly seen the news about a recent federal court ruling that, according to some, strikes down “net neutrality.” Below you can find a roundup of posts looking at the ruling and what it will mean.

Joe Carter put together a nice summary post at the Acton Institute:

Net neutrality (short for “network neutrality”) refers to both a design principle and laws that attempt to regulate and enforce that principle. The net neutrality principle is the idea that a public information network should aspire to treat all content, sites, and platforms equally. At its simplest, network neutrality is the idea that all Internet traffic should be treated equally and that every website – from Google.com to Acton.org — should all be treated the same when it comes to giving users the bandwidth to reach the internet-connected services they prefer.

Net neutrality laws are legislation or regulation that prevents Internet service providers (ISPs) from discriminating or charging different prices based on such criteria as user, content, site, platform, application, or type of attached equipment.

A few writers have completely lost their minds and are panicking. Esquire, The Verge, and The New Yorker are representative of the more fearful responses. Yglesias at Slate is concerned but not quite as over-the-top with his rhetoric:

In almost any online services marketplace you see a few competing firms, and you see opportunities for new firms to get into the game. The online services also to some extent compete with offline services (going to the movie theater, etc.) or cross-modally (play games rather than watch movies). Broadband Internet, by contrast, is a profoundly uncompetitive marketplace. So a regulatory shift that pushes money out of the online services sector and into the broadband sector is a regulatory shift that pushes profit opportunities out of a competitive sector and into an uncompetitive sector. That’s bad news for the economy.

HuffPo, meanwhile, is speculating at what “web 3.0″ might look like.

For my money, the most interesting responses are these three. First, Derek Thompson on why Netflix isn’t doomed by the ruling:

Providers could ask Netflix to pay extra, and Netflix could say no. What happens then? Maybe Netflix streaming would slow for 30+ million American viewers. But is that worse for Netflix or the carriers? If the company refuses to pay extra for high-quality streaming and their video service declines, millions of people will notice—and blame their Internet providers (who have horrible customers service reputations,) rather than Netflix (whose consumer reputation is sterling). The fact that Time Warner Cable just lost hundreds of thousands of subscribers over a retransmission fee battle with CBS is a looming lesson, here.

Kevin Werbach sounded a similar note:

Everyone should take a deep breath. Yes, the court overturned the FCC’s rules prohibiting broadband providers from blocking or discriminating against third-party content and services. No, the court didn’t kill network neutrality. In fact, it gave the FCC a roadmap to reconstitute and even improve on its original decision.

The biggest piece of good news is this: On the issue the case was supposedly about, the one with the greatest long-term significance, the FCC won. Verizon’s core argument was that the FCC doesn’t have legal authority to regulate broadband. The court’s answer was unequivocal: It does. The FCC made a sufficiently strong case, the judges said, that it could do so to promote investment in advanced communications services under Section 706 of the Communications Act. And, they continued, the FCC was sufficiently convincing that net neutrality served that goal.

We shouldn’t pass over this fact lightly. Ever since the net neutrality debate began a decade ago, there has been a basic question about whether the FCC could impose obligations on broadband services. Verizon saw its legal challenge as a way not just to beat back net neutrality, but to foreclose any FCC regulation of its Internet-based offerings under the First Amendment. The court refused to go there. Instead, it gave the FCC the freedom to act when it concludes steps are necessary to promote broadband.

Wired, meanwhile, is less concerned about ISP’s abusing their new powers and much more concerned about the threat of the FCC abusing theirs:

No matter what you think of network neutrality — for it, against it, it’s complicated, who cares — the fact that a federal court just struck down most of the FCC’s net neutrality rules is clearly cause for concern.

But not for the reasons you think. Others are saying that the FCC just lost the battle but “can finally win the war” — if the agency formally “reclassifies” broadband as a heavily regulated “common carrier” (like traditional telephone services). Actually, the FCC lost the battle, but it just won the war over regulating the internet. It no longer needs to bother with reclassification, a process so difficult and drawn-out it was always a political fantasy anyway.

The FCC’s broad new powers should worry everyone, whatever they think of net neutrality. Because beneath the clever rallying cries of “net neutrality!” lurks a wide range of potential issues. Most concerns are imaginary or simply misplaced. The real concerns would be better addressed through other approaches — like focusing on abuses of market power that harm competition.

  • Caleb

    Well of course the neoliberal apostles of the new economy over at Wired aren’t worried.