Net Neutrality: The Free Market Won’t Save You

  • Ryan Ross
  • Jul 14, 2017 4:20PM

There has been a lot of uproar about the Trump administration’s proposed rollback of Obama-era net neutrality legislation, and for good reason: eliminating net neutrality would royally screw over the consumer. That said, I’ve seen quite a few arguments that the government has no place in this fight, and that net neutrality is a prime example of how the free market economy can — in theory, at least — solve this problem. I, of course, do not agree.

First, a quick primer on net neutrality. In a nutshell, the underlying principle of net neutrality is that all content on the internet is equal and should be treated as such by both the government and internet service providers (ISPs). The data on the internet should be able to be accessed by anyone, whether it’s a rich tech doofus in Silicon Valley or someone hovering around the poverty line in Mississippi.

Net neutrality also means that people can use the bandwidth offered by their ISP however they want. In the same way the electric company can’t tell you which lights you can turn on or outlets you can use, ISPs and the government can’t tell you “you have X amount of bandwidth per month, but you can’t use this bandwidth to access Netflix.”

The fight over net neutrality began back in 2007, when lobbyists for telecom giants began pushing for legislation that would allow ISPs to charge different rates for different websites. There were a couple of ways this would work: either Netflix (as an example) would have to pay more to ISPs for “interconnection agreements” that allow users of a particular ISP to access Netflix, or the consumer would be faced with a choice: pay more to their ISP for “fast-lane” access in order to continue experiencing Netflix the way they always had, or continue paying the same amount but have their bandwidth throttled; that is, watch laggy, constantly-buffering versions of their favorite movies.

In either event, the consumer would be screwed. Either they pay more out of pocket for the same internet they’ve always gotten or, if a company like Netflix doesn’t cough up more money to their ISP, lose access to Netflix. (Or Google, or Amazon, or wherever.)

President Obama believed — as do many Americans — that the internet is such an integral part of our daily lives that it should be considered a utility rather than a luxury, and as such, it should have the same consumer protections in place that exist for electric, gas and water companies. So in May 2010, the FCC under the Obama administration introduced net neutrality protections; in January 2017, the Trump administration proposed rolling them back.

The difference between the fight for net neutrality in 2010 and now is that unlike in 2010, there is no longer a real “good guy.” Companies like Netflix, Amazon, and others have come out against the proposed rollback of net neutrality regulations, and although they pretend they’re opposed to it for altruistic reasons, their chief complaint with it is that they’ll potentially have to pay more to ISPs to ensure service and avoid throttling; in this fight, their interests are at best aligned with those of the consumer, but they’re not our friends.

At the same time, ISPs are definitely not the hero — they may end up screwing the consumer, either by forcing them to pay more for un-throttled internet access or by making streaming services so unreliable that the consumer is forced to buy that ISP’s cable package in order to have something to watch.

And the government certainly isn’t the protagonist of this story — not anymore, anyway. The Trump administration is pro-business and anti-regulation, which means it’s naturally going to side with the ISPs. (I’m sure their justification will be something along the lines of “if ISPs make more money, they’ll be able to hire more people,” which would mark the first time in the history of capitalism that a company saw increased profits and said “Great, now let’s find a way to give this money back to the people!”)

With so few good options for the consumer, it’s not surprising that some have embraced the laissez-faire capitalist approach: let the free market figure it out. If ISPs charge too much, people will take their business elsewhere, they’ll drop their prices, and everything will be just fine.

There’s only one problem with this idea: free-market capitalism is a farce. Companies have proven themselves all too willing to work with one another to ensure healthy profits for both sides, no matter who wins the customers.

Let’s use me as a case study. I live in Brooklyn, a borough that’s home to 2,629,150 people; if Brooklyn were its own city, by population alone, it would be the fourth-largest city in the country (behind New York, Los Angeles, and Chicago). Using free-market capitalism as a guide, you would think that there are plenty of ISPs in the area, all competing for my business, right?

Wrong. Of course, ISPs will claim to have 99% coverage in Brooklyn, but having made calls to every ISP I could think of when I first moved into my apartment, it turns out that realistically, there are only two: Verizon (who could care less about your bandwidth or the quality of your experience unless you’re running FIOS) and Optimum.

Manhattan effectively only has two ISPs: Time Warner, which services lower through upper Manhattan, and RCN, which services anything above Harlem and in the Bronx. Sure, you can get Time Warner in the Bronx, but they’re using RCN’s lines to provide it, which requires cooperation between the two companies. It’s why, even though there’s nothing stopping Time Warner from laying lines in the rest of Manhattan and into the Bronx, they don’t do it: why get into a turf war when you can work with your competition?

Obama was right: the internet is as vital a utility as electricity or water, and ISPs know that. Free-market capitalism only works if the consumer has a choice of whether or not to purchase a good or service, but when it comes to the internet, there really is no choice. And if there are only two companies in a given area, it’s not too difficult for the heads of those businesses to sit down and agree on a baseline price for their services that will maximize their profits. I know government oversight gets a bad rap, but in this case, it’s absolutely necessary to ensure that private businesses don’t gouge their customers or price them out of receiving a service that they need.

The net neutrality protections need to remain in place. The free market will not save us.