I recently wrote an article here on Torque discussing my thoughts on net neutrality and the possible outcomes of the recent vote by the FCC. Now that the FCC has voted, let’s turn our attention to the winners and losers from the new rules.
In short, the vote was the FCC’s way of saying “no soup for you” to parties interested in throttling Internet traffic and to the proponents of pay-to-play fast lanes on the information superhighway.
This is a good thing. I like the idea of the little guy getting a fair shake at accessing and disrupting the market with a better mousetrap. So who exactly are the winners?
The Little Guy
Garage inventors, mom and pop stores, and any small business with aspirations to grow. This is the fertile ground for new ideas that might have suffered in an ecosystem dominated by the current market heavyweights.
This is not Politico. I know. But it’s an unavoidable truth. President Obama threw his weight behind the FCC’s proposals. The FCC vote broke down 3-2 over party lines with the three Democrats voting in favor and the two Republicans dissenting.
In the near term we can look forward to the five FCC Commissioners testifying before the Senate Commerce Committee on March 18 about this vote and net neutrality in general. This may cause some contention among those in objection to net neutrality about how to best stake claims to being free-market champions.
Speaking of consumers. . . if you are an end user of broadband then you probably benefit by this ruling.
Throttling of content has been a thorny topic pitting telecom titans like Verizon against powerful providers like Netflix. In the end, though, the end user will likely see faster service and will enjoy a better overall experience due to this vote.
The premise underlying the new rules was the decision to classify broadband providers as “common carriers.” Traditional common carriers like power and phone services are not very controversial—they are the backbone of a civilized society.
But while you and your neighbor get exactly the same electrical current and water quality, you are consuming the result of highly regulated industries. Governmental authorities set rates, monitor the quality of the product, and oversee the number of players in the marketplace.
Was the recent vote by the FCC a first step down the slippery slope of deepening government involvement in the Internet? That remains to be seen. But in the meantime we can identify some of the losers from this ruling.
Proponents of the new regulations argue that some regulation is necessary to protect consumers of Internet-delivered content. On the other hand, the assurances that come with this regulation are, by definition, the result of significant government involvement and oversight.
And while this regulatory oversight has its origins in the crucible of good intentions, how it turns out is anyone’s guess.
As we become more of an information-driven economy I worry that the FCC will be unable to help itself and will treat the Internet like the airline industry.
Do you remember the regulation, then subsequent de-regulation of airlines? It was a guardrail-to-guardrail type of oversight that stifled ingenuity and competitiveness in the name of “protecting the consumer.”
From a bottom-line profits perspective the new rules will limit the ability of broadband providers to upcharge certain users who might otherwise be subject to throttling and to create pay-to-play high speed internet lanes. The FCC also took direct swipes at broadband providers in enacting the new rules, stating, for example, that “[they] have even more incentives to interfere with Internet openness today.”
Once the rules actually take effect we will have to see who lines up to be first at the courthouse door to sue the FCC seeking a stay of the rules. Don’t discount the possibility of Congress swooping in with legislation meant to supersede the rules and thereby creating a whole new regulatory dynamic.
There are lots of variables still to play out. It is safe to say there will be plenty of topics to choose from for future stories on the legal wrangling over net neutrality.