November 28, 2017

Fair but Unequal

As I’m sure you’ve heard by now, the FCC will vote on December 14 to dismantle the Obama Administration’s “Title II” net neutrality rules. Many folks are trying to block this action, but given the political realities of Congress (and the FCC itself), it seems likely to pass.

Setting aside the inevitable court challenges for a moment, what would this change actually mean for the US Internet ecosystem over the next several years?

A few thoughts…

1. Blatant Discrimination Against Particular Services Is Not That Likely
Supporters of net neutrality tend to start (and even end) here. The idea that Comcast is going to block Netflix or YouTube traffic on its networks may make for a good sound bite, but it misses the point. The FCC is actually correct to point out (in a massive 210-page treatise in defense of the proposed rules) that giant “edge services” like these have large and loyal user bases, along with incredibly strong brands and vast resources. The idea that ISPs are going to pick fights with these services (and win) just doesn’t seem that likely.

Arbitrarily blocking sites looks and feels like censorship to the average American. Even though the First Amendment does not technically apply to non-state actors like Comcast, at an emotional level it does. This type of discrimination just doesn’t seem fair. Given the transparency rules, which would force the ISP in question to openly disclose and describe these practices, it’s hard to imagine how that would end well for the would-be censor.

As a result, rather than just block services they don’t like, ISPs are much more likely to find ways to favor services they do like, which brings us to our second point.

2. Blatant Favoritism Of Particular Services Is Quite Likely
Pay-to-play for CDN access or peering relationships is already a reality for bandwidth-heavy sites. The idea that Netflix and I (as individual content providers) are on a level playing field today with respect to our ability to serve high quality video to a large Internet audience is downright laughable. If I posted something on a lone AWS server that suddenly became wildly popular, I would either need to start throwing money at said AWS as well as Akamai and other CDNs. Otherwise, my server would simply crash under the load.

I’m not sure adding the requirement to pay an ISP like Comcast or Verizon a fee per gigabyte to ensure that my stream reaches my devoted followers at the highest quality is all that different. The result is almost certainly going to be that the largest and most well funded services have the best looking content, especially when it comes to UHD (4K) video streaming. Again, this is already the de facto situation today. Amazon, Netflix, YouTube, and other deep-pocketed players have the ability to deliver 4K streams at scale because they can afford the data-center bill that comes with this level of performance.

This is a much tougher sound bite for opponents of a laissez faire Internet. How exactly is this unfair? What would be the alternative? Free servers for all? When push comes to shove, Americans are not as egalitarian as we sometimes like to think, which brings us to our third point.

3. Different Tiers Of Services Based On Ability To Pay Is Overwhelmingly Likely
Our laws governing telecommunications were originally based (by analogy) on laws governing transportation in the physical world. There is a historical reason, after all, that telco companies are still referred to as “carriers,” as if they were trucking or shipping companies. In thinking about where the US Internet goes from here, it’s useful to remember that the analogy also works in the other direction.

Transportation today, whether of people or of packages, is overwhelmingly dominated by the principle that you get what you pay for. Been to the airport lately? The difference in treatment between being a first-class passenger and squeezing into coach is enormous; including everything from the government-run security lines to the boarding process to the experience onboard the plane. Despite the trials and tribulations of modern American air travel (my sympathies to all those who battled the crowds flying for Thanksgiving), the blatant in-your-face inequality of the experience based on one’s ability to pay sparks little or no resistance. Americans are strongly conditioned to believe that it’s totally fair to get what you pay for.

Packages are even worse. At least with human air travel everyone on the plane arrives at the destination at the same time. Look at Amazon. Prime customers get 2-day free shipping. The rest of the hoi polloi get to pay for the privilege of getting their stuff slowly.

The message from these services is simple: Americans are incredibly tolerant of services that vary in quality based on the ability to pay.

This suggests that the real consequence of abandoning net neutrality is likely to be different tiers (and endless bundles) of service that provide different levels of convenience and functionality at different price points. As long as providers are transparent about what they are doing (no more selling unlimited data plans that actually throttle usage), ISPs will be able to craft services however they want.

Some less expensive services will be packed with targeted ads (based on data) and affiliate arrangements that try to steer users toward certain services and away from others. (Basically Ryan Air for the Internet.) Others will provide very small quantities of low-speed service at a rock-bottom price. (Basically, the dollar store version of the Internet.) So lower-income consumers will have Internet access, it just won’t be all that great.

Don’t like these services? Just pay more and the restrictions go away, much like Hulu and CBS are willing to get rid of their ads for a fee. Pay even more and you will get both speed and priority. The Tesla crowd will get gigabit speeds, with no caps and no restrictions. First class all the way.

I know many readers will not particularly like the vision of the once pure, utopian Internet becoming sullied by the requirements of money-grubbing commerce. But is it really all that surprising? We have become a pay-to-play society. The surprising thing is that Internet access would be an exception to this rule.

The political battle is still raging, but the writing is on the wall for net neutrality. The result will not be blatant discrimination and censorship of the Internet (which most Americans will not tolerate). Nope. We’re headed instead for blatant inequality of access based on the ability to pay (which most Americans totally accept).

Stick with TDG and stay ahead of the curve.

Joel Espelien is a Senior Advisor for TDG and serves as an advisor and Board Member to the video ecosystem and technology companies. He lives near Seattle, WA.


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