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Since the 1980s, when a deregulatory climate emerged in Washington D.C., American media companies have launched consolidation efforts to buy up smaller competitors to expand market share, taken control of national and local television stations, and merged with telecommunications companies to acquire a share of the nation’s Internet market. The proposed $45.2 billion merger between Comcast and Time Warner Cable, which would combine the nation’s top two cable companies, both of which also provide Internet access, has alarmed consumer advocates that worry it will harm consumers through higher prices and selective access to content. The principle of net neutrality, whereby all Internet content is treated equally by Internet Service Providers (ISPs), was established by the Federal Communications Commission (FCC) in 2010 to ensure that large media conglomerates could not prejudice certain forms of Internet content over others. However, in January a federal appeals court ruled that the FCC had no statutory (lawful) authority to enact those net neutrality rules based on the way that it has classified ISPs. A recent deal that Netflix, a streaming and DVD-based movie distribution service, made with Comcast is seen by consumer watchdog groups as the beginning of a “pay-to-play” Internet where content distributors will be forced to pay ISPs to access their networks or acquire satisfactory Internet speed so that they do not lose existing customers.
Science and technology issues emerge occasionally in domestic social rounds and they often constitute a separate round at the NFL National Tournament for United States extempers. As a result, net neutrality is an issue that extempers should be aware of because of its economic implications for the Internet and political potential. This topic brief will explain the concept of net neutrality and the recent events surrounding the issue, why supporters of net neutrality believe that it is essential for a open Internet and what they want the FCC to do about it, and why there are opponents of net neutrality.
Readers are also encouraged to use the links below and in the related R&D to bolster their files about this topic.
Net Neutrality & Recent Controversies
For a quick explanation of net neutrality, you can watch this two minute video from The Wall Street Journal that summarizes the issue. As explained in the introduction, net neutrality is the idea that all Internet content should be treated equally, meaning that content coming from a wide variety of different websites and content providers (e.g. Facebook, YouTube, Hulu, Netflix) should have the same amount of access to existing Internet networks. Companies that are Internet Service Providers (ISPs) like Comcast, Time Warner Cable (TWC), Verizon, and AT&T should not be able to limit access to these services to its customers, “throttle” data coming from content providers (meaning that the data coming from these sources should not be intentionally slowed down), force content providers to pay for faster access on their networks, and/or allow content that they may own (Comcast has a majority stake in NBCUniversal) to be delivered at a faster rate than services that might compete with it (e.g. Comcast should not be allowed to let NBC News content go faster on its networks than content from Fox News or CNN). In 2010, the Federal Communications Commission (FCC) laid down the rules for net neutrality, which were called “Open Internet Rules.” These rules were meant to provide regulation for the growing Internet market and create an environment that would be beneficial for consumers and the producers of online content. While the rules called for ISPs to be transparent about how content is moving through their networks and prohibited the blocking and discrimination of Internet services, exceptions to the rules did exist. The first exception, according to The Economist of February 25th, is that ISPs were allowed to manage their networks as they saw fit to keep them in good running order as long as they continued to treat services equally and were public about their decision-making. For example, this enabled Comcast to slow Internet data coming from Netflix because Netflix’s streaming is 1/3rd of the Internet’s output and Comcast’s networks are being clogged with streaming traffic. As long as Comcast did not slow Netflix data on its networks while enabling its own services to move faster, it was still within the FCC’s rules. Another exception existed for “peering relationships,” which are the backbone of the existing Internet infrastructure. Peering relationships allow content to go from websites to your home and the data that is transmitted usually move through “backbone providers” that channel the traffic through the Internet. Think of backbone networks as the roads that allow data on the Internet to clearly get from point A to point B. Without them, the Internet would be a tangled mess and data would slow. The Washington Post on February 23rd has a helpful diagram and article for understanding the Internet’s infrastructure and backbone networks. Backbone networks are third party providers that content providers typically use to send their data to a variety of sources and the exchanges between these networks, which borrow data from each other, enable people to have access to a diverse amount of content on the Internet. However, when you have a company like Netflix that is sending out far more data than it is receiving from another network this “peering relationship” breaks down because there is not equal sharing of content (this is called an asymmetrical relationship). According to the FCC’s rules, when these “peering relationships” become imbalanced (e.g. Comcast is sending less data to Netflix’s backbone providers than vice-versa) then ISPs are allowed to charge fees to content providers to deal with the excess traffic since that might require increasing broadband infrastructure to accommodate the flow of excessive content from that provider.
The FCC’s net neutrality rules were challenged by Verizon, a telecommunications firm that also provides an Internet service called Fios. Verizon charged that the FCC did not have the regulatory authority to impose net neutrality rules on ISPs because of the way that the FCC had classified the status of ISPs under federal law. In January, the U.S. Court of Appeals for the District of Columbia found in favor of Verizon, arguing that the FCC’s rules tried to treat ISPs as an unregulated “information service” and as a “common carrier” simultaneously. The difference between the two, as The Economist of January 14th explains, is that if ISPs are deemed as a “common carrier” by the FCC then they are subject to a great deal of regulations like utility companies, of which net neutrality can be one, but if they are considered an “information service” then little in the way of regulation can be created. The Los Angeles Times on January 14th explains that the classification of ISPs that used cable modem services, as opposed to the dial-up services that dominated the old Internet’s structure, as “information services” dates back to 2002 when FCC Chairman Michael Powell made the decision that they should be classified as such. When the FCC made its net neutrality rules in 2010, its then-chairman Julius Genachowski declined to reclassify ISPs as common carriers and that produced the shaky legal ground underneath those rules that the Court of Appeals eventually ruled against. ISPs would prefer for the FCC to consider them as “information services” so that they avoid government regulation and the FCC has yet to classify ISPs as “common carriers,” so the Court of Appeals held that the FCC’s 2010 net neutrality rules, aside from its rule on transparency, were void since it had not classified ISPs appropriately. However, as Al-Jazeera on January 14th writes, the Court of Appeals did hold that the FCC did have the power to regulate the Internet and that it had the power to reclassify ISPs as a telecommunications service and a common carrier, which would enable it to enact net neutrality regulations.
The recent actions of Comcast has provided the spark behind much of the existing literature that is out there in the media about the need for net neutrality. USA Today on March 6th explains that Comcast is the largest cable provider in the United States and is a giant corporation, having acquired a majority stake in NBCUniversal in 2011. Comcast owns thirty cable networks, twenty-six local television stations, and owns a share of the popular streaming service Hulu. Its proposed merger of Comcast and Time Warner Cable (TWC), which would combine the top two cable providers in the United States and control 52% of the existing American cable market, The merger would also affect the Internet service of thirty-two million Americans (about 35% of U.S. broadband subscribers). Opponents argue that the proposed merger would create a mammoth media corporation that would restrict consumer options and be harmful for content options. Comcast and TWC have argued that the merger will lead to better economies of scale for consumers, since the larger corporation will be able to have more resources at its disposal and make services cheaper in the long run, and that consumers have satellite options in many areas for television (and in some cases Internet) and/or telecommunications firms like Verizon and AT&T for Internet service, so the merger will not produce monopolies in many areas of the country. Reason on February 26th argues that the merger could threaten the provision of third-party content to subscribers of existing Comcast and TWC customers. For example, Comcast might decide not to provide CNN, especially since the ratings for that channel have declined and it may not consider it an “essential channel.” This is already happening with other providers, as DirecTV recently decided to jettison The Weather Channel from its services. Another argument against the merger is that it will give Comcast too much power over content providers. If there were other companies to work with and Comcast was throttling traffic from a certain provider like Netflix, Netflix could easily decide to stop sending content to Comcast customers and force Comcast to change its ways when customers grew angry. Since many Americans do not use satellite television or Internet because of transmission problems during storms and the expense of installing satellite Internet technology (and questions about its speed), Comcast could become the primary vehicle for getting media content to many Americans and Netflix and other content providers will have to deal with them on their terms if they want to reach customers. Thus, the bigger Comcast is it might be worse for smaller providers who cannot match Comcast’s capital resources or influence.
A few weeks ago, Netflix struck a deal with Comcast that will see Netflix pay Comcast an undisclosed amount of money, estimated to be millions of dollars, to allow Comcast to link directly to Netflix’s servers. The idea is to speed up the delivery of content to Comcast customers, who have reported declining video quality and speed in their Netflix services over the past year. Comcast has blamed Netflix for sending so much data that it is clogging its servers, which is why there have been slowdowns in service. The slowdown is exacerbated by Netflix using third party backbone network providers like Cogent to get their data to ISPs. Since Netflix data is being routed through Cogent and other backbone providers to get to Comcast this is slowing down some of its content delivery, especially as the data that Netflix is sending can sometimes overwhelm these backbone providers. The Reason article cited previously explains that the deal is seeing Netflix cut out the middleman (in this case Cogent) and allowing Comcast to directly tie itself in with Netflix’s servers so that traffic can be channeled more efficiently. This will make Netflix customers happy because their speeds will increase and reflects the reality that if customers get dissatisfied with their Internet speed for an Internet-based service like Netflix that they will probably cancel Netflix before they cancel their Internet service, since many areas lack cable-based Internet competition (telecommunications networks like AT&T have been reported as slower than cable-based services like TWC). What worries watchdog groups is that Comcast demanded that Netflix pay it a fee before it decided to link to Netflix’s servers directly, which they say is the beginning of a “pay-to-play” Internet whereby content providers will have to pay fees to ensure that their services are delivered at a satisfactory speed and/or reach consumers at all. After all, if Comcast is going to get away charging this fee what is going to stop others like AT&T and Verizon from also charging Netflix? These groups also fear that the high fees content providers may have to pay in the future will add to the costs of doing business, will erode the ability of start-ups to get off the ground, will impair the entrepreneurial spirit of the Internet, and that consumers will pay higher prices from content provider services like Netflix. Still, Netflix is not the first to make an arrangement with ISPs for this kind of treatment as Facebook and Google (who owns YouTube) have also made these agreements and as U.S. News and World Report writes on February 24th, it is too soon to tell whether the Comcast-Netflix deal really signals a shift in the way content providers deal with ISPs. Business Week on February 24th points out that the agreement with Netflix is a shrewd move for Comcast, since it will boost the speed of Netflix to its customers (Netflix reported in December that Comcast ranked fourth-slowest among seventeen Internet providers when it came to its service) and will reduce the voice of a popular content provider that could’ve spoken out against the Comcast-TWC merger.
Supporters of Net Neutrality
Those that support the principle of net neutrality is a diverse and eclectic group, all of whom support a free Internet for their own ends. The Week on February 20th reports that open-Internet advocacy groups like the Electronic Frontier Foundation stand for an Internet free of government and business interference as a matter of principle whereas Internet startup firms want to ensure that the Internet remains an equal playing field that does not prejudice existing firms and consumer groups want to protect customers from unfair pricing practices and limits on free speech. The matter becomes even more complicated when firms like Comcast and Verizon argue that net neutrality is a good idea in theory and that they also supported an open Internet, according to Business Week on March 5th. Politically, liberals and Democrats tend to favor net neutrality more than conservatives and Republicans and the Associated Press on February 19th explains that President Obama is a vocal supporter of net neutrality, in part because his 2008 presidential campaign generated momentum due to the Internet.
One of the arguments made by supporters of net neutrality is that many Americans do not enjoy competition in their local marketplaces when it comes to Internet access. The Economist previously cited from January 14th explains that the regulatory climate of the 1990s allowed existing telecommunications companies to limit access to their phone networks from startup broadband providers and that this has left millions of Americans without satisfactory competition in their local market. With only one legitimate option for fast Internet in many areas, consumer groups and advocates of net neutrality warn that if the government does not establish a strong stance in favor of equal content access that ISPs will soon discriminate against certain websites, streaming video, and Internet voice services that are competitors to its own services or that refuse to pay fees. The Huffington Post on December 11th warns that ISPs have designs to do exactly this because Verizon’s legal team mentioned in its case against the FCC’s net neutrality rules that they would look into preferring some websites over others in the rules were overturned. Historically speaking, the arguments that are being heard against large telecommunications companies like Comcast when it comes to the Internet remind one of the arguments made against railroad companies and “trusts” of the Gilded Age and Progressive Era (late 19th and early 20th century) which used their size to crush competitors, limit consumer options, and engage in unfair pricing techniques that helped them and hurt most of the country. Those that favor a strong net neutrality policy would like the FCC to follow the wiggle room given to it by the U.S. Circuit Court of Appeals and reclassify cable-based services as “common carriers,” thereby subjecting them to a host of federal regulations used against AT&T’s 70-year monopoly of the American telecommunications industry and strong net neutrality rules. This would be a broad intervention into the free market, but one that net neutrality supporters say is needed because the free market is not working under the status quo since a free market system needs true competition to actually serve the interests of consumers. For example, USA Today on February 26th reports that Comcast competes with phone companies for Internet service in only 45% of its markets. The alternative to doing nothing, according to advocates of net neutrality, is that the Internet could become like cable television, whereby the provider of the service (in this case the ISP) can limit what customers have access to depending on their market and which content providers choose to access their network.
Another argument made in favor of net neutrality is that it is needed to help small business and start-ups. The Huffington Post on January 14th argues that if net neutrality principles are not enacted that smaller content providers that do not have the consumer base of Netflix, Hulu, Amazon, etc. may be closed out of the future Internet market. These smaller companies do not have the leverage that larger content providers do (e.g. thousands of people in a market might become outraged if their Netflix is suddenly blocked by Comcast, but very few might complain if a niche website is blocked) and may not be able to negotiate a deal like Netflix recently made with Comcast. As a result, their content may move slower and may never reach enough consumers to make their start-up, regardless of its potential, get off the ground. Imagine a world where ISPs throttled YouTube in its first year and video load times took several minutes and the uploading of videos took several more. It is very likely that people might have avoided the service, especially since studies show that American customers get very angry when their Internet content does not load at a fast speed. Other services now offered on the Internet related to file sharing may also be impaired if companies believe that those services are competing with its own products.
The FCC has decided not to appeal the U.S. Court of Appeals decision and will instead redraft a new version of net neutrality regulations that it thinks could survive judicial muster. FCC Chairman Tom Wheeler argues that the FCC has the authority under Section 706 of the Telecommunications Act of 1996 to regulate elements of the Internet. Section 706, as Forbes explains on February 20th, gives the FCC the authority to remove barriers to infrastructure deployment (which in this case means the provision of new broadband networks) and to promote competition to increase broadband usage. Wheeler has disappointed liberal activists and groups like the American Civil Liberties Union (ACLU) by saying that he will not use his authority until Title II of the Telecommunications Act to reclassify broadband internet providers/ISPs as “common carriers” since that might create too much regulation. Instead, he is focusing his attention on local restrictions that are creating uncompetitive local markets. The Forbes article previously cited explains that currently twenty states have severely restricted the ability of new broadband networks to be set up and Slate on February 20th points out that Kansas and Utah are considering legislative proposals to limit the growth of government-funded Internet operations. The Washington Post on February 19th explains that Longmont, Colorado and Chattanooga, Tennessee have constructed their own versions of Google Fiber, a fast-speed Internet connection that trumps existing cable-based Internet networks, and want to run the Internet as a public utility. This represents a new form of Internet innovation taken by local communities, but telecommunications companies are lobbying for laws that would keep local communities from creating these types of entities because they may disrupt their market share. Wheeler wants the FCC to look into the legality of these regulations, but that is likely to invite a legal challenge since The Los Angeles Times noted on February 20th that state prohibitions on government-owned Internet services might be beyond the FCC’s reach. Wheeler also plans to have the FCC require that all broadband operators disclose how they manage traffic and use a case-by-case approach to resolving disputes when a provider might discriminate or unfairly block traffic. However, in some respects Wheeler’s hands are tied by the Court of Appeals ruling. The rewritten regulations, yet to be released, will be the third time that the FCC has written rules for net neutrality and The New York Post on February 19th writes that Wheeler has been silent on whether ISPs can charge content providers to speed up their content because the Court of Appeals said that the FCC cannot regulate this so long as ISPs are not considered “common carriers.” Also, The Washington Post from February 23rd that was previously cited says that the FCC could look into old mergers that have created large telecommunications institutions, but doing so would prove difficult and cumbersome. What is certain is that regardless of what the FCC does it will invite another round of legal challenges, which may serve to further clarify what it can and cannot do in relation to the Internet.
Opponents of Net Neutrality
The opposition to net neutrality stands on a few core ideas. First, some opponents of net neutrality argue that there is no evidence that the Internet is in danger of having its content limited. Second, some argue that net neutrality regulations will actually limit options for Internet content and lead to government overregulation of the Internet, which would be bad for consumers and bad for free speech. And finally, the argument is made that the true problem of net neutrality has nothing to do with ISPs, but with the capacity of the America’s Internet infrastructure, which is something that is in need of the biggest fix.
First, opponents of net neutrality point out that it is not a pressing social problem. The National Journal of February 19th writes that top Republicans in Congress have considered the FCC’s push for net neutrality as “a solution in search of a problem” and they argue that any regulation of the Internet without a pressing problem in the status quo would actually harm startups more than it would help them. They also contend that the regulations would overstep the FCC’s legislative authority, which helps explain some of the legal challenges that have emerged and are bound to emerge in the future over the FCC’s writing of net neutrality rules. It is not just Republicans making the argument that net neutrality is not a pressing problem. Wired, a technology magazine, on February 17th argues that content providers like Netflix have actually throttled traffic to ISPs and their own customers in the past and not the other way around. For example, Netflix withheld high-quality streaming from TWC last year and the Reason article cited earlier in this topic brief contends that the company was accused of throttling the streaming of customers that used too many DVDs back when the company combined its streaming and DVD services into one package. Even Chairman Wheeler has admitted that the FCC has failed to prove that existing ISPs are intentionally blocking and throttling existing content providers at the present time. Additionally, as a condition for the FCC’s approval of its takeover of NBCUniversal in 2011, Comcast agreed to follow net neutrality rules until January 2018, so it cannot legally discriminate against incoming Internet content for the next four years. Comcast has already said that its net neutrality agreement will cover the markets it will take over from TWC if the merger between the two companies goes through.
A second argument against net neutrality is that if the FCC classifies cable-based Internet services as “common carriers” and introduces a host of restrictions and regulations that it would constitute a government takeover of the Internet. The Court of Appeals did hold that the FCC could regulate the Internet, the only real question is how far the FCC is willing to go and how far Congress is willing to let it go. The Tennessean of February 26th writes that U.S. Representative Marsha Blackburn (R-TN), the vice chairwoman of the House Energy and Commerce Committee argues that the federal government should have no business policing telecommunications firms and has introduced legislation to block the FCC from implementing new net neutrality rules. Some Republicans have likened the FCC’s net neutrality push to the Affordable Care Act and argue that the government did such a poor job rolling out that legislation that its attempted governance of the Internet would be a disaster. The Hill on February 22nd says that there are some legitimate criticisms to make of giving too much regulatory authority to the FCC, which is something that even proponents of net neutrality concede. The article explains that the FCC could expand its authority under net neutrality to include cybersecurity standards and copyright enforcement, which have thus far been untouched by federal regulators. It gives the example of the FCC forcing Internet providers to prevent online piracy, which could immediately lead to the blocking of any website suspected of engaging in such behavior, and might lead to greater government surveillance of Internet activity on the grounds of ensuring fair competition. Thus, greater government involvement in the Internet might produce red tape that might stifle Internet options and some business advocates say that overregulation of television markets over the last thirty to forty years is what has produced such little competition for television service in many of America’s markets today.
One of the most interesting arguments against net neutrality is that America needs to increase the capacity of its broadband networks, which would solve many of the problems that are beginning to emerge. CNN on February 26th reports that the World Economic Forum ranks the United States thirty-fifth in the world when it comes to broadband capacity. The lack of capacity in America’s Internet infrastructure means that a streaming service like Netflix, that gobbles up an estimated 1/3rd of Internet traffic, eventually overwhelms some existing networks and slows down Internet traffic. ISPs and other Internet providers argue that Netflix and/or consumers should pay for large bandwidth consumption and Comcast has experimented with “bandwidth caps” on customers (if a customer exceeds the cap they are charged extra on their bill much like someone going over the minutes allotted on their phone plan). The New York Times on February 19th writes that ISP providers spent billions creating their infrastructure and believe that content providers should chip in to pay for expanding bandwidth for the content they want to send to their customers. Thus far, content providers have refused to do so, citing it as the ISP’s responsibility to increase their infrastructure. This dilemma over who pays for enhancing the infrastructure is at the heart of the net neutrality debate because if both sides chipped in and capacity expanded, there might not be a need to ensure that all content is treated equally since there would not be problems of Netflix’s streaming data getting clogged in the Internet’s pipes and overloading existing ISP networks. Some economists hope that Comcast will use the revenue generated from its deal with Netflix and expand capacity, but there is no guarantee that this money will not line the pockets of executives. Forbes on February 24th writes that the federal government could assist the Internet’s capacity by investing over $100 billion in an infrastructure project to build a wholesale fiber network and lease parts of the network out to various companies, thereby ensuring adequate competition in local areas, but due to the hefty price tag this is unlikely to take place. The Wall Street Journal on February 23rd explains that Google is laying a fiber network in areas of the country that is more than 100 times faster than basic broadband cable services and Kansas City, Missouri, Austin, Texas, and Provo, Utah are using the system right now to rave reviews. As indicated earlier in the brief, Chattanooga, Tennessee has built a gigabit broadband system for 56,000 homes in its community. However, although Google is expanding its fiber operations to more than 30 cities, it will soon run into problems as local communities and/or state governments prohibit local government from setting up separate agreements with Internet firms and/or creating an Internet utility of their own. The willingness of the FCC to investigate these prohibitions is a good first step in potentially making the Internet more accessible and cheaper, but they may need more statutory authority under the law to strike down these legislative restrictions on Internet growth. Nevertheless, despite Google’s best efforts to expand its operations, it is moving too slowly and assistance from the federal government or other technology-minded companies like Microsoft and Apple might be needed to expand fiber networks throughout the country to expand the capacity of existing broadband networks and enhance the nation’s Internet speed. If the capacity of America’s broadband network can expand, net neutrality might not be a significant issue because there would be enough room for all kinds of data to move through the Internet at reduced cost to ISPs, who under the status quo have to make choices between paying higher returns to investors or expanding their Internet capacity.
Last Words of Advice
Net neutrality is a very, very complicated topic. If you choose to speak on it in a round, make sure that you clarify certain terms for the judge. You should explain clearly in your introduction what net neutrality is and when you mention terms like broadband, bandwidth, content providers, Internet Service Providers, etc. you should be able to define them for your judge. Keep in mind that you may be proficient in the uses of technology, but your judge may not, especially if they are from an older generation. The best speeches on net neutrality will be those that clearly define tech language and teach the audience the importance of the net neutrality debate. This is often true of all technology topics, but just make sure in your rounds to not assume your audience knows how Internet networks work.