If you thought the net neutrality spectacle was over, think again. The chairman of the Federal Communications Commission, Ajit Pai, is pushing for significant changes to loosen government oversight of internet providers. At its core, it’s yet another skirmish in cable television’s war to remain relevant to the American consumer.
Before the initial policy decision in 2015, HBO’s John Oliver took it upon himself to be the unofficial pro-net neutrality spokesman, and goosed the Federal Communications Commission then-chairman Tom Wheeler over the issue, on more than one occasion. Wheeler was a former lobbyist for the cable television industry, which some believe will benefit greatly if new rules are created that would allow Internet service providers to treat data differently. Wheeler's successor, Pai, is fighting the same fight of rolling back regulation that he sites as "harmful to business."
The end of net neutrality will spawn the beginning of net inequality, naysayers like Oliver cry. It means that broadband providers, which often also offers cable TV, will be able to push out their competition by charging premiums for an indispensable service to their business — fast internet. The providers could selectively pick should get access to high-speed internet, and how much they should pay, which could be devastating for the streaming industry.
Pai argued in a speech that "It’s basic economics. The more heavily you regulate something, the less of it you’re likely to get," and the purpose of the roll-back of policy is to "restore internet freedom," according to the accompanying press release.
The Legal Fight
Oliver's rants indeed drew the public’s attention to a difficult-to-understand legal fight. During the first round of debates in 2015, the public filed more than 120,000 comments on the issue of “Protecting and Promoting the Open Internet,” a staggering number and almost ten times the next most-commented issue at the time.
Many of the comments expressed outrage that the FCC would oversee a new era of tiered Internet service. Without net neutrality, consumers and businesses are fearful that the Internet would became a segregated landscape. Some content will be delivered at full speed while other websites will work more slowly because their owners didn’t pay up for the bandwidth.
The End of Neutrality?
The Obama administration advocated for net neutrality, and the FCC has had rules in place since 2010 that required companies like Verizon Communications Inc. (VZ) and Comcast Corp. (CMCSA) to handle all similar content on their networks in an equal fashion, regardless of whether it was a video on a personal blog, on YouTube or on a government web site.
Under Wheeler, the FCC proposed new rules for Internet traffic which would allow broadband providers to charge companies like Netflix Inc. (NFLX) and Google Inc. (GOOG) a higher rate to deliver content via the speediest lanes.
The issue was seemingly put to rest in 2015, when the regulations which restricted broadband providers from blocking content, slow down specific services or applications (known as throttling) and receive payments for favorable treatment, stayed in place — but now it's back.
Pai — who warned against net-neutrality in 2015 — argues that high-speed internet service should not be treated like a public utility and be regulated like it is now, and that the industry should police itself. It's pretty much the same conflict as it was two years ago.
Simply put, if the FCC’s proposed rules remain in their current form, old media wins and new media loses – and consumers will be left with the bill. In 2016, the average cable bill was $103, and the cost grew a whooping 39% between 2011 and 2015. This explains the "cord-cutting phenomenon," as Fortune put it. More than 800,000 people dropped their TV packages in the second quarter of 2016, while providers like Netflix, Hulu and Amazon have grown its membership base. If broadband providers got the chance to charge these companies more — and it's safe to say they would — the cost would likely be tranferred to consumers.
Fighting To Stay Relevant
Just like the print media is fighting the online media, cable is fighting streaming. But young people will simply not pay through the nose for cable anymore. Many would drop the programming portion of their cable contracts entirely if not for the fact that it’s usually bundled with internet service. A 2016 report said that millennials watch 54% of content via streaming, a massive increase since 2011.
Clearly, the cable glory days are over, but a change in policy to loosen regulation is definitely in the old media giants' interest, and will hurt the "Netflixes" of the world.
The Bottom Line
Regardless of the policy outcome, old media isn’t going to die right away. The effects of the policy is that less regulation will help the cable companies, hurt streaming providers, and eventually the consumer will foot the bill. If the regulation stays in place, the cable companies is forced to face the competition head-on, and prices are bound to go down. The question boils down to wether high-speed internet should be considered a public utility like electricity, gas and water, or not.