Net neutrality is one of the most polarizing issues surrounding global internet regulations. The Federal Communications Commission, or FCC, voted 3-2 to repeal Obama era net neutrality rules on December 14, 2017. The protections given by these rules were set to officially end on April 23, 2018. The FCC's repeal of net neutrality rules officially took effect on Monday, June 11, 2018. But what is net neutrality, and why should you care?
To begin, it is important to define net neutrality so everyone understands what the term means. Net neutrality is the idea that no internet provider shall throttle (slow down) or block any specific traffic or give preferential treatment to any specific traffic.
Many giant Internet companies, such as Netflix, Facebook, Google, and Apple, along with some smaller sites, like Reddit and GitHub, have showed their support for net neutrality.
How Internet Networks Operate
If you click on any link on the internet, your internet provider and the networks they use should try to give that content to you equally fast. For typical website viewing, checking email, reading blogs, and visiting quality sites run by attractive people like Investopedia, there is no serious debate about blocking traffic in the United States.
Where the problem comes in is when internet users want to watch bandwidth heavy content, such as Google’s YouTube (GOOG), Netflix (NFLX), or other streaming video. Contrary to popular conception, the internet is not a magical cloud, it is built up of physical servers, wires, switches, and infrastructure spread around the world. There are underground fiber optic cables connecting every major city and running under the ocean between city pairs like New York and London, Washington DC and Paris, and Los Angeles and Tokyo (with a hop in Honolulu along the way).
These fiber optic cables cost billions of dollars to build out, and they have a fixed capacity. When the networks were built during the Dot Com Bubble at the turn of the century, few people had any idea that we would be changing from downloading 3MB MP3 songs to 3GB high definition video files. Over the last decade or so, the fiber optic cables have filled up.
Peering and Network Providers
The companies who own the cables are your ISPs, companies like Comcast (CMCSA), CenturyLink (CTL), AT&T (T), and Verizon (VZ), and Tier 1 and Tier 2 network providers, including Level 3 Communications (LVLT) and Cogent (CCOI). Some ISPs, such as AT&T, are also Tier 1 network providers. You pay your ISP to connect you to the big backbone networks like Level 3, who carry internet traffic long distances. Your ISP is called a “last mile” provider and brings the internet traffic from the big network to your home.
Here's where the conflict lies. Companies like Google and Netflix are paying Level 3 and Cogent to carry traffic to your city, and you are paying the last mile provider to get the data into your home. When people were just reading and sending emails, a concept called peering was used. Peering agreements state that because traffic sent between the two networks was about the same both directions, neither network had to pay the other. This is how the telephone network operates.
What Net Neutrality Means
Now, thanks to the consumer demand for video, peering agreements have become out of balance. And, because those fiber optic cables and routers are so expensive, these companies are spending billions of dollars upgrading their networks.
The ISPs say that companies like Netflix, or the transit network they are using like Level 3, should have to pay money to Comcast to help offset their upgrade costs. The content companies and Tier 1 and Tier 2 network providers say that they are only sending the content because the ISP customer clicked on it, and that the ISPs should have to pay their own upgrade costs.
Net neutrality does not tell the businesses who has to pay for what, but it does say that ISPs can’t give preferential treatment to any specific traffic. Before the FCC implemented net neutrality, Comcast could have said that they are slowing down Netflix and giving priority to a Comcast owned streaming service. While net neutrality was in effect they had to give Netflix, and every other video, audio, and webpage on the internet, the exact same treatment, that's all up in the air now.
A lot of consumer advocates worry that without net neutrality rules, broadband providers can sell the internet in bundles, similar to cable television packages.
Another major concern is that consumers could suffer from "pay-to-play deals." If the fast lane is occupied by big internet, media companies, and wealthy households, everyone else would be left using slow internet.
The New York Times reported that some small-business owners are worried about industry giants paying to get ahead and thereby setting up an unfair playing field.
In addition to small businesses, e-commerce start-ups might be hurt by paid prioritization, as their websites and services would load more slowly than those run by internet giants. Remote workers including freelancers and workers in the gig economy could similarly be charged more to do their jobs from home.
States Fight Back
In the wake of net neutrality's apparent death, some states have taken it upon themselves to reinstate the net neutrality laws on a per-state basis. Governors in Hawaii, New Jersey, New York, Montana, Rhode Island, and Vermont have signed executive orders to enforce net neutrality. Oregon, Vermont, and Washington have enacted legislation protecting net neutrality. It's possible that if certain states' versions of these laws are passed and are found to be within the confines of the law, it could be enough to convince ISPs to just leave the rest of the company alone, since California and New York are huge, huge markets.
The final order to replace net neutrality was released by the FCC on January 4, 2018, and it's likely that lawsuits from state attorneys general won't be far away. These officials believe they have a strong case to make for net neutrality and are ready to fight for it in court.
Some corporations have taken it upon themselves to educate people on the key issues concerning net neutrality, such as Burger King, who released a video in which they required customers to wait longer for their Whoppers unless they paid a premium pricing. Netflix and YouTube both created examples of what their streaming services could look like if fast and slow lanes were introduced.
The Senate Votes to Save Net Neutrality
In a 52–47 vote on May 16, 2018, senators voted to overturn the Federal Communication Commission’s Restoring Internet Freedom Order. They were able to do so under the Congressional Review Act (CRA), which allows Congress to reverse recent decisions by government agencies. Republican control of Congress means that such a measure would not typically even make it up for a vote; but the CRA allows senators to force a vote by obtaining 30 signatures.
All 49 Democrats voted in favor, as well as Republican Senators Susan Collins of Maine, John Kennedy of Louisiana, and Lisa Murkowski of Alaska.
In order for net neutrality to actually be reinstated, a few more things need to happen. The House of Representatives has to use the CRA to overturn the policy as well. That is proving to be even harder. Instead of 30 signatures, net neutrality supporters have to collect signatures from a full majority of House members. And finally, it would still have to get signed by President Trump, who does not support the policy.
The Bottom Line
As an internet end user, net neutrality is clearly in your best interest. You pay your ISP a lot of money each month, and when you click on a link, you want it to work. You do not want your ISP to slow down your traffic, that'd be really lame.
Who does that help? As an ISP, net neutrality is a very expensive proposition. It means networks will have to be upgraded to keep those videos coming fast and buffer free, and somebody has to pay for it. Upgrading the internet infrastructure is expensive either way, but now it is clear that each network has to pay its own way and cannot charge tolls to content providers and the networks that bring their traffic.
With the repeal of the net neutrality rules, internet companies will now have more power to design differential pricing structures as well as prioritize different traffic types of traffic.