What is net neutrality? It’s the idea that Internet service providers (ISPs) should treat all traffic equally, not giving preferential treatment to certain users, types of data, or equipment. With FCC Chairman Julius Genachowski on the way out, nominee Tom Wheeler may not be able to avoid this fight if he succeeds Genachowski.
Here’s the Tim Wu of the New Yorker on the essence of the issue:
An important aspect of the Internet’s original design is that many prices were set at zero—what have been called zero-price rules. The price to join the network is zero. The price that users and sites pay to reach others is zero: a blogger doesn’t need to pay to reach Comcast’s customers. And the price that big Web sites charge broadband operators to carry their content is also zero. It’s a subtle point, but these three zeros are a large part of what makes the Internet what it is. If net neutrality goes away, so does the agreement to freeze prices at zero….
Admittedly, it is hard to know exactly how things would work out if the zero-price rules are abandoned. Cable still has serious market power, and might, on balance, be able to charge more than it gets charged. But if you’re a cable operator, why take that bet when you’re already sitting on giant profit margins? Why risk the best business going? Beyond cable operators, a battle royale over Internet programming and termination fees would ultimately be terrible for consumers; the Internet would start to get both worse and more expensive.
Think of it this way: net neutrality, which sets all these prices at zero, is effectively a grand truce between the big app firms and the infrastructure providers. It eliminates an unnecessary middleman: consumers deal directly with content vendors and app firms. That’s a much healthier market dynamic than one driven by hidden, passed-on costs. If cable TV isn’t a good enough example, consider the dysfunction of the health-care industry, where consumers never see what they are paying for. That’s what the present rule avoids.
YSPR will continue to monitor this issue and provide updates here.