Loss of Net Neutrality Risks a Less Friendly Internet for Entrepreneurs
The Federal Communication Commission (FCC) has proposed new regulations that would allow for the creation of Internet “fast lanes” where, presumably for a fee, a content provider could get preferential access speeds. The proposed rules are drawing wide criticism so vehement that HBO’s John Oliver characterized the appointment Tom Wheeler, a former cable television lobbyist, as akin to hiring a dingo to babysit your baby.
Wheeler has publically denied he is a dingo.
Some might argue that this new FCC rule proposal, which is subject to public comment until Sept. 15, is capitalism in its purest form. After all, if there is value in the “fast lane” shouldn’t internet service providers (ISPs) be allowed to charge for it? If there is no value, consumers will refuse to pay for the greater speed. The whole issue would soon rest on what the market will bear. So what do we really lose if we move from “net neutrality” to “net bias?” Plenty.
1. Predatory business practices. Since the majority of Americans receive their cable internet from only a handful of major providers and in some markets these organizations have a virtual (or actual) monopoly there’s a real danger of cable companies creating an extortive approach to companies who refuse to pay. If some will be given faster access by definition others---who do not pay---will be given slower speeds.
2. Unfair advantages for large companies. There is something that smacks of unfairness in these proposed new rules and 52% of Americans disapprove of the FCC’s actions. For most entrepreneurs the new rules would appear to spell disaster—how can a small web-based operation compete with the internet giants if they can now simply buy access, effectively starving the smaller players out?
3. Censorship. Internet providers need not automatically provide fast track access and the proposed new rules create the danger of abuses. If a cable company disagrees with the opinions of a particular news source, for example, it need only relegate it to the “slow lane” making it a frustrating and less desirable source.
4. It protects the interests of a few at the expense of public interest. Clearly paying more for content that has been “fast-tracked” does not benefit the public at large (although select individuals may benefit). As a government regulatory body the FCC is charged with protecting public interest not those of a handful of companies.
Ultimately the proposed legislation would put too much power in the hands of too few people and open up the system for abuse, potentially gross abuses that we can’t even imagine right now.
Maybe things aren’t as grim as they seem. Entrepreneurs have a way of turning unfair regulations on their ear and creating innovations. It wasn’t so long ago that upstart organizations found loop holes in other FCC regulations and launched successful business ventures.
Take the case of Home Box Office (now known better as HBO). When HBO launched cable television wasn’t closely regulated by the FCC, but as its (and that of other similar providers) popularity grew, so too did the FCC’s interest in regulating it. One such regulation prohibited cable television providers from airing movies that were less than three-years old. Undaunted, HBO focused on something that network television couldn’t provide: classic movies that were uncensored and uncut for television.
Far from inhibiting HBO, the regulations helped HBO to establish a real market differentiator. Of course, ultimately HBO had to sue the FCC as the FCC (and local governments) tried harder and harder to censor HBO content. Ultimately HBO prevailed and the courts ruled that the FCC rules impinged on HBO’s First Amendment rights.
The FCC rules aren’t law yet, and despite powerful lobbying, they may never become regulations. There is strong opposition from many people of different political stripes and clearly there are ample efforts being made to block these changes. Even if the FCC is successful in making the proposed changes, might we not see entire industries grow out of this discontent? The possibilities are intriguing.