How open-internet rules are actually helping consumers

Rob Pegoraro
Contributing Editor
Protesters speak out against FCC Chairman Ajit Pai’s plans to end open internet regulations.

Opponents of open-internet regulations have long argued that such rules will lead to slower broadband internet speeds. Their reasoning is that with more regulations in place, internet providers wouldn’t want to risk investing in the infrastructure needed to improve their networks, which would hurt consumers.

And yet five months after former-Federal Communications Commission chairman Tom Wheeler challenged those claims by asking opponents “Where’s the fire?”, the broadband business has yet to implode.

In fact, it may have actually improved for customers. Data from internet providers themselves show that these firms have moved to offer people faster connections and better choices. Maybe you can’t credit the open-internet rules for that, but it’s certainly becoming harder to blame them for an industry-wide slowdown.

Net neutrality doesn’t seem to hurt ISPs

Until recently, much of the debate over open-internet, or net-neutrality, rules that ban internet providers from blocking, slowing or selling priority delivery speeds to legal sites has focused on whether these regulations have led broadband providers to put less money into expanding their networks.

In the January speech that marked his last public talk as FCC chair, Wheeler pointed to a slight rise in broadband investment over his term, from $75 billion in 2013 to $76 billion in 2015.

But the trade group that compiled those numbers, US Telecom, spun them in its own press release as evidence of net neutrality impairing investment. That’s because that 2015 figure fell below 2014’s $77 billion in spending. The group has since predicted that broadband investment will further decline in 2016.

Meanwhile, Wheeler and other net-neutrality advocates say lower network-upgrade costs brought on by increased efficiency mean that a 2016 dollar buys more broadband than a 2013 dollar, something an AT&T (T) executive bragged about to investors in 2016.

And pro net-neutrality groups like Free Press and the Internet Association have further argued that numbers showing lower investment involved cherry-picking the original data.

Fortunately, we now have another metric to check: internet providers’ own reports to the FCC about their networks. Posted in April, those reports show impressive growth. From the end of 2015 to the middle of 2016, the share of census tracts (subsets of cities and counties with, at most, several thousand people each) with at least two broadband services offering downloads of 25 megabits per second rose from 24% to 42%.

A more recent study estimated that those numbers translate to 61.4 million households with high-speed competition — almost 53% of America’s 117 million households.

And in this debate at least, connecting more people with faster service should matter more than the budgets involved.

Net-neutrality advocates should acknowledge this progress too. But during June 26th a town hall in Arlington, Va., Wheeler dragged out the now-obsolete line that three quarters of broadband users have no choice.

The lack of it can hurt startups

During the meeting Wheeler explained the risk of undoing open-internet rules could hurt smaller startup companies, saying, “If those innovators don’t have access to you, the consumer, it’s game, set, match.”

But would internet providers actually cut off legal sites from their customers? U.S. firms have not anytime recently. So then Wheeler’s “where’s the fire?” question can also be fairly asked of net-neutrality advocates who raise the specter of sites getting blacklisted by broadband providers.

The past few years have, however, shown what can happen when internet providers allow a site’s connection to become bogged down. Exhibit A: Netflix (NFLX) became mysteriously unviewable around 2012 on some theoretically fast-enough providers, thanks to “interconnection” arrangements that left insufficient capacity into the residential networks of firms like Comcast (CMCSA) and Verizon (VZ), Yahoo Finance’s corporate parent.

Wheeler noted that current regulations allow the FCC to stop that kind of mischief. He warned: “If these rules don’t exist, it’s a whole new game.”

Opponents of the current open-internet rules, led by Wheeler’s successor Ajit Pai, prefer to phrase things differently. If, they say, we let internet providers offer paid-prioritization deals that ensure a site’s feeds never buffer or stutter, those providers can use the proceeds to expand their networks.

But proof of that seems scarce. At an event last week in Washington hosted by New America’s Open Technology Institute and the Internet Association, I asked Vimeo general counsel Michael Cheah if any provider, anywhere in the world, had offered that video site a paid-prioritization deal. He said none had.

High Tech Forum founder Richard Bennett, a long-time opponent of net-neutrality rules, also couldn’t name any paid-priority arrangements sold by residential providers. The closest he came: the upgraded interconnection deal Comcast (followed by a few other giant ISPs) worked out with Netflix in 2013.

Comcast, however, has plenty of cash for network upgrades and has kept right on spending through the advent of net-neutrality rules. Would a smaller provider have the same leverage?

The history of cable TV suggests not, Public Knowledge vice president Harold Feld said. Smaller cable operators routinely pay more than their larger counterparts when negotiating carriage deals with channels — so if small ISPs even get a Netflix or a YouTube to take its call, their weak clout would leave them making little money off any such deals.

The least convincing argument of all

To avoid getting into the weeds of business-model discussions and network-expansion arithmetic, opponents of net-neutrality rules often fall back to a one-sentence critique of net-neutrality rules: They represent government regulating the internet.

Well, if government rules on how internet providers treat their customers regulate the internet, then the Food and Drug Administration’s food-safety rules regulate your stomach and FCC bans on on-air obscenity regulate your eyes and ears.

I know many people aren’t too fond of government regulations in general. But do net-neutrality opponents really want to bet that they aren’t outnumbered by those who complain even more about their cable or phone company?

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Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.