The United States has a highly developed internet infrastructure with incredible successes to its credit. But problematic policy changes being considered in Washington may jeopardize that success. In recent months there have been calls from many to restore net neutrality.
What is net neutrality? Net neutrality is a policy that internet service providers (ISPs) have to give all internet content providers equal access and use of the ISP’s networks, and for no extra cost. Because of this policy, ISPs could not impose any additional charges on a content provider, regardless of how much data the content provider uses in a network.
For instance, a video streaming company might use a large amount of data on an ISP’s system when users accessed the service. Net neutrality would prohibit the ISP from making the video streaming service pay for the extra data that they used. Instead, net neutrality would force the ISP to spread out the data usage costs to the rest of its users.
Net neutrality does not just increase the cost of the internet for the average consumer. Net neutrality also lowers the incentive for ISPs to expand broadband service if there is no competition to host content provider data.
Former FCC Commissioner Ajit Pai removed Obama-era net neutrality rules in 2018. Pai reasoned that net neutrality forced ISPs to charge consumers more to equalize their operating costs across the board. Following the repeal of net neutrality, there was an increase in broadband investment as ISPs moved to make deals with content providers that would prioritize speed and efficiency for those high-usage content providers.
There have been incredible free-market successes in the wake of repealing net neutrality in America. Yet, there are renewed demands from some for the federal government to reinstate net neutrality. Indeed, the Biden administration is considering the reinstatement of net neutrality. While such a move might be popular with certain groups in Washington, state and federal policymakers would do well to consider the negative implications that net neutrality could have on the strength of America’s broadband networks.
The failure of net neutrality in Europe is glaring evidence of how problematic the policy is. Amid the Covid-19 pandemic, there were concerns in Europe that the under-built broadband networks could not handle the uptick in internet usage. This network failure is largely due to the European Union’s net neutrality policies that had discouraged investment in broadband development prior to the pandemic.
The inadequate broadband infrastructure led to pleas from European policymakers that content providers limit the data they were pushing through the internet networks. Meanwhile, due to the higher investments in broadband development, the robust broadband infrastructure in the United States responded quite well during the pandemic compared to its European counterparts.
The success of American broadband comes as little surprise to proponents of the free market competition as the driving force in broadband developments and innovations. As it claims to use the free market as the justification for social media content moderation, Big Tech often insists that companies have the right to decide which entities they will host on their services.
But there appears to be a double standard for many of them regarding the net neutrality issue as these companies themselves feel threatened by the ISPs. The Big Tech companies have a huge market share of internet content. In 2019, just six content providers accounted for 43 percent of all internet traffic. The content providers also can control the content on their massive platforms. Yet, these content providers insist that the ability of ISPs to determine the flow of data on their networks poses a threat to the freedom of the internet.
For instance, Twitter stated with dismay that without net neutrality, “ISPs would even be able to block content they don’t like.” Yet, Twitter and other Big Tech companies have given strong support for other policies, like Section 230, that allow social media companies to moderate, block, or remove certain content from their sites.
Despite the protests of some Big Tech companies, a market without net neutrality has the potential for increased innovation and competition. By allowing for the market to determine which ISPs will prosper as they offer the most attractive services to consumers, there is a real potential for the cycle of competition and innovation to continue. While net neutrality treats the internet simply as a means of broadcasting data in an unsystematic way, a free-market perspective views the internet as a dynamic marketplace commodity that continually responds to supply and demand patterns.
Despite the claims that net neutrality keeps the internet open and accessible, the record shows that net neutrality actually threatens the efficiency of the internet as it erodes the incentives to develop and grow internet infrastructure. Bad policies have harmful consequences. A step back to the failure of net neutrality is a step backward from the success of America’s internet infrastructure.