Net Neutrality Battle Lines Drawn as FCC Vote Looms

FCC Chairman Ajit Pai’s long-brewing plan to repeal Net neutrality has the broadband, telecom and entertainment worlds at loggerheads. The commission’s expected Dec. 14 vote could result in a complete rewrite of the script for the Internet’s competitive landscape and consumer protection models.

The repeal of Net neutrality would end restrictions imposed by the Obama administration in 2015, which effectively regarded the Internet as a utility with heavy government regulation, and prevented providers from throttling speeds and imposing other restrictions on certain providers.

Innovation Dampened?

The Internet was working just fine before Net neutrality, but the restrictions created roadblocks to innovation and investment, Pai and other free market advocates have argued.

The cost of building out a network and investing in new technologies would be prohibitive without the ability to turn a profit, according to Net neutrality critics.

AT&T always has operated in an open and transparent manner, and it will continue to do so, wrote Senior Vice President Bob Quinn in a recent online post.

The restoration of pre-Net neutrality regulations with a lighter touch will spur new innovation on the part of providers and deliver enormous consumer benefits, he added.

Repealing Net neutrality in effect will make it impossible for independent content providers to compete, and allow providers to resume throttling down high speed access for certain customers, Net neutrality advocates have argued.

The end of Net neutrality could spark a new wave of consolidation that might leave non-favored providers standing at the altar without a dance partner.

Investment vs. Competition

The move to repeal Net neutrality is part of a never-ending debate on regulation of the Internet, and there are legitimate risks and benefits on both sides, said Jeff Kagan, an independent analyst.

“There are no right or wrong angles, just different angles,” he told the E-Commerce Times. “One side is beneficial to the consumer and certain companies that use the Internet for their business model. They want to use the Net at no cost, and I don’t blame them.”

On the other hand, the Internet is a “very expensive and rapidly growing area,” and companies can’t be expected to invest in it and not be able to turn a profit on their investments, Kagan said.

Incumbent broadband and telecom providers like Comcast, AT&T, Charter, Verizon and CenturyLink have emerged on one side of the debate, against Internet-based content, search and online storage firms like Google, Netflix, Hulu and Amazon, he pointed out.

Non-operator-based providers that lack a distribution pipeline to their customers, such as Netflix or Hulu, would lose unrestricted access without Net neutrality protections, said Tim Mulligan, senior analyst at Midia Research.

“The argument for consolidation between operators and media services becomes compelling from a business perspective,” he told the E-Commerce Times, “and whole business models which have been built around unrestricted access to digital services will need to be reevaluated.”

The outcry over the potential repeal of Net neutrality may dissuade the FCC from taking immediate action, suggested broadband consultant Craig Settles.

However, any pause likely will be short lived and little more than a ceremonial step to take off some heat, he told the E-Commerce Times.

“While Chairman Pai is pausing, the other thing we will see is a movement starting in Congress for legislative ‘reform’ of Net neutrality,” Settles predicted. “True believers in Net neutrality should fear this more than the FCC, because incumbents will hijack the … legislative process.”

Limited Access

For consumers and smaller competitors in rural America, the possible repeal of Net neutrality would create an even more complex set of issues, due to the high cost of investing in last mile infrastructure and therefore limited competition, noted Christopher Mitchell, director of community broadband networks at the Institute for Local Self Reliance.

“Repealing Net neutrality gives the biggest companies more incentive to create toll booths for Internet content and profit from that rather than building better networks in rural areas,” he told the E-Commerce Times. “The change is a big deal, rewarding the biggest firms at the expense of smaller firms that have less market power.”

A repeal of Net neutrality could lead to more consolidation, Mitchell said, which would make it even harder for small ISPs to compete against incumbents — and that would mean even less investment in rural broadband infrastructure.

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

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