Regulators are prepared to eliminate net neutrality. This is no esoteric concept but an action that will hurt the U.S. economy and its citizens.
Christmas came early for giant companies such as AT&T, Comcast and Verizon, when Ajit Pai, chairman of the Federal Communications Commission, indicated Tuesday that he would dismantle net neutrality.
Specifically, the FCC would roll back Obama-era regulations that classified big internet service providers (ISPs) as common carriers, subject to regulations requiring them to treat all content equally.
In other words, they couldn’t provide premium “fast lanes” for favored content services, while slowing down or blocking others. All had to be treated the same. Hence, neutrality.
Technically, the rule change is open for comment and must be approved by a majority of commissioners. But with Republicans controlling the FCC, it will soon be a done deal, perhaps by December.
(This is the same FCC that just voted to allow massive consolidation of media ownership, ensuring fewer independent news organizations and more “news deserts,” with little or no local coverage.)
The end of net neutrality is another move forward by the Trump administration to “deregulation” and erasing the legacy of his predecessor. I use quotation marks because the results are not so much the end of regulation, but altering it to favor the most powerful and politically favored industries and companies.
Microsoft and Amazon are among those supporting strong net-neutrality rules. In a July filing with the FCC, the Internet Association (whose members also include Google and Apple) said weakening neutrality “would introduce significant uncertainty and would threaten the virtuous circle of innovation” that has created a big expansion of broadband services.
But the ISP cartel won the day, with an assist from most conservatives opposing net neutrality on philosophical grounds, anyway.
Dan Gillmor, the veteran technology columnist who is now a professor at Arizona State University, tweeted that Pai “is proposing to let the oligopoly of carriers decide what bits of information will get to your devices, in what order and at what speed — or whether the information gets to you at all.”
Call it the victory of old tech — many ISPs are the progeny of Ma Bell — over new tech.
Prosperous corporations such as Amazon and Google can afford to pay higher fees for speedy lanes on the net. But smaller tech companies and startups will be at a disadvantage, one that could be fatal. Considering the marked decline in startups in the United States, this is bad news indeed.
Customers will be another loser. In most parts of the U.S., the ISPs that “own the pipes” hold complete or near monopolies. Users will pay whatever the ISPs demand.
As a result of all this, the risks to economic growth are substantial, whatever the short-term performance of stocks on Wall Street.
The Obama rules codified the longstanding consensus on an open internet (a system that had its origins, after all, in taxpayer investments). This goes back to the early days of net idealism, where the new technology would open worlds of opportunity and prosperity for all.
In 2002, Tim Wu, then a professor at the University of Virginia and now at Columbia University, coined the term network neutrality in a paper.
He wrote, “The neutrality principle here proposed would allow consumers to reach any internet application or operate any kind of home network while also preserving the ability of operators to police network abuse.”
Wu has pointed out that some form of net neutrality can be traced to FCC oversight of the Bell System monopoly in the 1970s (the old AT&T was broken up in 1982). Later, it kept companies such as CompuServe and AOL from being throttled in the cradle.
In 2015, he wrote in Slate, “This longstanding neutrality policy has been an incredible success by any measure. Under one or another version of the regime, the internet economy has created at least a million jobs and contributed greatly to the economic growth of the entire country, even when the rest of the economy was flat.”
But elections have consequences. And every oligopoly from big banks and big oil to big telecom expects to benefit big-time from the Trump presidency — even though a majority of Americans voted against it. Come in second in the popular vote, claim a mandate.
When the Obama FCC declared the ISPs common carriers, history was on its side.
In the 19th century, railroads had near total control of transportation over anything but short distance or more time-consuming and limited water routes. Often controlled by a small number of robber barons, they charged farmers and other shippers confiscatory rates to take goods to market. This was one of the hallmarks of the Gilded Age.
In 1887, Congress created the Interstate Commerce Commission to police rates and ensure competition. Rail monopolies were a target of the Sherman Antitrust Act of 1890. By the turn of the century and the presidency of Theodore Roosevelt, the Progressive Era began to further erode the power of the oligarchs.
Today, we’re in a new Gilded Age, a Tech Gilded Age. Inequality has risen to levels not seen since the late 19th century, although this is cosmetically cloaked by overall higher living standards in a consumer economy. A sharp decline in opportunity for millions of Americans is even more ominous.
If we are to believe the narrative that working-class whites voted for Donald Trump for economic reasons, at least some of this might be a rebellion against the coastal tech “elites.” But it’s hard to believe they love their local telecom monopoly.
They want America “great again.” But we’re not going back to the 1960s — and those same Trump voters hate the unions that made that 20th-century middle class possible. The only realistic way forward is to leverage the tech economy, especially improving the skills and pathways up for those in lower-paid service jobs.
Another necessary step is massive federal investment in infrastructure, including high-speed rail. But that would require maintaining or even increasing taxes on the rich. And these are nonstarters in today’s D.C.
Meanwhile, this handout for a handful of giant ISPs will only make things worse for most citizens.