The Internet Needs Fair Rules of the Road – and Competitive Drivers

In the past few weeks, the Biden Administration has finally moved forward with nominations to the Federal Trade Commission and the Federal Communications Commission. One of those nominees, Gigi Sohn (who, fair disclosure, has been an EFF board member), is testifying right now, and we expect a vote on all of the nominees soon.

As the agencies moves forward, fully staffed at last, we hope they will both recognize the role they can play in promoting net neutrality – meaning, in preventing ISPs from taking advantage of their effective gatekeeping roles to favor some services over others. Most people think of net neutrality as the province of the FCC, at least at the federal level. But that view loses sight of a prior problem: lack of competition in the ISP space. U.S. residents pay more than most of our peers around the world for internet access—and get less for our money. One reason for that is that roughly half of us have no choice when it comes to broadband access. Our providers have no incentive to do better. And that, in turn, is one reason we need net neutrality rules.

If we had a competitive broadband market, we might not need net neutrality rules, or at least not so many. But we don’t. If we had good net neutrality rules, the lack of competition might be less dangerous. Right now, in most places, we have neither. Instead, a few major companies—AT&T, Verizon, Comcast, and the like—have enormous power over our access to essential services, power they can use, in turn, to manipulate our online experience promoting or prioritizing some services over others.

Competition Incentivizes Innovation and Allows Consumers to Choose What They Value

As it currently stands, the large ISPs have no incentive to make their services better. As near-monopolies, they know that between the option of no internet and bad internet, customers will pick expensive, slow internet. Without other companies offering better services or better terms, there is no reason for these companies to shoulder the costs of improving either one. Why take the initial hit to your profits to build something new when you don’t have to do it to get new customers?

Furthermore, the guaranteed income of near-monopoly leads to exorbitant profits that are used not to improve service but rather to buy up content providers, such as AT&T’s acquisition of Warner Brothers and HBO, and Comcast’s stake in Universal and NBC. Once they own those companies, they have every incentive to violate net neutrality principles to preference their new purchases, as AT&T did with HBO Max. AT&T charged video streaming services an extra fee, but when that service was HBO Max, it essentially cost nothing, since AT&T was, in effect, paying itself the fee. So while competitors posted a loss, AT&T did not.

In theory, if there was actual competition in internet service providers, you, as a consumer, could choose a provider that committed to net neutrality as one of its selling points.

In San Francisco, for example, some residents can choose between multiple local ISPs. One of those providers, Sonic, has adopted and promotes policies that are both privacy protective and net neutral. Sonic also invests its capital in fiber infrastructure, not content. That gives at least some Bay Area residents a choice few others can imagine. What works best for you should not be determined by where you live and therefore which of the major ISPs is available to you.

Net Neutrality Promotes Competition Online

But there is more to the net neutrality-competition nexus. Net neutrality is the principle that your ISP can’t block, slow down, or charge extra for access to a website or service except as needed for reasonable network management. Consumers alone get to decide what gets their dollars and their eyeballs.

Those same rules of the road, which become necessary when you lose competition for broadband, support competition in other internet markets. Consumers are less likely to find themselves locked into certain services because they are offered “free” with their internet access, or because their ISP chooses to prioritize those services, which means competitive alternatives can emerge.

Both. Both Is Good.

Of course, neither piece alone is as good as both. Ideally, ISPs would compete to provide us with better service—spending money on better infrastructure, offering prices that actually match the service they are selling, offering better protections for their users, and so on—in order to entice customers. That would be a huge improvement on the status quo.

And ideally, we’d have net neutrality protections so that what you see online is separated entirely from the company that makes it possible for you to see any content online. With net neutrality protections, companies have less of an incentive to buy content and apps to manipulate you into watching and using, since they would have to treat competitors the same. That also frees up money for better internet access and stems the tide of concentration we’re seeing across the board. For those who live in areas underserved by ISPs because of the cost of building out there, less choice in ISP won’t result in less choice online.

In the meantime, if we can’t have one, we must have the other. Unfortunately, the situation right now is that most Americans have neither. That situation requires a federal response. It requires a fully-staffed FCC and FTC.

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