On Feb. 26, 2015, the Federal Communications Commission ruled in favor of net neutrality by reclassifying Internet access as a telecommunications service and applying Title II of the Communications Act of 1934. While hailed as a victory for free speech worldwide, this decision will be a long-term negative for the United States.
To understand why this ruling will have negative impacts, it’s important to understand the infrastructure of the Internet. Initially an ad-hoc interconnection between government entities and universities, the Internet does not have a neat, well-ordered structure as presented by net neutrality supporters.
A fast Internet connection hinges on physical proximity between the sender and receiver and network proximity. Within the Internet, there are peering agreements between the different tiers.
Tier 1 networks are at the highest level with the most connections. Tier 1 networks do not pay to exchange data between each other. These are large telecommunications networks like Verizon and AT&T. As you move down the tiers to 2 and 3, the exchange of data costs money and that isn’t going to change.
The fear used to motivate the public to support net neutrality was that Internet service providers (ISPs) would force their favorite Internet service (probably Netflix) into paying for a faster Internet connection. In 2013, Comcast utilized peering discrimination to throttle Netflix streaming speeds and force Netflix’s hand to “pay to play.”
But what’s missing in this tale is that Netflix wants to do this. They want to pay money to decrease physical proximity and network proximity to their end-user. By setting up a peering relationship with a Tier 2 ISP, they can do that and deliver a better end product. If a company wants to purchase better raw materials to make a better product, we don’t balk and demand they can pay the original price.
Antiquated laws and bureaucratic red tape shut out any prospective telecom company from laying their own fiber optics and entering the game. If we don’t remove barriers in the U.S., companies like Netflix can and will take their businesses elsewhere.
In fact, Netflix recently inked a deal with Australia’s second largest ISP iiNet. The deal exempts Netflix traffic from the customer’s data caps. Clearly this deal flouts the ideals espoused by net neutrality supporters.
When a company like Google with its massive technology and legal clout struggles to bring its Google Fiber service to small cities because of government regulation, what chance does a start-up have?
The U.S.’s broadband Internet is far behind other first-world nations. We’re far behind and the only chance to catch up is with engineers and entrepreneurs, not regulators and politicians. With the legal protections in place to maintain the status quo, there is no incentive for current ISPs to improve their service. The progress will be slow just at a time when the Internet economy has finally figured out ways to be profitable.
While net neutrality supporters may have scored an early victory, they will ultimately lose the war. Let’s hope they lose before businesses leave the U.S. for better economic conditions elsewhere.