With news this week about the nomination of Ajit Pai as the next chair of the FCC, much of the attention has focused on his stance on net neutrality and the likelihood the existing rules on net neutrality will be dismantled. However, net neutrality is a complex topic; even the definition of net neutrality is subject to widely differing interpretations. It’s worth breaking down exactly what’s likely to change and what isn’t at a Pai FCC.
Defining Net Neutrality
The first challenge here is defining net neutrality. A very general definition would be it refers to treating all internet traffic equally. It sometimes seems as if some people really do believe net neutrality can only merit the name if it’s really that broad. But that would preclude any sort of network prioritization which puts time sensitive packets above non-time sensitive packets and would also preclude any sort of prioritization by user or content at times of congestion on the network. Most reasonable people seem to at least leave some leeway for sensible network management in order to improve the performance of services subject to delays, such as voice and video calling or live video streaming.
Beyond that, the consensus breaks down very quickly. There are some who insist net neutrality has to bar any and all prioritization or differential charging by content or by user on any basis, whether or not it’s transparent, available to all, or paid for. The best example is the programs introduced over the past couple of years by major wireless carriers, under which some or all content in a particular category is carried without counting against the user’s data plan. T-Mobile and AT&T are the most high profile examples. T-Mobile has two programs – BingeOn and Music Freedom – which “zero rate” video and music content respectively. These programs are essentially open to all comers from a content perspective and there’s no charge to participate. AT&T has recently exempted video from its subsidiary DirecTV from its data caps and says this reflects an internal transfer from the DirecTV division to the AT&T Mobility division in an arrangement also open to any other video provider under the company’s Sponsored Data program.
How you define net neutrality will determine how you see each of these programs. Strict advocates reject both T-Mobile’s programs and AT&T’s, while some others find T-Mobile’s program acceptable but not AT&T’s or Verizon’s. The FCC has never taken a final position on either program but did begin looking into AT&T’s towards the end of last year. The net neutrality rules as presently constituted, however, don’t explicitly bar zero rating programs. Whether you consider either or both of these programs in breach of the principles of net neutrality will determine to what extent you think the new FCC regime will dismantle net neutrality, as I’ll show in a moment.
Rules vs. Motivated Behavior
It’s also worth noting that net neutrality rules were contemplated for many years but only implemented successfully recently. In the time before the rules were finally introduced, there were very few violations of its principles regardless – literally less than a handful of prominent cases existed during that time. The reason is, broadband providers are highly motivated to stay away from controversial breaches of net neutrality principles because they know that such actions would be extremely unpopular with consumers and would invite additional regulatory scrutiny. If we’re talking about actively blocking or degrading any form of content simply because it competes with the carrier’s own content (rather than because it is illegal or against the carrier’s terms of service), that remains very unlikely because there would be an outcry and a backlash and, ultimately, severe financial consequences in terms of lost business if the situation continued.
Net neutrality rules as presently constituted largely lock this behavior in place but the carriers have always made clear they object to the rules largely because they represent additional regulatory encroachments on their freedom to operate rather than because they contemplate any particular action that would contravene them. However, it is clear carriers have other, softer, forms of prioritization and differential treatment in mind, as we’ve seen from the zero rating plans I mentioned earlier. Regulation might or might not bar those zero rating programs but it’s relatively unlikely carriers would ever stoop to systematically blocking or degrading traffic from competing services even in the absence of regulation. Carriers have mostly been willing only to engage in behavior seen as either neutral or beneficial by users. They have much less concern about how they’re perceived by content providers. As such, they’ll zero rate some or all video content because users respond positively to that, regardless of whether providers of other content services like the idea or not. Net neutrality regulation, therefore, mostly helps protect content providers rather than end users, at least in the short term.
Dismantling Net Neutrality
With all that as context, let’s look at what might actually happen in the real world if net neutrality regulations as currently constituted were eliminated. Here are my predictions for what we’d actually see as a result:
- Carriers wouldn’t suddenly (or even eventually) start engaging in discriminatory prioritization or blocking of traffic based on the source – as I’ve said, users would respond badly and even an FCC largely opposed to additional regulation would have to step in and act if this became widespread
- Carriers likely would continue to pursue zero rating programs as a way to both differentiate from competitors and to make their own content services more attractive in some cases (as AT&T and Verizon have already done). With the growth of unlimited data services among the major wireless carriers, this actually wouldn’t have a massive effect on the market
- Some broadband providers are actually bound by terms of merger approvals to abide by fairly strict net neutrality principles regardless of general regulations, with Comcast the prime example through 2018. As such, these companies would have to continue to abide by the rules whether or not they’re overturned, at least for the duration of the commitments they’ve made. AT&T might well be subject to some similar rules as a condition of the approval of its acquisition of Time Warner, putting the two largest broadband providers and the second largest wireless provider under net neutrality restraints
In short, we’re unlikely to see an apocalyptic end to the internet as we know it, even if the FCC begins taking apart the present net neutrality regulations. We will likely see more zero rating and similar programs which don’t prioritize or degrade traffic but merely apply different data pricing to it. If you object to that kind of thing as a breach of net neutrality, you’re likely to be upset but most consumers will be either blissfully unaware or happy about it. If you’re a content provider, you may feel hard done by here too but, again, under the increasingly prevalent unlimited wireless data plans, this will become less of a disadvantage over time. I, for one, am less pessimistic about the outcomes here than many of those decrying the changes on the horizon.