Net Neutrality

Over the last decades, internet has become a vital part of our economic, social and personal life. It is a huge platform for political movements, technical innovations and economic changes. Therefore, it is of critical importance that all lawful internet data remain open and accessible to every consumer. Until recently, small start-ups were treated by internet service providers (ISPs) in the same way as established companies. Today, however, as the traffic of large internet companies has become disproportionate, ISPs have the opportunity to regulate the speed or even block the traffic of smaller companies. The set of FCC rules to protect the net neutrality was overturned by the federal court earlier this year, and new regulations are underway. Though net neutrality is widely seen as an essential condition of information transparency and vibrant market competition, its rigorous regulation can be counterproductive both for consumers and providers.

As used in most political and economic forums, net neutrality refers to equal treatment of internet content and applications by ISPs. It implies that telecom companies should not discriminate against internet companies by slowing down their speed or blocking their traffic altogether. The technical ability of ISPs to disfavor or prioritize internet content has raised a serious concern among the population. However, the point that many people overlook when discussing this issue is that the internet will never be fully neutral, given the fact that half of the internet traffic is generated by a few dozens of internet outfits. It is understandable that services like Google, Netflix, and Facebook need to negotiate with providers to facilitate and speed up the delivery of their content to users via special peering connections, while small and relatively unknown websites may not need any technical assistance. As argued by Tim Wu, who coined the term “net neutrality”, the essence of the debate is not in fast lanes for large companies, but in the decreasing number of ISPs (McMillan, 2014). Their powerful oligopoly could enable them to sell high-speed connections to any kind of companies that seek promotion. I consent to the view that net neutrality implies the consumers’ rights to have access to all lawful information at equal speed, without any intentional regulation by an Internet service provider for its business purposes.

In the anticipation of new FCC regulations of net neutrality, the American society has split into two camps in their views on their expediency. The major advocates of net neutrality are large companies that use most of the internet traffic and fear that they will have to pay additional fees to do so. The internet giants, such as Netflix and Google, have recently spoken out against the financial and technical discrimination against content providers by ISPs. However, under the disguise of net neutrality, they are essentially pursuing their own financial interests as they want to cut down the charges (Hahn & Wallsten, 2006). If net neutrality laws are adopted, the large companies will continue to enjoy their privileged bandwidth, while At&T, Verizon and other major providers will have to cover the expenditures for their last-mile infrastructure on their own. Internet users, civil rights activists and many politicians also support net neutrality regulations as they want to safeguard equal and unrestrained access to all kinds of lawful information on the internet.

Cable and telecom companies, however, are putting up stiff resistance to net neutrality regulations because they believe that they have the right to charge major content providers for their high-speed connection services with flexible pricing system (Hahn & Wallsten, 2006). Furthermore, they claim that net neutrality regulations would hinder them from managing the networks effectively, while charging policy, in contrast, would enable them to cater to consumer needs in a better way. Experts in law and economics mostly side with the opposition, as they believe that mandating net neutrality is not consistent with reasonable economic management of the internet and with the current legislation. Among the politicians, this position is also prevalent, which is why most net neutrality proposals have been rejected in the Congress so far.

The legal imposition of net neutrality would have a twofold effect on U.S. and global consumers. On the one hand, it would provide equal access to internet content without any data manipulation by gatekeepers. Moreover, as argued by ACLU activists, net neutrality is crucial to protect the right of Americans to free speech (ACLU, 2010). Their primary concern is that at present telecom companies can favor one speech while discriminating against the other. In their view, rigorous net neutrality regulation can help to maintain the role of the internet as a platform for free communication, which is essential for a democratic society.

However, despite these obvious benefits, net neutrality can potentially be harmful to consumers. If the regulation prohibits the ISPs to interfere with the traffic even in the interests of security, the consumers will be more susceptible to malicious content, such as spam and viruses (van Schewick, 2009). Moreover, the rights of the providers to regulate traffic during congestion peaks are also likely to be limited, which will worsen the quality of their service. However, there are more far-reaching effects that have to be taken into consideration. The net neutrality mandate can eliminate the existing incentives to provide broadband internet access and even to hinder the development of new services and applications. Consumers benefit from numerous premium services on the internet, and it is reasonable that they should have premium pricing (Farber & Katz, 2007). Broadband infrastructure is rather expensive, and if the major content generators do not help telecom companies to cover these expenses, ISPs will not be interested in providing fast lanes to the outfits that are most popular with consumers. Moreover, the net neutrality policy can have unintended consequences, running counter to the interests of consumers. For example, Google’s free wi-fi with Google ads can be announced illegal, even though many consumers are quite willing to see the ads in exchange for free access (Hahn & Wallsten, 2006). If this initiative goes further, targeted advertisement and use of cookies will also have to be banned because these mechanisms also restrain the consumers’ rights to choose the content they want to see.

The implications of net neutrality regulation for the market competition are ambivalent as well. On the one hand, without any discrimination on the part of ISPs, any start-up internet company can be accessed by consumers at the same speed and with the same quality as a large established company. Naturally, it would foster the market competition and stimulate the development of new companies. On the other hand, however, comprehensive prohibitions on traffic regulation may stifle a broad range of innovative services that ISPs and internet companies can potentially provide. Wireless broadband providers simply would not be able to use the most valuable part of the spectrum of airwaves that transmit wireless signals (Hahn & Wallsten, 2006). Thus, the regulation would not only decrease the rivalry between the companies but also prevent new technologies from being developed. Moreover, if it is left up to the local governments to decide who can use broadband services, the candidate companies will have to meet cumbersome regulatory obligations which can discourage them from competing. In the overall, in the field of internet services, it can be extremely difficult to say whether a particular policy will promote or restrain competition (Farber & Katz, 2007). Therefore, much caution and deliberation is needed in the imposition of net neutrality.

My personal position on the issue of net neutrality is moderate. I agree that consumers should be protected from arbitrary blocking or slowing down of internet content by ISPs. However, providers should by all means preserve the rights to regulate traffic for the purposes of security and congestion management. I maintain that the prioritization of certain traffic is needed because it is in the best interests of consumers to receive high-speed access to the services that they use most of all. Also, it is sound that telecom companies can request internet companies to pay add-on fees for the use of broadband services. However, this opportunity should be open not only to the outfits that generate disproportionate traffic but also to start-ups with high-bandwidth needs, such as those involving audio and video streaming and similar quality-sensitive services. The consumers would only benefit from the high speed of data flow, and the content providers would enjoy increased traffic at a rate that would justify their expenses.

One potential danger of this non-regulative approach is the lack of competition between ISPs. Naturally, their consolidated oligopoly can lead to unfair price-setting strategies. This is exactly where federal regulation is necessary. The government should stimulate competition between internet providers, encourage extensive investment into broadband infrastructure and allow the use of wider airwaves spectrum to foster innovation. Antitrust enforcement may also be necessary to create a valid market environment if there is a tendency to over-pricing. All these means would have a positive impact on the market competition and on the technology development in general.

Net neutrality is a contentious and multifaceted issue that has riveted the public attention since the FCC has set off for its regulation. The public sentiment tends toward the rigorous control of net neutrality by the government to protect the consumers’ rights of free speech and free choice of internet content. However, the legal and economic implications of this deal suggest that both consumers and content providers will benefit more if the internet remains unregulated. The government control, though, is needed to prevent the pricing consolidation of oligopolistic internet providers. Also, more attention should be devoted to the quantitative and qualitative expansion of the broadband infrastructure of the country.

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