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Q&A: SIEPR’s Rosston weighs in on net neutrality

May 17 2018
Greg's portrait

Following the U.S. Senate vote to restore net neutrality regulations, SIEPR Senior Fellow Gregory Rosston offers his perspective about the future of the internet.

In December 2017, the FCC repealed “Title II” regulations that classified the internet as a public utility. Under these rules, internet service providers (ISPs) were required to treat all data equally and fairly. For example, ISPs could not favor one website over another, nor could they speed up, slow down or block access to websites in exchange for fees or other reasons.

But as Rosston has pointed out, the definition of net neutrality means different things to different people.

Some have said net neutrality regulations were too strict. The rules undermined competition and made investing in new technologies more challenging. It was, they believed, bad for innovation. Others argued its repeal could hinder free speech and stymie diverse opinions. And if the web was under a “pay to play” business model, larger companies could have an unfair advantage over less resourced websites.

But repealing or reinforcing net neutrality regulations is not as big a deal as people think it is, Rosston wrote in a recent SIEPR policy brief. Rosston said he wouldn’t put a lot of weight on the arguments from either side, especially when compared to the large changes that will arise because of technological advances and innovations in services and business plans. Broadband services have existed for over two decades where there were no net neutrality rules, and for some of the time, there were different sets of rules. During these periods the internet and companies relying on internet services have thrived and consumer demand exploded, he said.

Rosston is the director of Stanford’s Public Policy Program and is the Gordon Cain Senior Fellow at the Stanford Institute for Economic Policy Research.

Stanford News Service interviewed him about this issue.

What are common misunderstandings about net neutrality?

Probably the biggest complaint is that without net neutrality rules there will be no regulation at all. Instead, the change is from regulating internet providers as “public utilities” to regulating them as most other businesses in the economy. We have had a long experience with public utility regulations where companies and municipalities have provided telephone, electricity and water services across the country. Tight regulation is great for such services that do not experience a lot of change – when was the last innovation in municipal water delivery, for example? With a rapidly changing product such as internet access, it is much tougher to have regulations that benefit consumers both in terms of price and innovation.

At the same time, there are companies that would be subject to net neutrality rules that stipulate there is no need for such intrusive regulation because they would never block, throttle or even prioritize traffic. It is hard to understand why, if the rules are not affecting their services, the rules are problematic.

Net neutrality is sometimes equated with a free, fair and open internet. Is this a fair assessment?

Net neutrality is one of the great bumper stickers of the century. But it, and even Title II regulation, does not guarantee a free, fair and open internet. It could bar some practices that could harm consumers. For example, some companies may not innovate new services that require access to consumers directly. It also could bar some practices such as blocking unwanted content or prioritizing high-value services such as remote medical technology that could help consumers.

How might net neutrality affect investment?

I don’t know. The only difference between me and other people opining on this is that I am willing to admit that the answer is unclear. Internet service providers claim that it will reduce their investment by reducing the return to investment in the network. But, at the same time, edge service providers (websites or apps that delivers content online) claim that net neutrality rules will increase their investment. Assuming they are both correct, it is not clear what the ultimate effect would be on investment, and more importantly, the delivery of products and services.

What would you say to people who are worried that ending net neutrality means they will have to buy packages or services from their ISP, instead of picking and choosing the pieces they want?

Some people want packages whereas others want to assemble them. It is great when consumer choice can pick either the package or the piece parts when consumers have different preferences. The key is whether there can be competition for internet services. For example, if 5G wireless service develops enough to provide competition for wired in-home broadband, much of the worry motivating net neutrality rules should be ameliorated because competition in delivery would prevent providers from exploiting market power.

There are other channels trying to block the repeal of net neutrality – including one lawsuit filed in California with three dozen entities from the tech and public sector. Some states are taking net neutrality to the local level and are implementing their legislation. How do see this playing out?

I am not a lawyer, but will offer a point of view. States and localities have two paths: they can try to mandate local net neutrality rules, and they can try to use their purchasing power to push providers toward net neutrality principles. The legal one would get them closer to their desired outcome, but will be tough as the internet seems to fit under “interstate commerce” law, so federal jurisdiction could prevail. Limiting purchases to those providers who offer net neutral service could work if there is enough money at stake and there are competitive choices.

Now that the Senate approved restoring net neutrality rules, the issue still has to go through the House of Representatives. Will the regulations likely to pass the next hurdle?

Republicans may try to pursue a lighter approach to net neutrality by introducing their own bill. That way they can claim to be in support of net neutrality and not be subject to relentless attack on a position where the majority of the public favors net neutrality rules (possibly without really knowing what they are or do).