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How could the free market limit the effects of net neutrality's repeal? Specifically, how will consumers' internet access be protected without government regulation?

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    I think your question is based on a faulty premise. Why should the free market limit the effects? Protecting consumers is the point of government regulations, not of the free market. – tim Dec 15 '17 at 16:48
  • That's a good question but formulated somewhat biased. A neutral formulation would be something along the lines of: "How will the net develop in an unregulated free market?". This might actually be more a question for economy than politics because ... well unregulated (no politics involved). – Trilarion Feb 13 '18 at 9:37
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Almost all high-speed broadband Internet service providers, except in high-density urban populations, have limited competition, if not full monopolies. A small start-up would have to build out their own infrastructure with no existing customer base, which isn't going to happen, in most cases.

This is why so many people want to treat the providers like a utility. This is why hypothetical "free market" constructs do not apply.

The best way to use "free market" principles or competition to ensure net neutrality is for citizens to demand their municipalities build their own high-speed infrastructure and sell the services as a municipal utility under a net-neutral format. Then there would be actual choice and competition, but if the competition comes from a non-profit government or quasi-government entity, then the claim is that it's socialism, not free market.

As the physical infrastructure and regulatory environment currently exists, there is no free market with ISPs, practically speaking, so using something that does not exist is not a possibility.

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    "except in high-density urban populations" Should read "even in high-density urban populations". – Josh Caswell Dec 16 '17 at 4:04
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    This otherwise excellent answer fails to note that, in far too many cases, the problem with starting a new ISP or expanding into a given area is that the municipality stands in the way, preventing the ISP from starting up or expanding. – Michael Hampton Dec 16 '17 at 19:17
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    @michaelhampton while true, there’s a good reason for that in that cities don’t want duplicated infrastructure everywhere. The main problem is we have privately owned infrastructure that is impractical to duplicate (another argument for making the Internet a public utility) – user1530 Dec 16 '17 at 23:57
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    @Michael Just compare Internet with Water. The only difference is that unregulated water will result in a higher number of fatalities than unregulated internet. The same reasons that apply for water regulation apply for internet regulation. No, a few citizens banding together and starting up their own water supply company and laying their own pipes will definitely not solve the problems created by unregulated water supply. And for the very same reasons that solution doesn't work for internet connectivity. – Peter Dec 17 '17 at 16:57
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    @Peter: But somehow, municipalities have managed to regulate the laying of water pipes within their borders without the intrusion of the FCC. And outside municipal boundaries, private water service is entirely possible, practical, and practiced. – Ben Voigt Dec 18 '17 at 19:40
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The capitalist answer to this problem is that when there is a real desire for net-neutral internet providers, then the market will create them.

An internet provider could publicly commit to maintaining net neutrality and use that commitment as an unique selling proposition in their advertisement. Consumers who care about net neutrality could then vote with their wallets and switch to that internet provider.

This, however, assumes that there actually is a competitive market for internet access in a given region. If a region is only served by one provider, this is not an option. Also, a neutral internet provider will likely be more expensive, because they do not make any income through preferential treatment fees from content providers.

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    @user4012: He explained how they would make less money. If non-neutral providers make money by charging from Netflix, Youtube, Facebook, and other big companies (pay us or we'll throttle your traffic), then obviously a neutral provider can't do that. Therefore, they make less money. The difference in profit will have to be made up somewhere. Now, it hasn't been proven that such throttling will certainly happen, but there is clear profit motive towards doing so. And without competition, it's difficult for consumers to pick neutral providers. – Nicol Bolas Dec 15 '17 at 18:35
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    @NicolBolas - "Now, it hasn't been proven that such throttling will certainly happen" - what are you talking about? The whole reason why Net Neutrality was formally implemented as a policy was because the throttling already was happening. If it already did happen, I'm not sure how you can claim that there's no proof that it would. – PoloHoleSet Dec 15 '17 at 19:59
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    @NicolBolas - Let's see.... without the restraints, the companies actively pursued this strategy. Once it was in place, they fought tooth and nail to have it repealed. Now that it's repealed..... it's not certain that the Earth will continue to rotate and that the sun will rise, but anyone who tells you that it's not going to happen is probably being intentionally obtuse. If the companies didn't want to actively pursue this, then they wouldn't have bothered spending millions to get it repealed. Are you contending that what happened before was some kind of freak accident? – PoloHoleSet Dec 15 '17 at 20:12
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    I'm not sure if I should up-vote this, or down-vote it. On the one hand, it does give the classic capitalist answer, but on the other hand, it rather glosses over the fact that most of the US has internet monopolies, or duopolies at best, with virtually unbreakable barriers to new entrants to the market. – Mark Dec 16 '17 at 0:55
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    The world doesn't work like that. Capitalism and the free market, left to itself without protection, will tend towards market fractioning, information asymmetry and monopolies. A free market needs protection. – Stian Yttervik Dec 16 '17 at 18:45
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By having a free market. If consumers didn't want plans that delivered some content with better QoS than others or that limited content, they could simply choose to purchase from providers that don't do that. If there's enough demand for it, someone will offer it. And people who don't actually care that much about it can probably buy cheaper plans that do have those restrictions.

Where the problem with this comes in is that the current situation isn't a free market. Many ISPs have government-enforced monopolies in their service area, municipal exclusivity agreements. In the absence of net neutrality rules, these providers can then buy up content producers or make agreements with certain content producers to prioritize their traffic on their networks while excluding others. Thus, they can extend their government-enforced monopolies from content delivery to content production. To solve this problem, ban and nullify the exclusivity agreements, allowing an actual free market to operate as per the first paragraph.

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    +1 There's almost always some government interference if you look for it. – jpmc26 Dec 16 '17 at 3:55
  • Also realize that the government interference includes requiring some of the telephone monopolies to allow competition lease the last mile wire at a set rate (and allow their competition to co-locate in their central offices). This includes for DSL service, but generally not fiber. – Azendale Dec 18 '17 at 18:43
  • @Azendale Generally neither fiber nor cable. Even if there is competition for DSL, DSL is usually much slower than cable or fiber, so it's not much of an option for consumers who are having trouble being limited on their streaming video services by their ISP, since DSL often struggles with those bitrates anyway. – reirab Dec 18 '17 at 18:59
  • @reirab Right. I would love to see a setup where a customer owned Co-Op runs either active ethernet or a PON (both are fiber) to a central exchange point where you have your choice of carriers. That model has worked for power in some rural areas. On another note, in our area, there so far is no enforced monopoly on the cable and fiber networks. So the fiber, wireless, and cable are battling it out while the ILEC has more and more copper loops disconnected. – Azendale Dec 21 '17 at 2:13
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Net Neutrality is about preventing companies from selling certain products. Asking how the free market can prevent the effects of the net neutrality repeal is asking how the free market is going to prevent Nike from selling shoes that contain no laces.

Russia has no netneutrality. A while ago I was hosting couchsurfers from Russia in Berlin that had a contract that allowed them to use Telegram for free internationally. This meant that I didn't communicate with them via WhatsApp/Signal or Facebook messenger (the modes I usually use) but I instead installed Telegram because that allowed us to communicate freely with each other.

The free market isn't doing anything to prevent his Russian mobile company from selling him such a plan, as long as it's a good deal for him to buy it and for the company to sell it to him.

Similar arguments go for plans that provide service-level gurantees that gurantee a customer a low ping for communicating with US servers. Some customers will be willing to pay and others won't but a free market won't result in all customers getting the same ping.

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    Zero-rating (the practice you describe here -- not the only thing network neutrality principles prevent, but one of them) raises barriers to entry: If Comcast zero-rates their own streaming video service (f/e), then someone else who wants to compete needs to either pay for similar privileges (if Comcast will agree), or is at a severe disadvantage in terms of pricing. That reduces fair competition, resulting in a skewed market with higher barriers to entry -- hardly conducive to market forces performing efficient optimization. – Charles Duffy Dec 16 '17 at 3:14
  • There's a big difference in the US of A compared to other regions in that many of the ISPs in the US are both internet service providers AND are either content producers or own content producers themselves. So they can easily strongarm people by withholding their content. – Valthek Dec 18 '17 at 11:02
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    +1 for "Asking how the free market can prevent the effects of the net neutrality repeal is asking how the free market is going to prevent Nike from selling shoes that contain no laces." – guenthmonstr Dec 18 '17 at 15:26
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    @Valthek: "If you face backlash because your show can only be seen on your network, on a specific plan, that's an issue." - yes, but why would you? Your competitors will face backlash because the show cannot be seen on their networks, and some of their customers will contemplate switching to your network to watch the show. And the owner of the show has little incentive to change anything, because they're getting additional subscriptions from your customers that only sign up because it's so readily available at a discount price at the company they already get internet from. – O. R. Mapper Dec 19 '17 at 9:16
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    @Valthek : Independent content producers don't produce expensive series like Game of Thrones. Netflix has a business model that's effective at making money with series like Game of Thrones even if the model is more complex to understand than paying-per-unit. – Christian Dec 21 '17 at 15:36
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All the FCC did was repeal a rule it made in 2015. That's it. The Internet is now and has always been the free and open platform we know despite an almost complete vacuum of government regulations of any kind. For the past three decades it has plodded along, doing its thing, and changing the world -- curiously absent of the corporatist apocalypse that Net Neutrality's proponents have been warning us about for years. The answer to your question is all around you.

I'm no fan of Comcast or Time Warner Cable. There's a reason that people continually vote them as the worst company in America. But the point is that it's not like they just had this brilliant idea a couple of years ago to use their monopoly powers to put the screws to content providers like Google and Netflix. They've been trying to do that since the 1990's. They're the same evil, greedy mega-corporations they've always been. And yet, here you are, reading this post on your browser or your phone, for the same price that you're paying for all the other tabs and applications you have open right now.

The free market made the Internet what it is today. Attempts to monopolize and control it aren't new, but they have thus far failed to do so. If they ever do succeed, then we can talk about Net Neutrality. But for now, the term "Net Neutrality" is just a pleasant-sounding euphemism for "Government regulation of the Internet". And the Internet and all of the players on it large and small have shown us, consistently, time and time again, that there is little need of the government's "protection".

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    Funnily enough, it started out neutral, not segregated. No one realized that it didn't technically have to be until just before the NN regulations were put in place-- and they were put in place because that "apocalypse" was actively starting, with Netflix getting throttled by Comcast and FaceTime getting blocked by AT&T. Also, you realize it's literally just been repealed, right? Even for companies as eager to make a profit as that, it'll take them time to roll out changes that they're just starting to make now. – Nic Hartley Dec 15 '17 at 23:07
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    @QPaysTaxes I disagree with your interpretation. Your examples are of high bandwidth consuming services (video), which actively make managing traffic more difficult and costly to the provider. I just see companies trying to control internal costs or make revenue cover them. I see no examples of blocking lower bandwidth sites, like this one or reddit or any other primarily text based site. It is to the competitive advantage of each company to serve up as much of the internet as they can given their infrastructure. – jpmc26 Dec 15 '17 at 23:19
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    @jpmc26 "I see no examples of blocking lower bandwidth sites" - repro steps please. Show me how you do not see those examples. This would allow me to diagnose your problem. Nevertheless, what about Telus blocking a website supporting a labor strike against the company? What about AT&T, Sprint and Verizon blocking Google Wallet? What do you think about these cases? And finally, what about AT&T saying that it's illegal to put a small plastic receiver snap-on to make the conversation more private? freepress.net/blog/2017/04/25/… – Ark-kun Dec 16 '17 at 2:02
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    This ignores the real cases that net neutrality was created to prevent. – user1530 Dec 16 '17 at 7:45
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    @jpmc26 you, like most opponents, don't understand the issue. No one is complaining about charging more for bandwidth. It's about selectively charging based on type of data – user1530 Dec 16 '17 at 8:14
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Easy! Through competition! If you dislike your current service, you may select another service.

In Thomas J. DiLorenzo's Myth of the Natural Monopoly, we can see many examples of competing utilities before government regulation stifled competition and limited choices.

There is no evidence at all that at the outset of public-utility regulation there existed any such phenomenon as a "natural monopoly." As Harold Demsetz has pointed out:

Six electric light companies were organized in the one year of 1887 in New York City. Forty-five electric light enterprises had the legal right to operate in Chicago in 1907. Prior to 1895, Duluth, Minnesota, was served by five electric lighting companies, and Scranton, Pennsylvania, had four in 1906. … During the latter part of the 19th century, competition was the usual situation in the gas industry in this country. Before 1884, six competing companies were operating in New York City … competition was common and especially persistent in the telephone industry … Baltimore, Chicago, Cleveland, Columbus, Detroit, Kansas City, Minneapolis, Philadelphia, Pittsburgh, and St. Louis, among the larger cities, had at least two telephone services in 1905.

Government was lobbied (as today) to prevent and stifle competition.

The history of the Gas Light Company of Baltimore is that, from its founding in 1816, it constantly struggled with new competitors. Its response was not only to try to compete in the marketplace, but also to lobby the state and local government authorities to refrain from granting corporate charters to its competitors. The company operated with economies of scale, but that did not prevent numerous competitors from cropping up.

"Competition is the life of business," the Baltimore Sun editorialized in 1851 as it welcomed news of new competitors in the gas light business. The Gas Light Company of Baltimore, however, "objected to the granting of franchise rights to the new company."

This shows that government control over private services are empirically bad for consumers. It's a case of concentrated benefits, dispersed costs, and of rent seeking.

As a further empirical example of the benefit of the absence of government regulation, Somalia has the best internet in all of Africa due to its government collapse.

After the start of the civil war, various new telecommunications companies began to spring up in the country and competed to provide missing infrastructure. Somalia now offers some of the most technologically advanced and competitively priced telecommunications and internet services in the world. Funded by Somali entrepreneurs and backed by expertise from China, Korea and Europe, these nascent telecommunications firms offer affordable mobile phone and internet services that are not available in many other parts of the continent.

After forming partnerships with multinational corporations such as Sprint, ITT and Telenor, these firms now offer the cheapest and clearest phone calls in Africa. These Somali telecommunication companies also provide services to every city, town and hamlet in Somalia. There are presently around 25 mainlines per 1,000 persons, and the local availability of telephone lines (tele-density) is higher than in neighboring countries; three times greater than in adjacent Ethiopia.

As an example of the various competing services available in the USA, there is

When people complain there is no choice, what they usually mean is they are afraid of change. Now that censorship is a factor in comparison shopping, they may find a slower alternative preferable to no access at all.

Here is a news segment showing the many cheaper alternative choices for internet access in a Canadian city, and an analysis with a consumer psychologist for why people do not use them more often. Some of the main reasons people do not switch to another provider over larger corporations are

  • Fear - they fear the unknown
  • Habit - they have a habit of paying their current provider
  • Quality - they perceive that a cheaper alternative may be lower quality
  • Trust institutions - they tend to trust large institutions

https://youtu.be/HlRPLBLkZK0

Personally, I believe those people deserve to pay higher prices, like a tax on the stupid.

After all, would it make sense to sell electricity at a fixed price? Where some users would use 100kwh/day, and others only use 1kwh/day, but both pay the same price?

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    The electricity comment is not comparable, the marginal cost on units of electricity is real, the marginal cost on bandwidth (or even more specifically, access wrt to specific sites as opposed to others) is effectively 0. Getting rid of NN would allow for far greater price discrimination, with effectively 0 marginal cost to the producer, which is a classic example of rent seeking behavior. It would allow for artificial blocks on access to extract a greater amount of consumer surplus. – Teleka Dec 17 '17 at 3:32
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    @Algid Every time a transistor switches states, it consume power and produces heat. With more data, that means more transistor switches and higher clock speeds. True, one byte from one user is minuscule. But if you have 100M users watching 4K video, it's no longer minuscule. I don't know the costs as I don't own an ISP, but it's a non-zero cost. Maybe the greater cost is ensuring enough capacity for everyone else whom you've promised a minimum level of speed? – Chloe Dec 17 '17 at 16:58
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    This answer relies upon false equivalence (the various services listed as "competing" offer different capabilities; i.e. there are numerous activities that cannot be completed using slower speed connections) and a faulty assumption that multiple service options are available everywhere throughout the US. – Beofett Dec 18 '17 at 14:41
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    @Beofett, please note that neither government nor a free market guarantees that multiple service options -- "equivalent" or not -- will exist in all areas of potential interest. This answer indicates that monopoly -- a government-created phenomenon -- often prevents competition. – Christian Conti-Vock Dec 18 '17 at 16:33
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    @ChristianConti-Vock All monopolies are government-created? Citation required. Regardless, the question is about how free market can limit the effects of net neutrality. This answer says Easy! Through competition!, and then claims that no monopolies exist because of choices that are not equivalent, or even necessarily available. Whether or not multiple service options are guaranteed is completely irrelevant to the question or this answer. – Beofett Dec 18 '17 at 16:51
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One approach is to have a large virtual private network. So Netflix and others could send their videos over this network directly to consumers. Since Comcast and Verizon can't see the packets, they would be hard pressed to control the traffic.

Of course, there are issues with this. How much would consumers and businesses have to pay to gain access? Who would regulate this private network, etc? Is it run by a private or public entity?

  • But Level 3 didn't even have to do that. The problem was that the connection that Level 3 (Netflix's ISP) happened to use for Netflix traffic was overloaded. If Level 3 had simply routed around that, they could have bypassed the problem. I'm not sure people realize the extent to which Level 3 is acting as a free rider, forcing other ISPs to adapt their networks to Level 3's topology. – Brythan Dec 15 '17 at 22:28
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    The ISP can just block the VPN, back before NN the only internet provider at my house blocked vpn and ssh on residential lines. They claimed those were business class features and not traffic that they would permit on the home plan. – Ukko Dec 15 '17 at 22:32
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    Good point @Ukko. That's another problem with that approach. – Michael Silver Dec 15 '17 at 22:41
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    @Ukko Another likely scenario would be that both Netflix and the VPN would be equally slow by default, unless they paid the extortion fees to get whitelisted for better speeds. – Alexander O'Mara Dec 15 '17 at 23:03
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One possibility is that Google Fiber may pick up again. They stopped rolling out to new cities in 2016 presumably because of financial pressure. It was pretty clear that Google Fiber was rolled out to prevent a practice of ISP's charging providers for faster access to their content. As long as NetNeutrality was in effect, this practice was (at least in theory) curtailed. So Google Fiber couldn't distiguish itself in the market place of ISP's as a better-quality ISP for their customers based on voluntary neutrality of delivery of content. If ISP's do start charging content providers, then Google Fiber would become a distinctly better alternative.

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The question is extremely vague in that it doesn't specify what needs to be "protected". As such, the answers differ:

  1. Certain anti-competitive behaviors will be protected against because they have nothing to do with FCC's Net Neutrality Title II issue; and are "not OK" either way, under pre-2015 FCC/FTC purvue.

    ISPs have been targeted for such issues (for example, misleading data caps on "unlimited" service; or blocking Vonage) under FCC/FTC jurisdiction before; and the current official NN repeal rules re-instates that - and, arguably, strengthens it by comparison to pre-2015.

    Most dire predictions used to emotionally drum up support for NN ("they will block off your Google/Wikipedia/StackExchange access unless you buy 'Google enable internet plan' ") fall under this.

  2. Certain behaviors may not need to be "protected" from in the first place.

    Charging less money to preferred content providers's content (aka "zero rate") may not be fair to other content providers, but don't necessarily negatively affect any consumers. One can make a cogent argument that they benefit consumers, at least on tactical level.

  3. Certain behaviors arguably don't deserve NN Title II protections.

    As a NetFlix user, you may want NN rules to ensure you get to stream terabytes of high def video for low cost. Other users who don't do that have opposite priority (not to subsidize such behavior) - I'd love to pay less with a lower cost lower-bandwidth plan, like I do for cell service. Bringing the entire weight of federal government's Title II to adjudicate this preference dispute is not necessarily the best, and definitely not the only solution.

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    Point #3 misconstrues what the issue is. It's not about cost of data consumed--it's about discriminating amongst the type of data being consumed. – user1530 Dec 15 '17 at 20:36
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    Point #3 also is exactly the way it is right now. I can get a data plan for X Mbps for Y GB and once I've reached my Y GB limit the throttling takes place. – CramerTV Dec 15 '17 at 21:16
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    No. Net neutrality means you can pay different amounts as a consumer for different speeds...or different volumes of data...but the ISP can't discriminate on the TYPE of data. – user1530 Dec 16 '17 at 0:05
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    @jpmc26 or, more realistic example...Comcast can't prioritize cat video corp's content over remote medical procedure just because they have a business deal with cat video corp. – user1530 Dec 16 '17 at 7:43
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    @jpmc36 again, that's not the issue. Reliability contracts and bandwidth plans aren't the issue. The ISP can charge the hospital for whatever bandwidth and reliability they want. – user1530 Dec 16 '17 at 8:19

protected by Philipp Dec 15 '17 at 23:57

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