How could the free market limit the effects of net neutrality's repeal? Specifically, how will consumers' internet access be protected without government regulation?
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.
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.
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.
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.
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".
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."
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
- Verizon FIOS
- Cable Modems: Comcast, TimeWarner, Cox, etc.
- T3 line
- Cellular internet: TMobile, AT&T, MetroPCS, Verizon Wireless, US Cellular, etc.
- Satellite internet: Hughes, Dish Network
- DSL line
- Dial-up connections
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
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?
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?
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.
The question is extremely vague in that it doesn't specify what needs to be "protected". As such, the answers differ:
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.
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.
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.
protected by Philipp♦ Dec 15 '17 at 23:57
Thank you for your interest in this question.
Because it has attracted low-quality or spam answers that had to be removed, posting an answer now requires 10 reputation on this site (the association bonus does not count).
Would you like to answer one of these unanswered questions instead?