The Neutered Net: Why the FCC Can’t Save the Internet

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There’s no question that Net Neutrality has been this year’s most hotly debated and passionately defended political issue regarding the internet. It has often been painted as the next no-brainer that every internet user should hop on the bandwagon in support of—the next SOPA, PIPA, or NSA scandal. Opposition to shocking revelations such to these controversies sent a shockwave through the status quo of corporate government power. It was a signpost that the millennial generation can and will rise up to resist the oppression of personal liberties—at least when the fabric of their daily lives are at risk.

And next up was Net Neutrality. Editorials were written, Reddit posts exploded, organizations were formed, and people even protested. The fiery sentiment behind all the hubbub was well understood: we all want a free and open internet. None of us want big corporations or governments fiddling with the thing we’ve all grown up on—the thing that has impacted our lives so fundamentally. Unfortunately, the reality of the current situation isn’t quite that simple—nor are the stakes of implementing the government regulation that has been proposed.

A Free and Open Internet for All

At its core, the argument for Net Neutrality is an argument that all data should be treated equally and without preference—whether that’s a high-definition Netflix video or a simple text document. Proponents of Net Neutrality refer to the continued dream of an “open internet”, where no corporation or government can offer preferences or influence what content is available to users. Again, a perfectly understandable sentiment with all the attacks against the free internet in the last few years (again, SOPA and the NSA).

But here’s the first problem: bandwidth. Thanks to the increasing popularity of video streaming services such as Netflix and YouTube, the bandwidth that Internet Service Providers (ISPs) like Comcast or AT&T sell to users is now being used in very specific places and by a very specific audience. So far, ISPs have been able to get around this by charging heavy users the same as people who check their email once a week. The bill is shared, regardless of whether people realize it or not.

But as light internet users become the rarity, this millennial pipedream doesn’t seem to be sustainable—at least not in its current form. In order for Comcast to keep access to high-volume websites such as Netflix possible for everyone, ISPs are going to need to build more infrastructure and with more infrastructure comes increased prices. Those increases prices will either be passed on to content providers like Netflix or to its customers—the former of which being the hotly debated item.

The solution to the bandwidth problem that these ISPs have offered is to create a tiered system—one where they would allow the Netflix’s and Googles of the world to pay for the additional bandwidth they need. While this solution was originally rejected, the Federal Communications Commission (FCC) made shocking headlines when they stated in April of this year that plans were being made to allow for such a system to exist. As you can guess, companies that would be required to pay these extra costs such as Netflix and Google aren’t particularly fond of the idea.

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But it’s not just big content distributors that are worried about it—the average internet user is pretty up in arms about the idea of a fast lane and slow lane method too. Some think that this could lead to what they call corporate censorship or a fast lane for all the big corporations, while everyone who can’t bribe the ISPs are stuck in low bandwidth hell. Others thinks that ISPs would use this new power to “fast track” their own competing video services and force users away from their competitors. The idea is to make the internet work in the same way as the United States Postal Service—it costs the same amount money of money to send a piece of mail down the street as it does to across the country.

I can’t say that this tiered system is the best way to move forward, but I can say that it’s definitely not the system I would prefer. On the other hand, it’s not completely unreasonable to see why it’s been suggested. Historically, tiered systems of payments are almost always better for the consumer. It’s how pretty much every other service is used (such as energy, water, your smartphone service, etc.), and it always ends up being a more efficient and inexpensive way of delivering a range of services to a wide variety of customers.

However, the real reason why a tiered internet rubs people the wrong way is because of the small group of companies in control behind such a proposition. Let’s get real: no one likes Comcast. Earlier this year, a leaked phone call between a Comcast customer service employee and a technology journalist went viral, only months after the ISP earned the coveted Worst Company in America award once again this year. The idea of letting other content distributors pay a company like Comcast even more money through a tiered internet rubs most people the wrong way. I get that. No one likes massive corporations that practically own entire industries. No one likes a company that is so cozy in its top position in the marketplace that it doesn’t have to improve customer service and cut costs for customers. It rubs me the wrong way too.

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But the problem underlying Net Neutrality is this: the average person in the United States currently has little to no options for choosing their internet provider. What’s worse, our internet connection speed here in the United States ranks thirtieth in the world, but is the second must expensive. If we had options for the companies that provide usage of the internet—if there wasn’t a complete monopoly of the industry—enforcing Net Neutrality would be a complete non-issue. If companies were allowed to compete and the force of the free market was cut free, customers wouldn’t care if one particular ISP throttled bandwidth to video streaming because there’d be another ISP to fill that whole in the market.

But in order to fully understand this threat and where it came from, we have to see the FCC and government regulation of communication from a historical standpoint. It’s just not as simple as signing on to more “us vs. the corporations” or “we are the 99%” rhetoric. What people don’t often realize is that the current monopoly that weighs upon the internet is not a product of the free market, but instead the product of the classic dynamic duo of big government and big business getting in bed together.

The FCC: A Short History of Corporatism and Monopoly

By the turn of the 20th century, there were over 3,000 telecommunications companies in the country, with some states having up to 200 competing companies eager to sell their telephone services to customers. These companies had gained up to 51% of the market share against AT&T (yes, they’ve been around for a long time) and prices began falling, as is to be expected. So what happened in the past 100 years that could so radically change the marketplace for telecommunications companies? Well, a lot of things.

But most importantly, the Federal Communications Commission (FCC) was established (to replace the Federal Radio Commission of 1926) alongside the Communications Act of 1934. But even before the first regulations were put in place, the government was nationalizing AT&T and controlling it through a commission by the Postmaster General in 1918. The nationalization of telecommunications became law in 1934 when President Franklin Roosevelt signed the Communications Act of 1934 and made AT&T a quasi-government organization.

Despite that part of the FCC’s mission was to facilitate competition and dismantle monopolies, it was right there creating the biggest telecommunications monopoly the world had ever seen. What was the reasoning being the competition-killing regulation? If you’re feeling generous, it was to avoid the hassle and waste of duplication on a nationwide scale. This was what economists and legislators at the time referred to as “natural monopoly” that needed regulation due to high fixed costs. If you’re feeling cynical, it was a great excuse for corporate corruption of the worst kind.

The biggest change that has happened since 1934 was in 1996 when there was a sudden desire to “deregulate” the industry. Unfortunately, our legislators’ idea of deregulation is thousands of pages of documentation and close manipulation of the market. The result of the bill that was signed by President Clinton was not a free, untethered market—instead it was a way of micromanaging the industry. 13 out of the 15 FCC Commissioners behind this regulation would go on to become corporate lobbyists for the telecommunications industry, which should give you an idea about what kind of motives were behind such a bill.

After this artificial filling of the ISP bubble, it predictably burst in 2001, leading to the bankruptcy of most of the major ISPs such as Worldcom, Rhythms NetConnections, and Northpoint Communications. Quite predictably, all of this was blamed on the “deregulation” of the 1996 bill, despite that very little deregulation ever actually occurred. This brings us to where we are today—giant corporate monopolies that act as the gatekeepers of the internet that protected by constant government intervention, tampering, and regulation.

The Revolving Door

Here’s the truth that no one likes to talk about when it comes to regulations: they are almost always written by the biggest corporations and lobbyists in the industry. The revolving door between regulators, lobbyists, industry insiders, and big corporations shouldn’t be something . We all saw the politicians line up to line the pockets of the true 1% in the the banker bailouts of 2008. It doesn’t matter which side of the political spectrum you’re on—no one likes mixing corporate greed with government power.

A lot has happened between then and now—including a number of reforms that have passed over the past 75 years. But just a quick glance at the track record of the recent FCC Chairmen and Commissioners reveals how bad this entity in particular has gotten. The FCC Chairman from 2001-2005 was Michael Powell, the son of former Secretary of State Colin Powell. After leaving his position, which was known for the debacle over Janet Jackson’s Super Bowl controversy, he would go on to become the president of the National Cable and Television Association (NCTA). The man he replaced at the NCTA was Kyle McSlarrow, who had left the lobbying organization to work at—yup, you guessed it—Comcast. Powell would also come to sit on the Board of Directors at American Online, a position his father held while he was opposing harsh conditions on the AOL-Time Warner merger as FCC Chairman. The AOL-Time Warner merger was the largest corporate merger in U.S. history.

One more example: one FCC Commissioner who served from 2009-2011 was Meredith Baker, who had a long career as a telecom lobbyist and supported Comcast in its fight against the FCC over BitTorrent blocking. She then went on to approve the Comcast-NBC Universal merger in 2011 and then leave her FCC position to work at the newly merged Comcast-NBC Universal as Senior Vice President of Government Affairs. You just can’t make this stuff up.


And what about current FCC Chairman Tom Wheeler? Well, early on in his career as a DC telecommunications lobbyist, he was also the president of the NCTA (the same one that Michael Powell would later become the president of) and then later went on to be the CEO of the Cellular Telecommunications & Internet Association—all before his current position as the FCC Chairman.

This is who we are dealing with here. These are the people we are asking to save the internet. They don’t have our best interests in mind, nor do they have an understanding of what a true free internet would look like. And yet these are the bureaucrats who we are asking to be the next supposed Internet hero—the next Aaron Schwartz or Edward Snowden.

We all want a free and open internet. We all want internet access to be cheaper and readily available to everyone. We all want internet culture to thrive and for every person to have the chance to use the internet to broadcast their voice. More than all that, we want to be able to binge-watch our favorite TV shows instantly without having to pay more. We want to bake our cake and we want to eat it too—and there’s nothing wrong with that necessarily.

But the FCC just isn’t the entity to enable that freedom. They never have been and likely never will be. The corruption runs too deep and the insider top dogs will always be the ones calling the shots. Forcing Net Neutrality is a short term fix for a large problem that will only open up more doors for government intervention and corporate corruption—and that doesn’t even address the privacy concern that the government will need access to every packet of internet data to ensure that it’s being handled correctly.

There is certainly much more that can be said, but what I’m not saying is that you shouldn’t be outraged by what Comcast is doing or that you don’t have the right to raise your voice in favor of Net Neutrality. But know this: until there is true deregulation and open competition in the ISP market, we won’t truly have the free internet we were always promised. That’s not just the contrarian in me talking—it’s history.