The real reason that US internet service providers are terrified of strong net neutrality


US president Barack Obama’s endorsement of regulating the internet like a public utility has garnered praise from open internet activists—and plenty of enmity from the biggest telecom companies. The internet service providers are worried about more than being unable to play favorites with internet traffic: They fear the government will tell them how much money they can make from their services.

Just read this statement from the chief lobbyist for the cable industry, Michael Powell:

There is no dispute about the propriety of transparency rules and bans on discrimination and blocking. But this tectonic shift in national policy, should it be adopted, would create devastating results.

But if you look at Obama’s statement, it’s all about preventing discrimination against certain web traffic. If we take Powell’s vivd statement at face value—and we probably shouldn’t: there is plenty of evidence the industry is interested in discrimination and not really fond of transparency—it seems like there’s no reason for the companies to worry, since Powell doesn’t explain how exactly this new regime would devastate the American internet.

Perhaps he does that because what sounds devastating to the companies might sound quite nice to you, the consumer: The big telecoms are terrified that they’ll have to justify the rates you pay under the new rules—if not now, then eventually.

Right now, no one is really talking about rates: The main concern is balancing access to the internet with investment by the private sector. The FCC wants to make sure it can prevent internet service providers from discriminating against traffic, and US courts have made pretty clear that the best way to do this is to classify the internet as a “common carrier,” as Obama endorsed today. The FCC has the powers to regulate common carriers across a variety of arenas, including preventing unreasonable discrimination.

But one other thing that the FCC can do with a common carrier is ensure that its rates are “just and reasonable.” For instance, the FCC doesn’t allow phone companies to charge more than $6.50 for a single line, so that all Americans can afford access. Similar pricing rules are in place at electricity plants. If the internet is regulated under Title II, the government could come up with a similar cap on how much companies can charge for internet access.

At the moment, proponents of Title II, including Obama and net neutrality founding father Tim Wu, think that the agency should specifically say it won’t mess with internet rates, a process called “forbearance.” While there are arguments from the telecom industry that this would be impossible to do and result in large fees for content providers, both open internet advocates and the content providers themselves seem convinced that Title II won’t demand massive changes in rate-paying.

But even if you concede that the FCC can enforce net neutrality with Title II without messing with rates, open internet activists and telecom officials alike quietly acknowledge that if internet bills keep rising, and society sees internet service providers as a public good, people will start asking why they aren’t paying common carrier rates. At that point, an obvious remedy would be to fully use Title II’s powers.

So, while the big telecoms may be willing to make concessions on discrimination and blocking, they will fight and tooth and nail to avoid any suggestion that the government should consider internet access a necessity of life rather than a consumer good.

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