Breaking Down the Effects of Net Neutrality

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(The original podcast originally appeared on MarketScale and can be found here)

What is net neutrality?

“Net neutrality” refers to rules put in place in 2015 that primarily prevent internet providers from locking specific content behind paywalls and/or discriminating against particular websites or apps. A tweet by Ro Kanna, a US Representative from California, became the viral example of the potential outcome in a nation without net neutrality. The U.S. Senate recently passed legislation to put net neutrality regulations back in place, but the likelihood of similar legislation passing through the current House and President’s office appears slim.

Why is net neutrality relevant?

The internet started as a military venture entirely controlled by the government. Although it’s mainly used by consumers now, the control of the internet has never been given to the general public. The FCC decided to give natural monopolies to a few communications companies, who generally decide how the internet is controlled. These large corporations have immense lobby power on government actions, as proven by Ajit Pai, former Verizon Employee turned FCC Chairman. This is largely why net neutrality ending can potentially have an enormous impact on consumers.

Economist’s Point of View

While large corporations like Comcast and Verizon currently control the internet, they still have customers and need to worry about market constraints. Even without net neutrality regulations on these companies, they won’t be able to do whatever they please without losing massive amounts of customers. Before 2015, net neutrality wasn’t a thing, and nothing alarming had occurred to that point. Brand reputation is extremely important to these companies; they won’t want to become the viral example of bad customer experience, a vital part of a company’s success.

The natural monopolies given to these corporations is a far larger problem than net neutrality itself. The question shouldn’t be how they control our access to the internet, but why are there so few companies controlling the internet, and how can control be expanded? Monopolies generally aren’t going to enhance innovation as much as competitive markets. While mega-corporations have the resources and power to compete, individuals and small businesses don’t. A recent example of a corporation using their resources to enter into a new market is Amazon starting their own shipping service to work around their problems with UPS during the holiday season. Net neutrality regulations ending could lead to necessary innovation and the FCC opening up the market to new companies, such as Apple or Amazon.

Average internet connection speed in the United States has nearly doubled since 2015. Technological advancement is not slowing down. The internet is too big to fail, and innovations are bound to happen. An example of a recent innovation in the technology realm would be cryptocurrency, which has become a relevant part of today’s economy. There’s a good chance that future technological innovations will make the internet redundant. No matter what happens to net neutrality, cost, speed, bandwidth, and accessibility of the internet will all improve in the near future. The net neutrality debate has made it clear that many people have powerful opinions on how the internet is controlled. That passion can be channeled into creating the next vast breakthrough technology that makes the internet not nearly as necessary.