Why the death of net-neutrality rules will be a big campaign issue

Contributing Editor
Yahoo Finance
You haven’t heard the last of net neutrality. (AP Photo/Charlie Riedel)
You haven’t heard the last of net neutrality. (AP Photo/Charlie Riedel)

As of Monday, net-neutrality rules are really, officially, and certifiably dead. But the argument over whether the government should prohibit internet providers from blocking or slowing legal online sites or charging some for priority delivery is very much alive.

Federal Communications Commission chairman Ajit Pai championed the repeal of the rules the FCC enacted in 2015, before President Donald Trump elevated him to head that telecom regulator, though he would not have you think that. He took a victory lap in a June 11 CNET op-ed for “restoring internet freedom.”

“Our regulatory framework will both protect the free and open internet and deliver more digital opportunity to more Americans,” he wrote. “Our goal is simple: better, faster, cheaper internet access for American consumers who are in control of their own online experience.”

But voters and representatives who disagree have ways to counteract Pai’s actions. And don’t expect this debate to end anytime soon. It shouldn’t—because the underlying problem behind this argument, inadequate choice for residential broadband, isn’t going away either.

Don’t expect to see obvious abuse by internet providers

The big fear about repealing net-neutrality rules has long been that your internet provider would start blocking or slowing name-brand sites unless they paid up. So Big Telecom would win, Big Content could afford to pay to play, but smaller sites and customers looking for an open internet would lose.

Although telecom execs liked to talk about just that 10 or 15 years ago, don’t expect any such action anytime soon. That would subject any such provider to instant and visceral public scorn and have the added disadvantage of not necessarily making it any more money—many of the costs of providing broadband are fixed.

More subtle violations would both be harder to spot and slower to punish under the new regime. The Federal Trade Commission, now charged with investigating complaints of abuse by providers, was underfunded even before the FCC handed it this mission.

The most likely scenario is providers dangling paid-prioritization deals before sites and apps that demand copious bandwidth or an exceptionally responsive connection. But outside of “zero-rating” propositions, in which providers exempt a site from the bandwidth caps they impose on users, U.S. telecom firms have yet to strike those deals.

Ajit Pai (center), president of the FCC. EFE/JIM LO SCALZO
Ajit Pai (center), president of the FCC. EFE/JIM LO SCALZO

The battle will continue in and out of Washington

Many opponents of Pai’s move have banked their hopes on a congressional resolution of disapproval that would cancel out his cancellation of the 2015 rules. That narrowly passed the Senate but faces tougher odds in the House—and even then, Trump could veto the resolution.

Advocates of this resolution say that since the president has no clearly defined tech-policy principles, he might decide to cut his FCC chair loose if he sees the political winds blowing elsewhere. That strategy seems a little … thin.

But the president can’t tell individual states what to do, and many are considering their own net-neutrality actions. As of May 25, the National Conference of State Legislatures counted 29 states with net-neutrality bills introduced; Oregon, Vermont and Washington have passed theirs, while California and New York look likely to join their ranks.

In six more states—Hawaii, Montana, New Jersey, New York, Rhode Island, and Vermont—governors have signed executive orders requiring internet providers doing business with the state to abide by net-neutrality principles.

You will hear about this during campaigns

In political terms, the real payoff of the resolution of disapproval may be forcing representatives and senators to take sides on an issue with one-sided support. A December survey by the University of Maryland found that 83% of respondents opposed repealing the net-neutrality rules—as did 75% of Republicans.

One reason why: Most Americans still resent their telecom providers. The American Customer Satisfaction Index’s latest study of customer attitudes toward the telecom sector, released May 22, found consumer approval of internet providers had dropped to 62 out of a possible 100—“an all-time low for the industry that along with subscription TV already had the poorest customer satisfaction among all industries tracked by the ACSI.”

Accusing your opponent of taking the side of Comcast (CMCSA), with an ACSI score of just 60, seems like the kind of campaign ad that writes itself.

We still have a problem with broadband choice

If you could easily fire an internet provider that tries to tamper with your connection and play favorites with your own favorite sites, the net-neutrality debate might not exist at all. But too many Americans don’t have that kind of choice.

As of the end of 2016, the latest data released by the FCC, 43% of census blocks had only one or no providers selling connections at least as fast as 25 megabits per second, the commission’s definition of usable broadband. At 100 Mbps, the speed you’d want to stream 4K video to multiple devices, that figure drops to 15%.

A recent survey by the Pew Research Center found that one in five U.S. households only had wireless broadband, which should allow for a much better choice—but sharing a smartphone connection with a laptop usually subjects you to data caps that make full-time usage untenable.

Even if the best-case scenarios for repealing net-neutrality rules come to pass—that lifting this regulatory burden will free providers to invest in upgrading and expanding their services—we won’t see those benefits until well after the next election. That could result in a new Congress primed to repeal Pai’s repeal—or pass a net-neutrality bill that, were Trump to sign it, couldn’t be reversed with a tap of the “Undo” button by a future FCC chair.

Note: Yahoo Finance is owned by telecom provider Verizon (VZ).

Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.

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