In the last couple of weeks there has been a cacophony of rage against the FCC repealing net neutrality here in the US. Open internet advocates have declared a crisis, and internet users are furious. The majority of critics are labelling this as classic regulatory capture, which at first glance it appears to be. ISPs want more profit and more control, and the government is giving them both.
However, it’s a complex issue. In order to serve society’s future internet needs there must be on-going investment in infrastructure — there would be no Netflix today if we were still all plugged into 56kbps dial-up lines — but not all services require such demanding specifications, and not everyone uses those services that do.
“Internet rights are civil rights” — Jay Stanley, a senior policy analyst at the American Civil Liberties Union
The services that need high specs could be charged more than those that don’t: an ISP could, for example, prioritise packets that carry video calls over those that carry email. This might sound sensible — like charging drivers to pay for tarmac roads, while leaving those on horseback to their dirt paths.
But then remember that utilities are a natural monopoly. Giving monopolies more control over the flow of information is rarely a good thing. The consumer and small businesses looking to challenge the status quo are likely to suffer. It’s a tough problem, so who do you side with?
The European experience could prove instructive. In 2015 the European Parliament rejected full on net neutrality and the end of days has yet to arrive. Analyst Ben Thompson suggests that a possible explanation for this is that the majority of European countries have local competition amongst ISPs. Take the UK: internet used to be slow and expensive, but around 2000 the government mandated Local Loop Unbundling, and competition flourished. ISPs were all striving a lot harder to meet consumer needs and wants. Even without the government mandating net neutrality, the ISPs appear to have some integrity. Maybe consumer choice can win the day?
Zihao joined Octopus Ventures in 2016. Prior to this, he spent more than five years as a strategy consultant with Roland Berger, where he led strategic, operational and transaction advisory projects around the world spanning a wide range of sectors. While at Roland Berger, he also founded Canopy Sunglasses.