Report: Net Neutrality Leads to Higher prices, Less Innovation

Say goodbye to unlimited HBO data streaming, think tank says

• May 17, 2017 5:00 am


Keeping Obama administration-era net neutrality rules would result in higher Internet prices for consumers and less innovation, according to a new report.

The Competitive Enterprise Institute released a report Tuesday providing a history of net neutrality regulations and arguing the Internet flourished precisely because it was free from federal government control.

The Federal Communications Commission will meet and vote Thursday on Chairman Ajit Pai's proposal to reverse the Title II net neutrality rule that treated Internet service providers, or ISPs, as utilities rather than information services. Information services have historically been free from regulation, but the Obama administration's FCC changed course by subjecting ISPs to broad regulation with the adoption of net neutrality in 2015.

"Consumers should be aware that net neutrality regulations will result in higher prices and less innovation for their broadband services. So, if it ain't broke, don't break it," said Jessica Melugin, an adjunct fellow at the Competitive Enterprise Institute and coauthor of the report. "Just look at Europe's broadband market. It has long been regulated like a utility, and they now have half as much investment in wireline service as the United States, and their average mobile broadband speeds are 30 percent slower than what Americans enjoy."

"Washington's hands-off approach has allowed a vibrant, open, and free Internet to flourish for decades," according to the report, which explains that regulating companies like Verizon and Comcast as utilities went "far beyond net neutrality's relatively humble roots."

"If you have watched Last Week Tonight with John Oliver recently, you will have noticed that its TV comedian host is upset about something called ‘net neutrality,'" Melugin and coauthor Ryan Radia, CEI's regulatory counsel, wrote. "But does anyone know what it means?"

The report sheds light on the complicated rules highlighted by Oliver's "go FCC yourself" campaign, which has led to racist attacks against Pai.

The rules force ISPs to treat all data transmitted over the Internet in the same manner. However, not everything on the Internet is treated equally by consumers, the CEI report argues.

"The FCC's net neutrality orders presume that consumers will be better off if their ISPs are barred from throttling usage on an application-by-application basis," the report said. "In reality, not every consumer perceives every byte of Internet traffic to be equally valuable."

"If a mobile ISP were to degrade video content from ultra-high-definition to ‘ordinary' high-definition, how many consumers could even tell the difference?" Melugin and Radia ask. "The answer depends on the technical sophistication of the ISP's customers, the capabilities of their mobile devices, and even their average visual acuity."

The report argues that ISPs are better equipped at finding innovative solutions to solve network congestion than federal regulators. Net neutrality has "thwarted such exploration, ultimately reducing innovation and consumer choice."

As a result of net neutrality rules, companies are restricted in how they can manage Internet traffic on their own networks.

"If the FCC rule is left intact, it will prevent you from getting free stuff like sponsored data from your wireless provider," Radia said.

"Just think, if you like unlimited HBO with your AT&T plan or unlimited music streaming from T-Mobile, then you should demand that these net neutrality regulations be eliminated," he said.

Published under: FCC, Internet