The Push for Net Neutrality Arose From Lack of Choice
By STEVE LOHR
Feb 25 2015
The case for strong government rules to protect an open Internet rests in large part on a perceived market failure — the lack of competition for high-speed Internet service into American homes.
The Federal Communications Commission is expected to adopt on Thursday utility-style rules to ensure so-called net neutrality, prohibiting practices like offering pay-to-play fast lanes on the Internet. A legislative response by Republicans on Capitol Hill has stalled out.
The F.C.C.’s approach makes sense, proponents say, because for genuine high-speed Internet service most American households now have only one choice, and most often it is a cable company.
“For the moment, cable has won the high-speed Internet market,” said Susan Crawford, co-director of the Berkman Center for Internet and Society at Harvard Law School, and a former adviser to the Obama administration.
The new rules will not ensure competition from new entrants, ranging from next-generation wireless technology to ultrahigh-speed networks built by municipalities. Instead, strong regulation is intended to prevent the dominant broadband suppliers from abusing their market power.
Technology, of course, can change quickly and unpredictably. So, analysts say, it is impossible to predict what the competitive landscape might look like in several years, or a decade from now.
“But we are very unlikely to see any kind of broad-scale, national competitor to the incumbents in the near future,” said Kevin Werbach, a former F.C.C.counsel and an associate professor at the Wharton School of the University of Pennsylvania.
Tom Wheeler, chairman of the commission, described the challenge in a speech last year. “The underpinning of broadband policy today is that competition is the most effective tool for driving innovation, investment and consumer and economic benefits,” he said. “Unfortunately, the reality we face today is that as broadband increases, competitive choice decreases.”
When judging from lower-speed services and mobile access, there is ample competition. But Mr. Wheeler’s analysis leans on the definition of high-speed service at download speeds of 25 megabits per second or higher. He terms the 25-megabit threshold “ ‘table stakes’ in 21st-century communications,” when households are increasingly using online connections to download movies and music. At that level, 55 percent of consumers have only one choice of provider, according to the F.C.C.
Last month, the commission redefined basic broadband service, adopting the 25-megabit standard, up from four megabits. The move was opposed by the two Republican commissioners, including Ajit Pai, who says there is a “very competitive marketplace.”
With or without the new net neutrality rules, cable broadband faces numerous competitors. They include upgraded versions of the DSL, or digital subscriber line, technology offered by most telephone companies; next-generation wireless service; Internet access from low-orbit satellites; and very-high-speed fiber optic connections to homes.
Each has promise, analysts say, but also limitations. The telecommunications companies have employed a variety of techniques to increase the performance of DSL and have made progress. But cable remains a more capable technology, and keeps advancing.
“The gap between cable and DSL is getting larger,” said Craig Moffett, a senior analyst at MoffettNathanson Research.
Mobile wireless services are improving rapidly. But even if high speeds and steady transmission could be achieved, analysts say, the cost to consumers on metered data plans would make them inordinately expensive for households streaming movies on Netflix, for example. Mobile wireless is for data sipping, not gulping.