What's at stake for consumers if and when the FCC ends 'net neutrality'

What does the 'open internet' mean? Here's why you should care.

  • By Quentin Fottrell,
  • MarketWatch
  • Markets
  • Online Security
  • Technology
  • Markets
  • Online Security
  • Technology
  • Markets
  • Online Security
  • Technology
  • Markets
  • Online Security
  • Technology
  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
  • Print

It could be the end of the road for net neutrality.

"Net neutrality" sets out principles for regulators to treat all companies using the internet equally. Consumer advocates call that an "open internet." The Trump administration calls it "micromanaging." The Federal Communications Commission chairman Ajit Pai recently circulated a plan to repeal Obama-era net neutrality rules in an attempt to "restore freedom" and is expected to undo Obama-era rules protecting net neutrality on Thursday.

The Wall Street Journal investigated comments on the FCC website and uncovered "thousands" of fraudulent comments on regulatory dockets at federal agencies, using what appeared to be stolen identities posted by computer bots. "In a random sample of 2,757 people whose emails were used to post those 818,000 comments, 72% said they had nothing to do with them," it found. This public comment process is designed to democratize the process and can influence the outcome.

Here's how net neutrality affects you:

  • People can purchase different internet speeds from their cable provider for different prices
  • But that guarantees the same speed for all videos on sites you access with that account
  • Net neutrality ensures that those speeds are equal regardless of what service you use
  • An end to net neutrality could favor services that pay more to internet service providers

Not everyone agrees with that assessment. Last month, Pai argued that ending net neutrality or the "open internet" will promote competition. The Obama-era FCC, he said in a statement, "imposed heavy-handed, utility-style regulations upon the Internet." Instead, the FCC would simply require Internet service providers to be transparent about their practices so that consumers can buy the service plan that's best for them," Pai added.

Verizon welcomed the FCC's stance. "We're very encouraged by Chairman Pai's announcement today that the FCC will move forward next month to restore the successful light-touch regulatory framework for Internet services," it said. But Google, the world's most popular search engine, said in a statement, "We're disappointed in the proposal."

Consumers also have a lot at stake. Repealing net neutrality rules would give internet service providers more power over what sites we visit and make it more difficult for new companies to grow, said Jonathan Schwantes, senior policy counsel for Consumers Union, a New York-based nonprofit. It would lead to consumers being strong-armed into paying higher prices for higher speeds, he said.

A two-tiered internet where some websites could be left with slower access

The FCC originally approved "open internet" net neutrality rules in 2015. In April, the newly-confirmed FCC chairman Pai released a preliminary plan backed by internet service providers to undo the rules. That would allow cable companies and content providers to make deals to provide faster access to some websites and content, meaning other websites would have slower access.

This, critics argue, would pave the way for cable companies to give some broadcast companies and video streaming services preferential treatment. The 2010 Federal Communications Act forced companies like Comcast and Verizon Communications to treat all video streaming equally. The five-member commission is due to vote on undoing the rules on Dec. 14.

What we watch online could eventually be controlled by a small group of big corporations, said Aram Sinnreich, professor of communications at the American University, Washington, D.C. "The FCC not going to hold these companies to those standards," he said. "The real power of the wireless market will be unleashed with the 5G marketplace and digital companies want to dominate that."

The FCC old rules were designed to make it easy for the Facebooks, Netflixes, and YouTubes of tomorrow to succeed — or get a fair chance — without being penalized by cable companies and broadband providers with slower speeds. Advocates of net neutrality say new players won't get a proper start if they can't harness the full power of the Internet.

Multimedia center

Find more videos and infographics covering important investing and financial topics.

Online content could be controlled by a few 'mega companies'

In the past, there were no preferential conditions for legacy cable companies. "The entire regulatory approach to the internet and digital services is changing," Sinnreich said. "We are seeing a move back towards allowing communications and viewing to be controlled by just a few mega companies." Without competition and innovation, consumers will have fewer choices of faster content, he said.

If net neutrality ended, cable companies would be able to charge Netflix, Hulu and YouTube to prioritize their services. Netflix works with ISPs to secure faster streaming and has a monthly "Netflix ISP Speed Index," meaning that Netflix plays at different speeds on different providers. Currently, Comcast No. 1, followed by Cox, Spectrum, Verizon-FIOS and Optimum AT&T-U-verse.

The majority (57%) of Americans support net neutrality rules to prevent internet service providers from blocking or discriminating against lawful content on the internet, a recent Consumer Reports survey found. Some 16% opposed them and 27% had no opinion. And 67% did not agree that ISPs should be able to choose which websites, apps or streaming services customers can access.

Still, streaming places a burden on the network, which needs to be recouped, said William Rinehart, director of technology and innovation policy at the American Action Forum, a center-right policy institute. "Although the text of the order hasn't dropped yet, this proceeding offers a reset." Consumers, he said, could download a movie at a faster speed for a higher price.

Schwantes sees the FCC's proposed rules as good for cable operators, but bad for Joe Public. "If the FCC approves this proposal," he said, "it would be an enormous loss for consumers."

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
  • Print

For more news you can use to help guide your financial life, visit our Insights page.


Copyright © 2018 Dow Jones & Company, Inc. All Rights Reserved.
Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
close
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
close

Your e-mail has been sent.