The comment period for FCC Commissioner Ajit Pai’s plan to reverse the Obama-era net neutrality regulations recently came to a close, with major industry groups on both sides of the issue rushing to make their voices heard. With big players like AT&T, Apple, and Amazon (and that’s just the As) making contradictory arguments, it’s tough to know what’s really going on. Here’s a quick rundown on why these tech companies might take the positions that they have, in light of how net neutrality stands to affect their businesses.
First we have to remind ourselves that businesses are self-interested. They have shareholders to answer to, and that means they will use government to their own advantage whenever possible. It’s naive to assume that tech companies will always put freedom and innovation ahead of their own profits. Despite clever marketing and the cultivation of a “we care” image, the truth is that these companies have a bottom line to worry about, and if that means exploiting government regulations for their own benefit, we shouldn’t expect anything else.
Supporters of net neutrality who point to companies like Apple as evidence that it is good policy forget that Apple only cares about Apple. They certainly don’t care about the new competitor that may start in a high school kid’s garage tomorrow, but that kid is the one who’s going to get hurt by net neutrality.
So how does net neutrality work, and how does it affect the tech industry? Basically, net neutrality prevents broadband providers from charging different prices to different consumers and from slowing down or speeding up certain connections on a selective basis. Supporters of the regulation claim this is necessary to prevent big companies from paying for an “internet fast lane” that consigns the little guy to slower connection. But in fact, what paid prioritization really allows is not an internet fast lane, but a way for ISPs to compensate for the companies that hog a disproportionate amount of bandwidth.
For example, Netflix and YouTube, by streaming huge amounts of video every second of every day, consume a gargantuan amount of bandwidth that could be allocated to other, smaller competitors. Paid prioritization would allow ISPs to charge them a little bit more for the privilege and pass the savings along to more bandwidth-friendly sites. Under net neutrality, however, the bandwidth hogs get to keep sucking up all the internet’s oxygen cheaply, while their competitors effectively subsidize their use. There are also performance issues, because if Netflix isn’t allowed to pay for better, faster service, it will be more likely to experience outages at peak times.
For this reason, companies that use a lot of bandwidth tend to favor net neutrality — it saves them money. Amazon, with its Prime streaming service, YouTube, and Netflix were all major supporters of the regulation when it first went into effect. Apple, which operates AppleTV, is also a supporter, probably bearing in mind future ambitions for expanded video streaming.
Meanwhile, ISPs like AT&T, Verizon, and Comcast have been against the regulation, as it restricts the levels of service they are able to offer customers, as well as their flexibility in dealing with different types of content. They dismiss the arguments of net neutrality supporters that they would shut off large portions of the internet to their customers. As AT&T wrote in a recent comment, “Market dynamics require all [internet service providers] to honor their customers’ engrained expectations of full access to the Internet.”
Of course, the actual regulatory situation is more complicated than simple net neutrality. Even Apple declines to defend the current regulatory framework, which imposes net neutrality through the circuitous process of reclassifying the internet as a public utility, akin to phone lines. This step was taken due to an appellate court’s 2015 ruling that the FCC lacked the authority to regulate the internet in its current form. The reclassification allowed the FCC to get around that ruling, while also opening the door to much more onerous regulations like censoring content and dictating the terms on which providers offer service.
Some groups that support net neutrality as a concept balked at these regulations, recognizing the potential for abuse. Most notably, Netflix, one of the most vocal net neutrality advocates due to its heavy bandwidth usage, expressed regret once it saw the aftermath of the new regulations. Other companies, like Google and Facebook, supported net neutrality in the past, but have been silent on the plans to reverse it, likely due to the overregulation of treating the internet like a public utility.
In short, the reason some tech companies support net neutrality is that it provides them cheaper access to the bandwidth they use, while making life more difficult for startups that could one day turn into competitors. In addition to benefitting big companies more than small ones, the regulation in its current form also opens the door to all kinds of government control of the internet. As the internet is one of the last frontiers of freedom and innovation, we should all be opposed to that.