Fort Report: Net Neutrality

Dec 15, 2017
Fort Report

Little did I know that my recent online shopping experience would become a lesson in a forthcoming policy debate.   To demonstrate my point, I pulled up a major Internet news site on my phone during a staff meeting in Washington.  There it was, an advertisement with customized content from the site I had reviewed earlier.  Even my younger tech-generation staff were amazed at the level of micro-tracking.  “They know your habits,” I said. 

The Internet is a great tool for commerce, information sharing, networking, equalizing the playing field, media, and entertainment.  It has launched a new generation of entrepreneurs, pressured old business models, and created a world of interconnectedness--all good things.   It has also made Apple, Amazon, and Microsoft the wealthiest companies in history.  

But there’s this creeping sense among many Americans that we must watch vigilantly in order to prevent large monopolies from controlling, blocking, or throttling content or content creation. The public fears an industry that could slow down delivery speeds for those of lesser means.  Small business, in particular, fears losing out to larger, better capitalized competitors.  Everyone is concerned about their most intimate personal data being used for profit.  

In the roiling debate over what is now known as “net neutrality,” two sides are at war: the telecommunications/Internet Service Providers (ISPs) on the one hand and content creators, including social media and search engines, on the other.  In a trend long envisioned by stock market watchers, the two sides are crossing over into one another’s turf. Telecoms are becoming media companies, as their greatest threat comes from Internet behemoths like Facebook, Amazon, Netflix, and Google (the famed FANG companies), which have become hugely popular destinations for an increasing number of consumers seeking media and entertainment outside the cable and satellite pay gateway. Conversely, FANGs are seeking to become telecoms, as they procure fiber optic infrastructure to connect their vast data farms. Amazon and Google have already started to provide high-speed Internet service in select parts of the planet.  

The chief telecom beef is that FANGs have built their massive profits on the back of the telecoms’ massive infrastructure investment. And there’s the crux of the issue: In the eyes of telecoms, the FANGs have bought a low-priced ticket in steerage, but are getting first-class transportation of their content. According to one source, Netflix alone represents over 35% of all U.S. Internet traffic, 20% more than the next highest user, Google’s YouTube.  Constrained by their heavy regulation as utilities, rather than as more lightly regulated interstate information services, telecoms complain that they are not making sufficient return to justify further infrastructure investment. On the other hand, “edge” content companies have innovated and delivered in-demand services to the public who, by and large, believe that the Internet should be open without restriction on access. 

Against this backdrop, I recently urged Federal Communications Commission (FCC) Chairman Pai to preserve the framework of net neutrality: maintaining the necessary consumer guardrails while encouraging innovation and investment in vital communications architecture.  As Jared from Lincoln recently wrote to me, “I understand [the FCC Chairman’s] perspective, but that really assumes consumers have an actual choice of who their Internet provider is… Corporate regulation of the consumer is no better than government regulation of the consumer.”  

As of this writing, the FCC just overturned Title II of The Communications Act of 1934, from which the net neutrality regulation of 2015 flowed. But, in the heated Telecom-FANG debate, what we need is assurance that innovation and competition in the digital space is maintained, access to content preserved, and consumer and privacy rights protected. And if all the players in this space do not cooperate to achieve these principles, then Congress should intervene.  

I checked back on the news website.  No advertisement there.  Maybe I missed out on a sale, or maybe the Fort algorithm has already changed.