December 15,2017

the staff of the Ridgewood blog

Washington DC, The FCC voted 3-2 on Thursday to approve chairman Ajit Pai’s plan to repeal “net neutrality” rules backed by the Obama Administration that reclassified internet-service providers as common carriers under Title II of the Communications Act of 1934. Title II prohibits “any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services.”

The Net Neutrality rules effectively deemed the internet a utility, former chairman Tom Wheeler turned the FCC ie the Federal Government into a political gatekeeper. The rules prohibited broadband providers from blocking, throttling and favoring content, which Mr. Wheeler ostensibly intended to help large content providers like Google , and Netflix gain leverage against cable companies.

Bans on throttling content may poll well, but the regulations have created uncertainty about what the FCC would or wouldn’t allow. This has in tern  throttled investment. Price discrimination and paid prioritization are used by many businesses. Netflix charges higher prices to subscribers who stream content on multiple devices. Has this made the internet less free?

Mr. Pai’s rules require that broadband providers disclose discriminatory practices unlike now. Thus cable companies would have to be transparent if they throttle content when users reach a data cap or if they speed up live sports programming. Consumers can choose broadband providers and plans accordingly. The Federal Trade Commission will have authority to police predatory and monopolistic practices, as it had prior to Mr. Wheeler’s power grab.

Despite the screams from the left Mr. Pai’s net-neutrality rollback will also support growth in content. Both content producers and consumers will benefit from increased investment in faster wireless and fiber technology. Apple is pouring $1 billion into original content to compete with Amazon, Netflix and YouTube.

Disney is buying the 21st Century Fox assets in an effort to compete with Netflix and other streaming services, build leverage with cable companies and establish a global footprint. Netflix has more than 47 million international subscribers and streams in nearly every country. Fox will keep its news and main sports channels, which can offer “live” content to consumers. The antitrust concerns should be negligible.

More positively consumers will also benefit from the speeding up of the breakdown of the cable monopoly as they offer more customized “bundles” like Hulu or a Disney stream that may cost less and no longer force large expensive packages of channels on customers  Americans will also enjoy new distribution options, which could have been barred by the old net-neutrality rules.

This week T-Mobile announced its acquisition of Layer3 TV, a Denver startup that streams high-definition channels online and will compete with AT&T’s DirecTV Now. Verizon Wireless last month said it will start delivering high-speed broadband to homes over its wireless network late next year. Google and AT&T are experimenting with similar services that will be cheaper than digging dirt to lay cable. This could be a boon for rural America.

Google, YouTube and Facebook have vigorously promoted net neutrality in theory but less in practice. While Google says it remains “committed to the net neutrality policies,” the search engine like Facebook uses opaque algorithms to prioritize and discriminate against certain content, sometimes in ways that undercut competitors. Net neutrality for thee, but not me should be Google , YouTube and Facebooks mantra . In simple terms these providers till search results to favor politically correct view points. Google, YouTube as well as Facebook should be far more transparent about these discriminatory practices.

Technology and markets change faster than the speed of regulation, which Ajit Pai’s FCC has recognized by taking a neutral position and restoring the promise of internet freedom.