Case Study #2 The Battle over Net Neutrality

Overview

Debates over how government should regulate the internets evolution heat up whenever anyone mentions net neutrality. Here are the two sides of the debate:

The Case for Net Neutrality

This side argues that carriers selling internet accessVerizon, AT&T, and Comcast, for instanceshould not discriminate for or against different content providers or applications. All traffic should be routed neutrally, and the carriers should not make special deals to favor some content by giving it more bandwidth so movies and games will play more smoothly and web pages load faster. So-called zero-rating offers, in which carriers such as AT&T and Verizon exempt their own streaming services from their wireless customers data caps, should also be banned. Companies that provide content over the internet, such as Amazon, eBay, Google, Lending Tree, Skype, PayPal, and Netflix, typically support net neutrality, along with nonprofits that advocate for openness, such as the American Civil Liberties Union, American Library Association, and Educause.

The Case Against Net Neutrality

On the other side of the debate are the carriersAT&T, Verizon, Comcast, and others. They argue that incentives are needed to encourage their investment in the network infrastructure and that their networks have to be managed to provide the best service at reasonable costs. Video downloads, in particular, hog bandwidth to the detriment of other users who just want to read the news or send email. In fact, this issue gained considerable steam when Comcast began throttling download speeds for subscribers who used BitTorrent, software that downloads movies. Comcasts move, while helpful to most customers, was a violation of net neutrality. Carriers also argue that the networks will need to offer fast lanes for services that should be high priorities, such as medical applications or self-driving cars.

How the Case Is Unfolding

Even though adherence to the net neutrality principle was voluntary, the Federal Communications Commission (FCC) reprimanded Comcast for what it considered an outrageous violation. Comcast sued, and the courts decided the FCC didnt actually have jurisdiction to reprimand anyone because the commission has no authority over broadband communications. The FCC went on to establish rules supporting net neutrality anyway. In 2015, the FCC reclassified broadband services from a lightly regulated information service to a more heavily regulated telecom service. To no ones surprise, the carriers objected to the FCCs rules, and lawsuits are under way, arguing that the FCC went way beyond its authority. Verizon also claimed that the rules violated the companys freedom of speech by taking away its control over its own propertyits networks. Whether network traffic is speech is an interesting question, of course. Another wrinkle in this debate involves Facebooks Free Basics service, which the company launched in India to provide mobile access to Facebook and a few other websites that wouldnt count toward the customers data plan. Critics argued that the service is a kind of walled garden that violates net neutrality by giving unfair advantage to Facebook. Indias regulators agreed with the critics and blocked the service. In 2017, the FCC began the process to roll back the 2015 regulations, and the period during which interested parties could comment became chaos. The FCC received more than 22 million comments, but many were duplicates, or they came from bots or fake email addresses. The agency voted to repeal the net neutrality regulations and new court cases began. All businesses that have an online presence and organizations that rely on the internet have a lot at stake in this debate, and so do consumers. The outcome of the many lawsuits will affect the internets future and the way governments treat the nets development.

Assignment

In a 1-page Word, Google or PDF document, respond to the following question:

How do the interests of carriers differ from the interests of websites? What are the implications for websites from a value chain perspective?