Losing Net Neutrality Is The Symptom, Not The Problem: Now Is The Time To Focus On Real Competition

by Mike Masnick

For nearly a decade we’ve been trying to point out that the entire fight over net neutrality is something of a red herring. The concept of a neutral network is quite important for innovation.

I think venture capitalist Fred Wilson does an excellent job talking about how much of a problem innovators might face in the future if we actually lost net neutrality, in that it would massively benefit legacy internet players over innovators:

Entrepreneur: I plan to launch a better streaming music service. It leverages the data on what you and your friends currently listen to, combines that with the schedule of new music launches and acts that are touring in your city in the coming months and creates playlists of music that you should be listening to in order to find new acts to listen to and go see live.

VC: Well since Spotify, Beats, and Apple have paid all the telcos so that their services are free on the mobile networks, we are concerned that new music services like yours will have a hard time getting new users to use them because the data plan is so expensive. We like you and the idea very much, but we are going to have to pass.

Entrepreneur: I plan to launch a service that curates the funniest videos from all across the internet and packages them up in a 30 minute daily video show that people will watch on their phones as they are commuting to work on the subway. It’s called SubHumor.

VC: Well since YouTube, Hulu, and Netflix have paid all the telcos so that their services are free via a sponsored data plan, I am worried that it will hard to get users to watch any videos on their phones that aren’t being served by YouTube, Hulu, or Netflix. We like you and your idea very much, but we are going to have to pass.

But, just because the court this week struck down the FCC’s weak attempt at forcing net neutrality rules on ISPs without resorting to classifying them as telcos, it doesn’t mean that the answer is to classify them as telcos and give the FCC a broad mandate over them.

And that’s because net neutrality fights have always been the symptom not the problem. A symptom of what? Of a near total lack of competition in the marketplace, a problem that has only become worse over time. Telco lobbyists will argue that we don’t need net neutrality because we have real competition, but they base that claim on the laughably inaccurate data that the FCC has put together at broadbandmap.gov. The FCC has been releasing totally bogus broadband data for years, and among the problems here are that it counts mobile data services as real broadband competitors, even though the big mobile data providers (often the same as the big telcos: Verizon & AT&T) don’t let you actually use mobile broadband as a full time service (not to mention that the speeds and reliability are a lot lower, while the costs are much, much, much higher). The reality is that there is less competition, as you basically still have one cable provider and one DSL/fiber provider in most places, with the DSL/fiber telcos actively trying to get out of the wireline business to concentrate on the more lucrative wireless world.

So, rather than picking a fight that is unlikely to be won (i.e., trying to get a timid Congress and or FCC to back the idea of presenting new net neutrality rules by reclassifying broadband ISPs — something that is seen as politically unfeasible) it’s time to recognize what the FCC should have realized a decade ago, but has always avoided: focus on encouraging real competition.

Two separate articles about this week’s ruling discuss this in more detail, and you should read both. First is Ryan Singel’s post about how the FCC won’t save net neutrality, and we should focus on building real competition. He argues the best path forward is through municipal fiber operations that offer open access to service providers. The big broadband providers have known all along that this is the most effective weapon against their fight for a monopoly, which is why they’ve lobbied hard to outlaw even the possibility of such competition in a bunch of states.

The other piece to read is former FCC staffer, now Wharton professor, Kevin Werbach’s take on all of this, which comes to the same basic conclusion. Congress and the FCC don’t have the stomach to reclassify broadband and put in place net neutrality rules, so it’s time to focus on the real issue, and that’s increasing competition:

The best hope for a dynamic, affordable, and innovative Internet is real broadband competition.

Most of the greatest barriers to broadband competition are at the local level: State prohibitions adopted at the behest of the incumbent carriers, difficulties with zoning and access to rights of way, and limited willingness to invest in the kinds of municipal open access fiber optic utilities that are wildly successful in cities like Stockholm. The FCC has been hesitant to confront these impediments, perhaps because it was so focused on net neutrality.

And the reason it was so focused on net neutrality was because it was unwilling to take on the real issue all along. It would provide lip service to competition, but never make any move to support real competition. But Werbach is correct: local state-level prohibitions have made real competition quite difficult. Getting access to rights of way is the biggest challenge in building a competitive network.

Google Fiber is no solution. It’s only available in a few places, and there are no indications that it will go national. And, despite early promises to run its network on an open access basis, Google has since backed away from that promise. That’s a big problem. Still, what we have seen is that real competition can make a difference. Whenever Google shows up with Google Fiber, boradband connections suddenly, magically get better for customers of competing broadband ISPs as well.

That’s how competition works. It drives investment and innovation. I have tremendous respect for Marc Andreessen, but I think he is wrong in thinking that there can’t be significant investment in broadband with net neutrality in place. Everything else he says in that link is correct though: faster, better broadband is key to all sorts of economic opportunity, but there’s no evidence that we get that when there’s no competition (and no net neutrality). Instead, what we need to do is to drive real competition.

That can be at the network level, but making it easier for local providers, whether municipal or (better yet) locally owned, or it can be at the service level. We’ve talked before about Australia’s efforts to build a fiber network across the entire country, but then let service providers compete on the network. Those are all plans that can work. The focus needs to be on competition, because once you have real competition, the net neutrality issue fades away.

Why? Because any service provider that tries to double charge Netflix or Hulu or Spotify to get to you becomes an option that users will leave. Competition keeps broadband providers honest. But dishonest broadband providers have spent years making sure there is no real competition, and since the government refused to take on this real issue, it instead focused on some weak net neutrality rules.

Those rules are gone.

What they’ve left exposed is a broadband market that’s massively lacking in competition. It’s time to fix that problem.

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