Looking Into the Future By Learning from the Past: Net Neutrality in the 2020s

March 10, 2022

First in a Digital Progress Institute Series

by Kate Forscey, Contributing Fellow at The Digital Progress Institute and Principal of KRF Strategies

Net neutrality, that beloved buzzy tech policy term, means different things to different people. And it’s meaning often depends on the problem someone is trying to solve.  For some, net neutrality meant no walled gardens like those AOL once had in place.  For others, it’s meant no fast lanes and no fees for tweeting. For still others, it’s meant stopping the “cableization” of the Internet a la Portugal. And for still others, it’s just meant fast, smooth access to Netflix and other streaming services.

I posit that the common thread among all these conceptions of net neutrality is to understand what it intends to do—to create an Internet ecosystem that protects and promotes: innovation, competition, and access to and by consumers on the platform and innovator end. It seeks to prevent Internet actors from using their dominant position in one market to stomp on their competitors in another.

But let’s turn back to net neutrality’s roots.  In 2003, Tim Wu coined the term “net neutrality” in his paper Network Neutrality, Broadband Discrimination. He defined a neutral network as “Internet that does not favor one application over another.” Over the years, regulators and legislatures have translated this into a set of nondiscrimination principles intended to prohibit or prevent Internet gatekeepers from blocking, throttling, or extracting fees for more favorable terms. In addition, transparency is another core tenet of net neutrality principles, requiring companies to make their practices readily available to their customers, because true neutrality is contingent upon consumers being apprised of harmful practices all the way up the stack. But the bottom line—and what Wu and other proponents of net neutrality rules worry about—is that net neutrality is most critical when competition is lacking in a marketplace.

To that end, we can think of net neutrality as an outgrowth of a market failure or failure of antitrust enforcement in the Internet space. Put simply, consumers expect that when they pay for access to the Internet or a streaming service, they can go where they want and access what they want (barring illegal content). However, when a gaggle of companies control or can control consumers’ online experience, then net neutrality requires us to have rules of the road for those companies in place to ensure a free and open Internet.

For some background, the gatekeeping effect of highly concentrated Internet service providers (ISPs) market was at the core of Wu’s concern. In 2003, the largest companies in the Internet space just so happened to be the cable and telecommunications providers. Wu worried about mergers occurring between these entities and felt that, if left unchecked, it could lead to a significant market concentration on the network layer as we had seen in other marketplaces in the previous century. This high concentration could lead to Internet service providers being the ultimate gatekeeper, controlling what Americans saw and did online—all to benefit their own services. As it would come to pass, these were not hypothetical concerns. One concrete example is the famed Madison River case, where an ISP blocked a competing VoIP service, like Vonage, because it competed with their own telephone offerings. Another was Comcast’s limiting BitTorrent uploads, which would lead to a decision in Comcast v. FCC that precipitated the now-hot debate we remain locked in today.

To quell the concerns it started to see in the marketplace, the Federal Communications Commission (FCC) took an active role in regulating ISPs, beginning with a set of policies put forth by a Republican administration. However, when a court found these to be fine in theory but not binding as a matter of law, the FCC moved to put more enforceable rules of the road in place. Since 2008, the FCC has gone from no rules to light-touch rules—that were again found unenforceable by the court—to rules that treat ISPs similarly to other public utilities (e.g., electricity or traditional telephone). In 2017, the FCC then rescinded those rules and went back to transparency-only rules, with the Federal Trade Commission taking the reins on enforcement. 

This oscillation between which Administration the agency falls under has led some people to question whether Congress should step in and lay down the rules of the road for net neutrality in a more concrete way. Indeed, in the wake of the 2017 FCC rule, there were several bills introduced in Congress attempting to solidify net neutrality principles into law. Many of the companies to whom net neutrality applies laud this approach because of the certainty it provides for the market and their customers.

But many proponents believe that the FCC remains the most appropriate place to address new net neutrality. Hence, with the 2020 return of Democratic majorities across federal legislative and executive branches, there is renewed energy to tackle net neutrality.

However, this raises many questions given today’s Internet landscape. For instance, if net neutrality is at its core about competition, where do the competitive issues with platforms and content factor in?  Are the agencies still the right or only venue for authority, or does Congress also need to play a role? What complementary role does the FTC have, particularly with regards to platforms? How do we adjust core principles to apply to other competition issues in the broader Internet industry? 

It may be time for lawmakers to explore more deeply what net neutrality means for our rapidly evolving Internet ecosystem.

For one thing, everyone can acknowledge that the Internet has changed in big ways since 2008. Heck, since 2017. Internet platforms and content providers that were considered “start-ups” are now global behemoths. Moreover, Congress has found rare bipartisan ground that something needs to be done about so-called “Big Tech,” as have advocates on both sides.

Recall that the gatekeeping effect of a concentrated Internet service provider market was at the core of Wu’s original concern. Or put in more general terms, Wu felt that net neutrality principles were necessary as a result of a market failure or failure of antitrust enforcement in the Internet space.

We may be seeing this in the Big Tech markets. Certain tech mergers and a lack of antitrust enforcement have allowed companies, like Google, Facebook, Apple, and Amazon control what we see online and what apps we can access. Meanwhile the streaming marketplace has exploded. And because of their size and that they can funnel online ad revenues more directly, they have the “incentive and ability”—the term used to explain the need for original net neutrality—to use (and abuse) that power, such as large app store platforms collecting rents from competing apps on their app stores, harming competition in the platform marketplace.

No one supports anti-competitive actions, and so it’s no surprise that FCC Commissioners from both political parties have historically supported the concept of net neutrality—it was Republican Michael Powell that first proposed the “four freedoms” of the Internet; it was Republican Kevin Martin that first went to court to enforce net neutrality; it was Democrat Julius Genachowski that first proposed and adopted net neutrality rules; and Democrat Tom Wheeler, who created the first set of rules held to be enforceable by the courts.

So if Democrats and Republicans agree that blocking lawful content online is wrong, maybe it’s time to apply net neutrality concepts in a more comprehensive capacity. Why focus on just ISPs alone? Large tech companies now raise significant competitive concerns as well. Given that larger tech firms are also capable of controlling content in their own way, it may be time to evaluate how net neutrality’s principles apply throughout the Internet ecosystem in the 21st century.

Tim Wu wrote his paper almost two decades ago, when the commercial Internet was in its infancy. Even he has updated his thoughts on the threats to a truly neutral net. In his recent book, The Curse of Bigness: Antitrust in the New Gilded Age, he expresses serious concerns regarding Big Tech’s gatekeeping abilities. With all of this in mind, we need to figure out how to apply core net neutrality principles up and down the internet stack—from Internet service providers to content delivery networks to platforms to search engines and applications.  Moreover, we should ask who is the best cop (or cops) on the beat to enforce. A lot of figuring that out requires a closer look at what has changed and what remains the same, and therefore what to retain. We will examine that in our next essay in this series.

On the next blog: What does a forward-thinking net-neutrality/competition policy look like? A framework for the future.