President Barack Obama's declaration that the Federal Communications Commission should use its Title II authority under the Communications Act of 1934 to treat Internet service providers as "common carriers" sounds incredibly technical, but its philosophical and practical implications are quite simple. If the FCC follows his suggestion, it will mean that Internet service will effectively be considered a necessary element of modern life just like electricity or telephone service, and it will mean that ISPs cannot pick and choose what content users have access to and at what speeds. Such a ruling would set off a firestorm of lobbying and litigation from heavy-hitters like Verizon and Comcast, but it would also preserve the free-flowing Internet to which we have grown accustomed and recognize the degree to which it has become essential to fully participating in society and the economy.
The philosophical question here is whether ISPs are more like electric companies or cable companies. Electric utilities have long been subject to strict regulations that ensure standardized services to all customers on the grounds that electricity is a necessity. The utility's role is simply to provide reliable service, and what you do with the electricity it delivers is up to you. Cable companies, on the other hand, have not been regulated in that way, and they enter into complex business arrangements with various cable channels to offer consumers packages of service. On the plus side, this approach has led to a profusion of entertainment options for viewers. On the down side, it has made cable bills increasingly expensive and opaque. How much are you paying for each of the hundreds of channels you never watch? You'll never know.
The big Internet service providers want the cable model of regulation, and no wonder. It gives them tremendous power and with it the ability to squeeze out new revenues. If the FCC bucks the president (and, as an independent agency, it certainly could), expect first and foremost that the ISPs will start negotiating with bandwidth hogs like Netflix and Hulu for payments to ensure preferential access to their networks, with the costs no doubt passed along to their subscribers.
At first blush, that may not sound like a big deal, and maybe even the fair approach. At peak times, Netflix alone accounts for about a third of Internet traffic in the United States. Why, you might ask, should those who don't subscribe to Netflix see their traffic slowed to accommodate all that "House of Cards" binge-watching? But under a world without net neutrality, we could see ISPs block our access to certain websites or services altogether. This happens periodically in the cable TV world when a provider reaches an impasse in negotiations with a network and a channel temporarily disappears for some customers.
It's annoying when a contract dispute prevents viewers in one city or another from seeing a football game or an episode of "Dancing with the Stars." But the stakes with the Internet are much higher. It is the medium through which we communicate — increasingly more so than the telephone — and with all due respect to C-SPAN, it is crucial to the functioning of democracy and civil society in a way that cable TV has never been. Without net neutrality, ISPs, which as a practical matter face little competition for true broadband service in most markets, would have the ability to restrict access to content for whatever reason they choose, whether commercial or political. That would fundamentally alter the Internet's power as a means to exchange information and foster social and political mobilization.
There's an economic case for net neutrality, too. One of the key factors in fostering the explosive growth of innovation on the Internet has been the low barrier to entry for new companies. Because every consumer on the Internet has the theoretical ability to access any site, fledgling start-ups have the chance to upend established players. Just as Netflix killed Blockbuster in the bricks-and-mortar world, some new innovator could displace Netflix online. That's good for the economy, both because it creates opportunities for growth and because it prevents complacency by big companies. But if firms like Netflix and Hulu are paying for preferential access, it will be difficult in not impossible for a new entrant to compete in the market.
The FCC would need to approach regulation of the Internet carefully. Not all the elements of the regulations on other utilities apply, as President Obama suggested in his statement Monday. Ideally, Congress would step in to write new rules that reflect the reality of the modern communications landscape. But in principle, a common carrier designation is a far simpler and more effective approach than any of the attempts at compromise FCC Chairman Tom Wheeler has made in the last several months. His response to the president's remarks was cautious, but we hope in time he will recognize that reclassification of Internet service is the only way to preserve the web's open nature that will stand up in court.