Network Neutrality Misconceptions

Of the many “myths” about net neutrality, perhaps five most are most widespread, according to Brent Skorup, Mercatus Center research fellow.

They are:
  • The Internet is, and has been, neutral
  • Net neutrality is the only way to promote the open Internet
  • Neutrality promotes access competition
  • Packet prioritization harms end users
  • Neutrality rules will lead to lower prices, better video experience

Packet prioritization has been built into Internet protocols for years, says Skorup. One might point to widespread use of content delivery networks as one example. Peering and transit are different interconnection models that are not “equal.”

Use of the public Internet for voice, conferencing and video entertainment makes the need greater, as those apps are intolerant of packet delay. Telemedicine and other industrial and commercial apps coming as part of the Internet of Things likewise will require more quality of service than the “best effort” Internet is likely to provide on a consistent basis.

Nor are neutrality rules the only way to promote the open Internet. The FCC already had committed to openness principles assuring consumers access to all lawful applications, for example. On the two or three discrete instances where an ISP had tried to block lawful apps, the FCC acted quickly to discipline the offenders.

Every ISP now knows they cannot block a lawful app. And where it comes to consumer protection, the Federal Trade Commission and Department of Justice all have authority to take action, as well.

Whether neutrality rules enhance competition is hard to assess. The rules apply to all consumer Internet access--mobile and fixed--so no provider has an advantage, or can get an advantage.

Neutrality rules arguably reduce or limit ISP profit margins and products, and might therefore make the industry less attractive to new entrants.

Nor is “packet prioritization” automatically harmful to retail end users. Though as a slogan “treating every bit equally” sounds great, different apps have different exposure to packet latency. That is the principle behind content delivery networks that reduce packet latency and jitter.

That is why email and most web browsing works just fine with best effort access, but video conferencing, voice sessions or video can be unpleasant, when networks are congested.

Some possibly related concepts, such as zero rating some apps, also have value for end users.
Zero rating is a way to allow consumers--especially consumers in the developing world--a way to use and sample Internet apps when they cannot afford a mobile data subscription.

Some might argue that network neutrality will make end user services cheaper, in part because the rules will prevent some possible costs for app providers. But net neutrality--and the coming litigation over it--will add costs for ISPs that certainly will be recovered from end users, one way or the other.

Neutrality rules do not directly allow video entertainment services to operate more pleasantly (lower latency) or load faster. In fact, packet prioritization does those things. In a best effort scenario, congestion will degrade performance for all apps, but especially video, voice and conferencing.

The argument that investing in more capacity solves all problems is not completely correct. But the incentive to invest more arguably is reduced by new neutrality rules.

So what parts of the Internet ecosystem are helped by neutrality rules? Only some app providers who now are creating the biggest traffic demand on any consumer ISP network, namely suppliers of streaming video.

In that sense, the broader “television content” segment of the industry wins, as it is protected from the cost of any content delivery network capabilities that reach all the way to consumer homes, and which might be necessary as a competitive investment if one or more leading competitors were to opt for such prioritization.

As always with any regulatory action, there are economic winners and losers. Network neutrality is no different in that regard.
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