Reconciling the repeal of net neutrality

Dire predictions aside, Madison-area experts are cautiously optimistic that the internet will remain open and free with or without net neutrality.

From the pages of In Business magazine.

December 14, 2017 was a bad day for net neutrality advocates.

On that day, the Trump administration Federal Communications Commission (FCC), on the recommendation of FCC Chairman Ajit Pai, voted 3–2 to repeal net neutrality rules that were barely two and a half years old, but more than a decade in the making.

Since then, there has been little clarity on the future of net neutrality regulations in the United States. Almost immediately following the FCC vote, attorney generals from the states of Washington and New York announced their intention to sue the FCC over its decision. Congressional Democrats began their own work to reverse the FCC’s decision legislatively.

A number of states opted to pursue their own net neutrality rules. In Wisconsin, Democratic lawmakers introduced two bills — one that would bar the state from contracting with internet service providers that violate the former FCC rules, and another that would simply reinstate the former FCC rules, just at the state level.

Several large tech companies, in addition to at least 21 states, even filed lawsuits against the FCC.

The reaction from internet consumers — which at this stage is most of us — was just as swift and negative.

Which brings us to today, several months later, when despite all the Sturm und Drang, not much has changed, as least not yet. While consumers wait to see when the other shoe will drop, and just how big of an impact it will make, IB sought out local players to gauge their reactions on the repeal of net neutrality and what it might mean for their bottom lines, as well as for Madison-area internet users.

Much ado about something — maybe?

Outside of the boardrooms of the largest internet providers, one thing is clear: There hasn’t been much love for the decision to repeal net neutrality rules.

For local internet experts though, the hubbub amounts to little more than hot air. There’s reason to be concerned, sure, but also a note of caution about overreacting.

“In general, this has been brewing for years and what it comes down to is the internet providers — mostly the large carriers, the Comcasts and the AT&Ts — basically want us to live in a world where they control the internet,” says Bryan Chan, president and founder of SupraNet, a Madison-based internet service provider. “It helps to realize though that the internet is so robust and so universal and so entrepreneurial at this point that government really can’t do anything about it, and neither can these large carriers.”

“We are not making any specific changes to our operations in response to the repeal,” notes Garrett Peterson, principal/director of life sciences technology for Yahara Software, an interactive web solutions and custom software architecture firm in Madison. “However, we will be closely monitoring how the new regulatory environment plays out in the marketplace.”

The repeal of net neutrality is just one of many recent policy changes occurring at the federal level, the combined total of which continue to evolve the rules and regulations that apply to the tech sector, explains Peterson. “We strive to remain agile as new ‘normals’ are established and then adjust accordingly as the rules become more permanent and well defined.”

The concern many consumers have, according to Chan, is that following the repeal of net neutrality, internet service providers (ISPs) will no longer be obligated by law to treat all data on the internet the same, meaning they cannot discriminate or charge differently by user, content, website, platform, application, type of attached equipment, or method of communication. Essentially, the worry is that now ISPs will be free to slow down internet speeds to certain content providers that are viewed as bandwidth hogs — primarily streaming services like Netflix, Hulu, and Amazon Prime, among others — while also charging consumers more to access those providers at higher speeds.

Chan believes he’s in a unique position because he can see the issue from both sides as an internet provider and content-hosting provider.

“Basically not a whole lot has changed for SupraNet at this point,” Chan says. “What we’re doing now, or what we have been doing over the past three years, is creating peering arrangements with other providers in other places. Currently our network reaches down to Chicago to one of the world’s largest data centers, to Minneapolis, and to San Jose. We have peering arrangements with other internet providers in those markets and at those network meet-points. That helps us to reduce the cost of internet over time and it also helps us to mitigate anything that might happen with net neutrality.”

What Chan is getting at is that while a net neutrality repeal could give larger ISPs those malevolent powers, the streaming media providers know that and have already taken steps to mitigate it by moving their content closer to the people who actually use it.

“They do that through content peering and network meet-points that are set along the internet to mitigate the speed issue,” Chan explains. For example, when you use Netflix in Madison, more than likely you’re actually going to servers that are hosted at the Madison Internet eXchange Peering Point (MadIX) through the university.

“In the old days, you’d have to reach across the internet — literally — to get that content,” acknowledges Chan. “Steadily because of the influence of internet providers and speed issues, and actually them not being able to keep up with the demand of content providers like Netflix and Amazon, the servers have moved closer to those users and we have a broader diversity of servers out there that we can get to.”

So, if both ISPs and content providers are working to improve internet service, what’s really the problem?

“This started with Netflix and more broadband streaming,” says Chan. “Nobody could imagine 20-plus years ago that you would ever be watching the NCAA basketball tournament at your desktop over the internet. [The internet] was never really meant to do any of that stuff. The fact that it could is great, and it’s spawned all sorts of interesting ideas, companies, and startups around that idea of the internet of things. Whoever would have thought we’d be putting internet on our refrigerators and doorbells and things like that?”

Chan says where he’s most concerned is for people whose only internet or broadband comes from the major wireless carriers like AT&T and Verizon. They can definitely slow things down and charge more money to make things faster if that’s your only option, he notes.

“A bigger threat to net neutrality is the lack of competition and the consolidation of internet providers,” notes Chan. “When that happens, consumers have fewer choices, and when you have that dynamic of a fewer number of carriers, then yeah, they can do whatever they want or intentionally slow things down.

“On the other hand, I can see where this has come up because as an internet provider, as there are more demands on bandwidth from various devices and especially streaming things, it forces us to make faster internet for our customers,” which costs money, Chan adds.

(Continued)

An imperfect solution

Though the worst-case ramifications of repealing net neutrality are scary, the original net neutrality rules have their issues, as well.

When the original net neutrality rules went into effect in June 2015, Peterson says he found himself of two minds regarding this very complicated issue.

“The freedom to use the internet bandwidth in a largely unrestricted manner is necessary for business growth, and net neutrality was a movement toward establishing a level playing field that encourages entrepreneurship and innovation,” Peterson states. “However, it seems that the categorization of the internet under Title II was a heavy-handed way for the FCC to enforce the concept of net neutrality. I would rather have seen Congress address this more directly with a law restricting providers from filtering communication based upon content type.”

Peterson is referring to the FCC’s February 2015 decision to reclassify broadband access as a telecommunications service, which applies common carrier protections under Title II of the Communications Act and section 706 of the Telecommunications Act to ISPs — essentially defining broadband ISPs as a utility.

In undoing the net neutrality rules late last year, the FCC this time reclassified broadband access as an information service (what it had been classified as previous to 2015). Not having a more definitive proposal for what that means is a concern
for Peterson.

“Ultimately, the internet is a utility, and access to the infrastructure should be regulated in the same way that other utilities are regulated,” Peterson says. “In the long history of utility-level services in this country, deregulating that sector has rarely led to an increase in service quality or a decrease in consumer cost. What I hope will happen is that this will be dealt with through Congress protecting net neutrality concepts within the United States via specific regulation.”

With no alternative regulatory framework to fill the gap, Peterson acknowledges he is concerned that walking back net neutrality could have an impact on growing enterprises as large network providers implement potential anti-competitive practices. “While these practices are likely to eventually be countered with regulatory responses, it will take time as lawmakers work through other legal frameworks. In the meantime, disruptive startups, or other businesses that may be on the disadvantaged side of any abuses, could be significantly negatively affected.”

While it was an imperfect solution to the problem, Peterson says the current net neutrality rules did contribute to a stable environment within which companies like Yahara could conduct their business on a level playing field. “Our clients want to take advantage of a large competitive marketplace as they consider hosting options for the cloud-based applications we develop. Net neutrality created an ecosystem that supported a diversity of choice, giving our clients numerous options to meet specific requirements to keep their systems operationally viable.

“In the short term, since current net neutrality rules are focused on large content providers and ISPs, changing them won’t directly affect us,” Peterson continues. “However, over the longer term, we expect the repeal will generate pressure for consolidation of business activity in the cloud-hosting marketplace and create factions that favor large infrastructure providers, subsidiaries, and partners. As a smaller independent services provider, this may force us to engage in exclusive channel partnerships to allow us access to critical infrastructure. Losing the ability to provide potential clients with the flexibility they desire could significantly limit our future growth.”

Chan was also initially wary about net neutrality rules in 2015 but he’s since come around.

“Initially I viewed it as a threat as an internet service provider,” notes Chan. “I certainly don’t want the government to tell me what to do. The core competency of any internet provider is to constantly make their network faster and more reliable. So my initial reaction was why do we need laws to tell us this? Aren’t we all doing this already? It turns out, no, not everyone believed in that.

“Again, this rift has come up because no one intended the internet to be a source for TV, to be a source for meeting people online, social media, and things consumers are using it for on various devices, Chan continues. “The explosion of internet devices and products out there, no one could have predicted that,” he states. “I’m glad that it happened. It’s made the world a closer, better place. Whoever would have expected Arab Spring to happen, and all those other things?

“Other governments have sort of gone the other way — countries that filter their citizens’ access to the internet,” he adds. “So now I do think that it is necessary to have things in place to protect consumers and providers. I get where they’re [the government] coming from. Of course, I get where ISPs are coming from, too, because they have to invest in their networks and basically not make as much money as content providers like the Googles, the Amazons, and the Netflixes of the world.”

For its part, SupraNet is so far taking all of the uncertainty about the future of net neutrality in stride, according to Chan. “I can tell you we’re hiring right now and we’re building out the network. For now it hopefully affects our bottom line in a positive way.”

What comes next?

“When we in America are at our best, we are seeking ways to reinvent and better ourselves, and the repeal of net neutrality will subdue this trait and favor the status quo and big business over innovation, growth, and new business,” says Peterson.

Strong words, but Peterson doesn’t back down.

“While large content providers such as Google, Netflix, and Facebook benefit the most from net neutrality rules, these rules are a positive force for nearly every user of the internet,” Peterson explains. “The winners in a neutrality rollback will be companies that can leverage their control of infrastructure to disadvantage competitors, and thus affect changes in marketplace behavior. Only the largest infrastructure providers and their partners will benefit, while smaller businesses and consumers are likely to feel the most negative impact.”

Peterson says the issue of net neutrality deserves the public attention it’s receiving, since repealing these rules will affect our national and international business environments.

For instance, Peterson believes large ISP providers may soon drive the market backward toward billing based upon how much and what types of data consumers are using rather than the flat monthly rates most are paying today.

“However, it is important to remember that the internet functioned before net neutrality and will continue to function after its repeal — the rules of the game will just be different,” notes Peterson. “It is unlikely this will result in some type of catastrophic collapse within the technology sector. The concern is more along the lines of stifling of future innovation and therefore limiting growth potential, than a complete breakdown of the system as we know it.”

Peterson offers one example from Yahara’s portfolio.

“A lot of the work we do is within the public health arena, and within that community there is a real concern that hard-won progress may be hurt by restrictive content filtering and prioritization practices,” explains Peterson. “Much of the advancement in the last 15 years in public health has come through embracing the use of informatics for data analytics and communication.”

For instance, many initiatives rely heavily on mobile networks and technology to reach out and interact with marginalized groups in society. Peterson’s concern is that removing or limiting community access to this critical infrastructure would severely impact our ability to support the public health use of internet services. The result could be the severing of crucial lifelines used by people nationally and internationally to lead safe and healthy lives.

According to Peterson, the best-case scenario for the future of a free and open internet is that this latest change in protocol by the FCC will trigger Congress to enact specific legislation that protects net neutrality concepts within the U.S. This would remove the uncertainty created by primarily regulating it by administrative rule as it is today. The worst-case scenario, he says, would be if the larger ISPs swiftly take advantage of the change in policy and gain a significant foothold in implementing practices that would limit innovation and competition through the enforcement of selective filtering of content.

“In the short term, I believe that the status quo will be shaken up a bit as the marketplace adjusts to any actions that are taken under the new administrative rules,” says Peterson. “As ISPs begin to change their filtering and bandwidth policies, we will see a series of court battles to clarify how these tactics of blocking and prioritization of content will be dealt with in already existing laws.”

There’s always going to be a need for the internet, there’s always going to be a new technology out there, and it will just continue to evolve, adds Chan. “Whether it’s via radio waves, broadcast TV channels, or whatever other technology happens to be out there, it’s not really something government or the large carriers can suppress,” he notes. “In all fairness, the larger carriers do have a huge impact on the internet because they built that infrastructure, but let’s keep in mind, too, that most of those phone companies built that infrastructure by being subsidized by the government to do it.”

The carriers do get money from the government to build out their networks, so the fact that some — not all — have to be told what to do is disheartening, but there is a silver lining, Chan adds. “As long as we have competition and choices, consumers can take a deep breath and say, ‘Look, no one can dramatically alter the internet,’” he states. “I’m very bullish on the future of the internet, and whatever legislative things happen from here, I’m confident that the internet will continue to grow and thrive, and I’m glad that there are more sophisticated internet buyers in the market now and we’re waking up to some of the things the carriers do.”

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