Money Monday: Why Net Neutrality Is So Important
What is net neutrality?
When people talk about net neutrality, they are referring to regulations that govern access to the Internet. Net neutrality is the principle that Internet providers should make all content available at the same speed. Current Federal Communications Commission regulations ensure everyone has equal access to the Internet, treating broadband Internet access like a utility.
Internet service providers are prevented from blocking, slowing access to or charging more for certain content. These regulations were passed in February 2015 by the FCC. Last week, the head of the FCC, Ajit Pai, announced a proposal that would repeal these regulations.
Why do some want to repeal the current regulations?
Many who are opposed to the current net neutrality regulations argue they were unnecessary. FCC Chairman Pai wrote that when the Commission put the current rules in place, they were using regulations “designed in the 1930s to tame the Ma Bell telephone monopoly,” and that this approach is hurting investment in Internet infrastructure and service provision.
Proponents of the rule change also assert that the Internet worked fine before the current rules were put in place in 2015, so repeal will not be a big deal. Essentially, this camp asserts that even if Internet providers wanted to provide differing levels of service, it is not in their interests to do so. As one Washington Post article put it, “Could Comcast, a part-owner of Hulu, artificially slow down Netflix? Sure. But it wouldn’t do that because it wouldn’t risk losing Netflix users to Verizon. Capitalism works.”
What about those who are for net neutrality? What is their argument?
Those who are against repealing the 2015 regulations are concerned that such a move would turn the Internet into a pay-to-play medium. Those who can afford it – wealthier Americans, large established companies, and others – would get access to higher speed Internet, and those who cannot – startup companies and those competing with ISP partners or subsidiaries, less affluent communities – could get stuck with lesser Internet services. Additionally, critics of repeal argue that this move could hurt free speech. After all, Under the repeal plan, Internet providers could, in theory, block websites they don’t like.
How could the end of net neutrality affect consumers?
It is hard to say definitively. This process could take years after repeal to really play out. It does seem like there is a possibility consumers would pay more in the long run. As one expert put it, “consumers will end up paying higher prices for essentially the same service” as Internet service providers charge big Internet and media companies for access to premium delivery, which will be passed along to all of us. We could also see higher bills if service providers charge more for faster speeds or for streaming specific content.
And, as I mentioned, many consumer advocates have warned the new rules could mean Internet providers could block or slow traffic to websites or services of their choosing, essentially playing a key role in influencing what content and sites users access. For example, providers could give preferential treatment to their own content, disadvantaging competitors. We will have to see how this plays out. One thing that is clear is that net neutrality is likely to be repealed.
Mellody Hobson is President of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS News.
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