Economic Reality Softens Stance On Net Neutrality

Net neutrality is one of those issues that a small number of people care passionately about. For everyone else, it's either a big mystery or a big bore. Net neutrality is about using regulation to require open and equal access to the Internet. Huge sums of money could be at stake in the outcome.

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STEVE INSKEEP, host:

As an old line industry recovers, a much newer industry considers its future. Google and Verizon came out with a proposal this week, for new legislation to regulate the internet.

RENEE MONTAGNE, host:

It was just two pages long, with a lot of language about ensuring equal access, and preserving the internet as we know it. But the reaction was strong.

INSKEEP: In fact, here are some headlines: The Google-Verizon Proposal Is Worse Than Evil.

MONTAGNE: Google-Verizon Pact May Herald End of Equal-Access Internet.

INSKEEP: You could easily find more headlines, just uh...

MONTAGNE: Just Google them.

(Soundbite of laughter)

INSKEEP: Planet Money's Alex Blumberg explains why so many people are so upset.

ALEX BLUMBERG: Most of the outrage over the Google-Verizon proposal comes down to one phrase, the one that says that Internet service providers could, under certain circumstances, engage in - and here's the phrase - quote, "traffic prioritization."

This is code for a debate that's been raging for over a decade now; the debate over Net neutrality. To understand this debate, let's log onto the Internet, shall we? Hulu.com - this is the site I go to watch television programs on the Internet, television programs like ABC's "Bachelor Pad."

(Soundbite of TV show, "Bachelor Pad")

Unidentified Man: If I had to choose between walking out of here with the love of my life or a quarter million dollars, I'd take the money and run.

BLUMBERG: Right now, my local Internet service company, Time Warner Cable in New York, doesn't really care what I do on the Internet - whether I'm watching "Bachelor Pad" on Hulu, or checking baseball scores on ESPN, or scrolling through the hilarious pictures at StuffOnMyCat.com - to Time Warner Cable it's all the same.

That's because, according to economist Scott Holladay at the Institute for Policy Integrity, the Internet is neutral.

Mr. SCOTT HOLLADAY (Economist, Institute for Policy Integrity): Any neutral network, your cable provider, has no ability to dictate which websites you go to. But in a non-neutral Internet, then your cable provider might choose to slow down traffic from competing websites.

BLUMBERG: In other words, my service provider could engage in that contentious phrase, traffic prioritization. My service provider could prioritize certain websites over others. Websites that paid for priority service would work fine, but if Hulu didn't want to pay, got relegated to slower, lower priority service, then if I went to watch "Bachelor Pad," this is would it could sound like.

(Soundbite of TV show, "Bachelor Pad")

Unidentified Man: If I had to choose between (audio skips) out of here with the (audio skips) life or (audio skips) million dollars, I'd take the money and (audio skips).

Mr. SCOTT WALLSTEN (Economist, Technology Policy Institute): It's not in the interest of an Internet service provider to stifle content.

BLUMBERG: This is Scott Wallsten, an economist at the Technology Policy Institute. He says that a lot of the dark predictions about traffic prioritization are overblown. For one thing, he says, it's already illegal for an Internet service provider to arbitrarily block content. And for another, it doesn't make any economic sense for them to do it anyway.

Mr. WALLSTEN: Because more content increases demand for their service. And, you know, the more demand there is for the service, the more they can charge for it and the more people will sign up for it. And so, you know, they don't want to be in the business of picking and choosing who gets to be on their network, because that only, you know, devalues their network.

BLUMBERG: For Scott Wallsten, if Internet service providers can do traffic prioritization, it's good for you and me and everyone who uses the Internet. We get the same Internet we have now and then we also get a better, higher-quality Internet for the sites that are willing to pay for it.

For Scott Holladay, though - the other economist named Scott in this story, on the other side of the net neutrality question - he says no, no, no, it wouldn't work that way. If an Internet service provider is offering priority fast-lane service, companies would only pay for that service if it's noticeably better. So, in Scott Holladay's future, Internet service providers would have an incentive to make regular service worse.

Mr. HOLLADAY: That's when all of the sudden the incentive flips and all the sudden capacity crunches and make them money, and that's the disincentive that I personally worry about.

BLUMBERG: The problem with talking about Net neutrality, you have to use words like might and maybe and hypothetical. The truth is, all we have at this point are two opposing visions of what might happen. What we know though, when it comes to the Internet, most of our predictions about its future are wrong.

For NPR News, I'm Alex Blumberg.

(Soundbite of music)

INSKEEP: This is NPR News.

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