Roger DeGennaro

@nycroger

Will Killing Net Neutrality Crash the Economy?

On December 14 the FCC will vote on whether to abandon its current policy of net neutrality. The looming decision has critics and the public in a fury over the subject, again.

We’re hearing the usual panic talk about the big telecoms and ISPs poised like vultures to throttle Netflix, stall gamers, and feast on the carcass of a dead internet. Stuttering movies create sputtering viewers, after all.

The fears may not be unfounded, but these common appeals play on the public’s fear of losing the entertainment it holds so dear. But a worse outcome is possible: a threat to the entire economy or sectors thereof. The future could play out in stealth mode as the ISP traffic cops slowly move to control access to some web services and green-light others.

You might not notice what’s happening at first, but one can imagine fevered brains at Verizon and Comcast offices scheming into the night once the power to profit flows back to the ISP and telecom giants. The law of unintended consequences will also be working overtime.

What players in the economy might internet providers hit? What bubbles might inflate and then burst? We can foresee some winners and losers as possible scenarios emerge.

The dark web
Cue the dramatic organ chords. Long portrayed, often with good reason, as a route for drug dealers and human traffickers, the dark web could see a shutdown. This lurid unscenic route on the information superhighway won’t have a lot of friends. Few will notice or care that it’s gone, except people in law enforcement, who will collectively pop the champagne corks, or crack a few beer cans.

There’s no reason the help anonymized criminals, so why care? Consider: People in countries where censorship reigns may be closed out of a vital means of getting and reporting news. Under the guise of protection, we might accept the cost to free speech. No one can hear silenced voices.

Bitcoin and other cryptocurrencies
The notoriously volatile economy of cryptocurrencies might show up on the endangered species list. Under the guise of protecting the public, ISPs may favor or disfavor certain trading traffic. They might follow the lead of major banks, even if there’s no direct pressure. (JPMorgan CEO Jamie Dimon declared employee trading in Bitcoin a firing offense, even though the firm trades in related instruments for others.)

Gambling
Oddly enough, established gambling companies could catch a break. The industry is organized and can pay to play, and so will you. Many states have outlawed internet gambling, New Jersey being a recent exception. Will ISPs charge states for the service of blocking out residents? The effort requires time and staff hours. Internet gambling could grow as a bubble as e-gaming takes off and perhaps crashes hard.

Banking and finance
If crypto currencies can be throttled, why not go the next step and charge banks and online traders for clients to access their convenient services? If financial institutions can be extorted for access to their users, expect the users to pay up in hidden fees. Regular consumers and large corporations alike have cause to worry. The uncertainty of what rules of the road might come next could be enough to inject volatility into any market. It’s hard to map the route forward when the map itself keeps changing as you read it.

Startups and small businesses
Will small sellers and dreaming startups be able to match the clout of Amazon or Microsoft? Companies and small shops with innovative technologies or local specialties might have to close up shop. Perhaps high-flying investments in new ventures will have to stay grounded, and entrepreneurs go begging for capital.

You want caps with that data?
Data backup and cloud services could easily be choked with newly imposed data caps, or get slowed to a crawl if a provider finds they take up too much of their valuable traffic. The loss of productivity would take a heavy economic toll.

The children, the children! Will anyone think of the children?
Say goodbye to any adult content that does not pay the telecoms/ISPs. What is adult content? Anything your ISP says it is. You won’t get a vote in the matter. Perhaps they’ll impose a rating system like ones in place for movies and TV shows. Cable TV companies would be delighted to steer you to their own pay-per-view offerings.

Of course, FCC chair Ajit Pai, dismissed such alarmist speculation in his statement on issuing his proposal:

Under my proposal, the federal government will stop micromanaging the Internet. Instead, the FCC would simply require Internet service providers to be transparent about their practices so that consumers can buy the service plan that’s best for them and entrepreneurs and other small businesses can have the technical information they need to innovate.

It’s all pure blather. “Transparency” means burying a notice in the fine print. “Service plan” translates to tiered services. And that bit about what’s best for them? It turns out that the FCC’s own data shows that 50 million households have either none or one high-speed broadband provider. Polls this year have showed public support for net neutrality as it stands at 61% to 73%.

The telecoms are trying to downplay their opposition to the current rules, claiming that they have no interest in throttling, blocking, or favoring certain types of traffic. They often say they merely oppose the FCC’s reliance on its authority over “common carriers,” such as old-fashioned telephone landlines.

As Comcast put it:

You can have strong and enforceable Open Internet protections without relying on rigid, innovation-killing utility regulation that was developed in the 1930s (Title II).

The cable lobby claims that there’s lots of competition between providers, but that definition includes mobile and outdated landline connections.

You don’t need psychic powers to predict the FCC commissioners’ vote. They have already voted to scale back the Lifeline broadband program that helps poor consumers, and are contemplating other severe cutbacks. Given the 3–2 Republican advantage in numbers, the conclusion is almost certain.

After that, expect a slow-moving avalanche as changes for the worse first creep, then roll, then plow under anyone and anything blocking their path.

Read my follow-up article: 
FCC Chair Quakes Before the Terrible Power of … Cher?

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