A free market approach might have worked if we actually had competition.
Image: Dave Winer/Flickr
When I moved to New York City from Toronto, I was shocked to learn that there was only one internet service provider serving my Manhattan neighborhood. Back in Toronto, I had three or four options, depending on where I lived, which meant I could shop around and get the best deal. But when there’s a monopoly on the internet in your neighborhood, you pay what they demand or you don’t get the internet.
This is a problem faced by millions of Americans, according to a new analysis from the Institute for Local Self Reliance, a nonprofit that advocates for equitable development and local government rule. Based on the Federal Communications Commission’s own data, the ILSR found that 129 million Americans only have one option for broadband internet service in their area, which equals about 40 percent of the country.
Of those who only have one option, roughly 50 million are limited to a company that has violated net neutrality in some way. Of Americans who do have more than one option, 50 million of them are left choosing between two companies that have both got shady behavior on their records, from blocking certain access to actively campaigning against net neutrality.
Aside from being a non-ideal situation for consumers like me, this lack of competition is another dock against the FCC’s plan to repeal net neutrality rules later this week. In arguing against net neutrality rules, FCC Chairman Ajit Pai has repeatedly cited a free market as just as capable of ensuring internet freedom as government regulations.
"All we are simply doing is putting engineers and entrepreneurs, instead of bureaucrats and lawyers, back in charge of the internet," Pai said on Fox News’s “Fox & Friends,” in November. "What we wanted to do is return to the free market consensus that started in the Clinton administration and that served the internet economy in America very well for many years."
But how can market competition regulate an industry when more than a third of the market has no competition at all, and even those that do have to choose between options that don’t uphold net neutrality?
Pai has claimed that net neutrality rules actually exacerbated the problem of a lack of competition and has said repealing the rules will help ensure smaller businesses have a fair shake. But the idea that net neutrality stifled innovation or infrastructure has been repeatedly debunked.
“The FCC stepping back means that the biggest providers can engage in predatory behavior,” said Christopher Mitchell, ILSR’s director for the Community Broadband Networks Initiative. “That makes competition more difficult. A market with no rules doesn’t work.”
Imagine, for example, that a big ISP decides to cut a deal with a content provider so that only their customers can access the service, or can access it much more quickly, or for free. How are other ISPs supposed to compete when the existing powers can make up the rules?
When really pressed on the issue, Pai typically doubles down on the idea that even if the market isn’t able to completely preserve a free and open internet, the Federal Trade Commission can always step in to crack down on any bad actors. But as I reported for Motherboard last week, the FTC is limited in how and when it can enforce net neutrality standards for ISPs, and in fact may not be allowed to at all.
Each of the FCC’s claims for why repealing net neutrality won’t be disastrous to American consumers crumbles when interrogated. The market is not sufficient to replace regulation, net neutrality did not make that problem worse, and the FTC is no substitute either. Just three days before the vote, we’re still waiting on a reason to repeal net neutrality that actually holds water.