The effect of net neutrality rules on consumers

Post tech reporter Hayley Tsukayama explains the idea of net neutrality and why its future could affect every Internet user. (Davin Coburn/The Washington Post)

The experience of watching videos online could soon become a hit-or-miss experience: either flawlessly smooth movies on Netflix or frozen and frustrating videos from the site of a smaller firm.

The reason would have nothing to do with superior technology but with money — how much companies are willing to pay to move their content onto faster Internet lanes into American homes.

This is what is at stake for consumers in a new proposal Thursday by the Federal Communications Commission dealing with whether all content should be treated equally over Internet connections. Under the FCC’s new rules, Internet service providers such as Verizon, Time Warner Cable and AT&T could soon strike deals with Facebook, YouTube and other Web content firms for priority access to consumers.

The FCC on Thursday said its proposal, which has not been made public, is still in draft form and could be revised before it goes to a vote May 15. The agency would then take public comments and finalize rules by the end of the year.

But already, the plan has drawn fierce protest by consumer advocates and some Democratic lawmakers for its potential to sharply alter the nature of business on the Internet and ultimately the experience of consumers.

Dozens of people filed critical comments to the agency’s Web site on Wednesday alone.

With few details provided in its new approach, critics of the FCC proposal said the rule could add massive costs to start-up firms, causing a chilling effect on entrepreneurs.

“No one should have to ask permission to innovate, and we need to retain the ability of all Internet users to communicate and compete on a level playing field, preventing the presence of fast and slow lanes that are contrary to the essence of the Internet,” Sen. Edward J. Markey (D-Mass.) said in a statement.

The FCC sought to defend its actions.

“There are reports that the FCC is gutting the open Internet rule. They are flat out wrong,” FCC Chairman Tom Wheeler said in a written statement. “There is no ‘turnaround in policy.’ ”

So far, companies like Comcast and Verizon have refrained from charging Web firms for faster download speeds, wary of punishment from regulators. But the new provision in the FCC’s broader net-neutrality proposal would give telecom firms confidence to pursue the business models they have long sought. ESPN.com, for instance, might pay AT&T for a guarantee that its site would download more quickly than others.

The result could be higher prices for consumers, some advocates say. If Netflix, for instance, had to pay more money to an Internet service provider for faster delivery of its streaming videos, it could pass along those costs to subscribers in the form of higher monthly fees.

In another scenario, a company that offers broadband could also repackage Internet service plans to offer premium access at a higher cost to certain Web sites like Hulu, CNN.com or Pandora.

“This plan doesn’t bode well for consumers,” said Delara Derakhshani, policy counsel for Consumers Union, the nonprofit organization that publishes Consumer Reports. “The FCC appears to have abandoned the principle that all Web sites and services should be treated equally on the Internet.”

The agency said that its new rules will prevent Internet service providers from altogether blocking a Web site and that any slowdown in traffic that is anti-competitive won’t be tolerated. But the FCC did not immediately elaborate on how it would detect bad behavior.

The agency promised that after it hears public comments over the summer, it will come up with more specific guidelines on what it views as “unreasonable” practices by Internet service providers.

“Broadband providers would be required to offer a baseline level of service to their subscribers, along with the ability to enter into individual negotiations with content providers,” an FCC official said on the condition of anonymity because the rules are still being discussed. “In all instances, broadband providers would need to act in a commercially reasonable manner subject to review on a case-by-case basis.”

The FCC said its proposed rules will also ask questions that guide its enforcement of Internet service providers. For instance, it will closely watch a company like Verizon, which owns streaming video provider Redbox, for any deals that would hurt rivals like Hulu and Netflix. The agency will also consider how deals between Web firms and ISPs affect future competition in the industry.

“To be very direct, the proposal would establish that behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted,” Wheeler wrote. “ISPs may not act in a commercially unreasonable manner to harm the Internet, including favoring the traffic from an affiliated entity.”

But several public interest groups and telecom law experts questioned how that will be possible, pointing out that one Web site’s ability to pay for priority Internet speeds has to be at the expense of others.

“You can’t have one without the other,” said Sarah Morris, a senior policy counsel at the Open Technology Institute.

Cecilia Kang is a national technology reporter, writing about tech and Internet policies at the Federal Communications Commission and Federal Trade Commission and how regulations affect businesses and consumers.
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