In 2005, AT&T’s CEO declared war on net neutrality. Net neutrality, a regime of minimal interference by Internet service providers (ISP), had prevailed since the commercialization of the Internet. AT&T proposed to create two lanes, a fast one for any content provider that would pay new fees to AT&T, and a slow one for everyone else. In the ensuing years AT&T and other ISPs have fought to institute this pay-to-play system. To prevent this, in 2015, the Federal Communications Commission (FCC) formalized net neutrality into law, blocking ISPs from being able to receive payments for prioritizing content.
Yet Thursday, the FCC, under Chairman Ajit Pai, made a U-turn and abolished net neutrality. If legal challenges do not reverse the FCC decision, ISPs will be able to create a fast lane and sell “paid prioritization.” The word “prioritization” here is misleading. ISPs will not provide faster Internet access. The content of providers who pay fees to ISPs will be delivered at normal speed. But the content of those who do not pay will be delivered with delay.
In essence, the FCC has given ISPs the legal power to blackmail any content provider that does not pay them with the threat of a slowdown in service delivery. The FCC clearly has put the ISPs profits above the benefits of consumers and of the overwhelming majority of businesses.
So, what could the Internet of tomorrow look like? Take Google and Bing, who are rival search engines. AT&T could offer to put each one in the fast lane (that is, not to slow them down) if they pay a fee. Both companies know that consumers may not wait for their search results before switching to the other engine, and therefore both companies would pay AT&T. AT&T could collect these new fees without making its service any faster than it already was.
Imagine what would have happened if we did not have net neutrality in 2000, before Google’s initial public offering (IPO), when Internet search was dominated by Yahoo. Yahoo would have paid for prioritization, a price Google at the time could not afford. If that happened, we would have been stuck with Yahoo’s low-quality search much longer than we had to be. As this makes clear, killing net neutrality will make ISPs rich but kill innovation—and even potentially slow down the growth of the U.S. economy, which is partially driven by the success of its major tech companies.
Let’s turn to news dissemination through the Internet. Without net neutrality, AT&T could threaten to place the Wall Street Journal and New York Times in the slow lane unless they paid a fee. If the Journal paid but the Times did not, it would be a massive advantage for the Journal. Many readers would not know why the Times content was delayed and would likely blame the newspaper’s staff. This would be a disaster for the news media.
With the FCC’s vote, the Internet as we know it is over. For now on our ISPs might serve us faster content from financially robust companies that are able to pay arbitrary fees. Content and apps from new, small, and innovative companies or non-profits could be slow and unusable; news access will be distorted; and consumers’ choices will be diminished. The FCC is forcing consumers and businesses to pay a huge price in order to boost the profits of telecommunications and cable companies.
Nicholas Economides is a professor of economics at the NYU Stern School of Business.