The Ethics and Economics of Net Neutrality

In this age of Trump, controversial policy decisions surface every day. The most recent hot-button issue is the repeal of net neutrality. Under net neutrality, the Internet is treated like a utility (i.e. water); this means Internet providers must provide their customers equal access to all web content— streaming services like Netflix or social media sites such as Facebook. If Comcast wanted to create a competing streaming service with expedited Internet access which crippled their competition by slowing Netflix speeds, they would be stopped by the protocol of the Federal Communications Commission (FCC).

The FCC has planned a vote to decide the fate of net neutrality, and the public is outraged. In the past few weeks, protesters have taken to the streets nationwide, forcing many to ask the question: is this hysteria justified?

In conversations about net neutrality, people often say, “Do you really want to lose Netflix?” This argument has convinced the public that we need net neutrality: it only seems fair that everyone should be afforded equal access to all parts of the Internet. Through this lens, the fight to preserve net neutrality appears vital to the future of the Internet.

There is, however, an argument against net neutrality that is hiding in plain sight: it isn’t economically advantageous. When net neutrality was first implemented, economics were blatantly ignored. The Obama Administration and the drafters of the regulation didn’t look at net neutrality through the scope of the free market. So, without any bias, let’s go through what would happen if the FCC votes against net neutrality.

Instead of taking a hard stance against the FCC for holding a vote to get rid of net neutrality, let’s think critically and fight to remove needless regulations.

It doesn’t take a degree in economics to understand the basic concepts of competition and supply and demand. In a purely capitalist system, the government does not regulate the market, making any business susceptible to competition. This idea of a competitive system ties into the second idea of supply and demand. The law of demand states that, when the price of a product is lower, the demand will be higher. Conversely, the law of supply states that, when the demand for a product is higher, there will be a greater quantity of that product produced.

In the world of the Internet, there are only a handful of providers, such as Comcast and Frontier; these companies essentially rule the market. Without net neutrality, many people fear that these companies will make their own content and services more accessible than that of their competition, like Netflix.

If we apply the principles of supply and demand, the demand for Netflix will be much lower if the price is raised by the oligopoly of major Internet service providers. Since we have a free market, smaller Internet providers may have the ability to offer Netflix at a lower price (or better speed), thus increasing demand for both Netflix and their own Internet service. Thus, net neutrality hurts the average American consumer as it allows internet monopolies to maintain their powerful grip on consumer access to content with performance at reasonable prices.

Although new regulations have set out to undermine these monopolies, they have not been effective in getting faster Internet. Numbeo, a crowd-sourced, data-collection site that compares international prices, lists the United States as the sixth most expensive country for Internet access, with an average monthly bill at $55.86. Singapore's internet access averages $33.96 a month, while South Korea tallies $22.03. Both Singapore and South Korea report dramatically faster average connection speeds than the United States.

A skeptic may argue that even though the negative impact of net neutrality would be offset by smaller companies offering Internet at a cheaper price, everyone would still be left without equal Internet until those cheaper options were made available.

While this is true, there would be benefits to allowing companies like Netflix to struggle for a short while. Because of net neutrality laws, every Internet provider has to give equal bandwidth to everyone. If this bandwidth were limited, it would make it nearly impossible to stream Netflix because of how much bandwidth is required. If net neutrality were gone, Netflix would be forced to adapt its product to be able to function with less bandwidth.

You may believe that Netflix would do that already if they had the capability, but net neutrality prevents them from needing to change their platform. This would benefit the average consumer because if Netflix were able to operate with less bandwidth, it would not take up as much data, thus saving people money.

In conclusion, keeping net neutrality is useless when we apply simple economics. The nature of the free market ensures that Internet prices will return to their original rate. Additionally, common services will adapt in the period of time that it takes for the market to catch up to a world without net neutrality. This will save more money in the long term for everyday internet users because they won’t be using nearly as much data. Instead of taking a hard stance against the FCC for holding a vote to get rid of net neutrality, let’s think critically and fight to remove needless regulations.