The Internet’s “Virtuous Circle of Innovation” Is Starting to Look Like a Spiral of Rate Increases

The Internet’s “Virtuous Circle of Innovation” Is Starting to Look Like a Spiral of Rate Increases

The Internet’s “Virtuous Circle of Innovation” Is Starting to Look Like a Spiral of Rate Increases

When the Federal Communications Commission (FCC) overturned the net neutrality rules in December 2017, it gave the green light to cable and other Internet Service Providers (ISPs) to make the internet start looking more like cable TV. It’s not news that many people are completely sick of cable, from the skyrocketing rates, to archaic and slow set-top boxes, to bogus fees. By refusing to police ISPs, the FCC has cleared the way for the internet to start looking more like this, as the Comcasts of the world begin to jack up rates and nickel-and-dime the internet like they did with cable. The FCC’s action didn’t just repeal one set of rules, but took away even the basic level of oversight the FCC has had over ISPs for years, under both Republican and Democratic leadership.

Given this lack of oversight, not only may new price schemes emerge that were previously illegal under the net neutrality rules, but with the FCC’s hands off the wheel, cable companies may feel emboldened to spread the pernicious below-the-line fees we see in our monthly cable bills to our internet service bills, too.

With virtually no competition or public oversight, cable companies have been raising prices 2-3 times the rate of inflation for over 20 years. Price hikes are added and hidden as new fees, like the regional sports fee, the broadcast fee, and HD technology fee. Price hikes have spread to items that cost much less than they charge, such as fees for set-top boxes, and connecting multiple TVs within one home. Hidden or not, these fees are deceptive and try to keep you from understanding the overall price you pay. Is this the model we want for the internet?

Nevertheless, despite overwhelming public opposition, on December 14, 2017, the FCC overturned the 2015 Open Internet Order, which prevented ISPs from blocking, throttling, and paid-prioritization of internet traffic. What this means is that the Comcasts of the world could:

• Impose special “speed” fees on rival streaming companies, like Netflix and Hulu just to keep the same quality of streaming we see today. This would be anti-competitive, and it is also likely to result to additional costs passed on to consumers.
• Impose fees on new market entrants — like new competitors to Netflix, Amazon, eBay, or even the ISPs’ own offerings — to make it difficult for competitors to enter the market.
• Bundle content into speed tiers, and charge consumers extra to get to the faster websites. (ISPs currently offer different speed packages, but that speed applies to all the traffic the consumer uses, without discrimination as to content.)
• Notably, AT&T has just released an advertisement, which supports the creation of an “Internet Bill of Rights” and states general principles that it will not discriminate, but none of its language assures consumers that it will not create fast lanes or prioritize for those who pay.
• Bundle sites together into packages and force consumers to choose a package, like consumers have to choose a package of content on cable.

In a World Without Net Neutrality, a Spiral of Fees

Not only may the cable industry use the end of net neutrality to spike fees, but they may be inspired to create a whole new set of fees, imposing their cable fee schemes to broadband internet services. Here are some examples of new special charges we might see in our broadband bills:

• Overage charges if bandwidth caps are set. With heavy reliance on streaming video content, online education, telehealth, and telework, many consumers are in danger of incurring charges for going over their cap.
• Smart homes, with connected thermostats and appliances, are becoming increasingly common. Perhaps ISPs will begin charging a “connected home fee.”
• Last year, Dish Network began allowing its customers to use Alexa to change channels, among other things. As new devices become available, will additional “device connection” or “home networking fees” be tacked on in order for them to become integrated to your ISPs services?
• Will there be separate fees for each device in a household?
• Security is another aspect of the smart home where ISPs could charge a fee. Maybe ISPs will begin charging “security and safety fees” to its customers using video surveillance or home security systems.

Consumers are tired of the bad treatment they get from their cable companies, and they don’t want to see the same practices spread to their internet service. With the end of net neutrality and FCC oversight of broadband, we run the same risk of big bundles that prevent people from making their own choices — like cord-cutting and other ways to pick and choose. Allowing consumers to have choices disciplines the market, keeping prices down and giving them what they really value. Consumers may not have much choice when it comes to their ISP, but they should still have choice when it comes to what they can do online. That’s why Public Knowledge, thousands of startup tech companies, and grassroots groups from all over the country are are calling on Congress to pass a Resolution of Disapproval which requires the FCC to abandon its “let ISPs do whatever they want” approach and bring back an open internet that forbids unreasonable discrimination.

Image credit: Flickr user alykat