Repeal of net neutrality threatens Silicon Valley companies

Silicon Valley, known as a hub of innovation around the world, has given rise to tech giants such as Google and Apple, and is home to Amazon, Netflix, Facebook and Microsoft. In Palo Alto, we’ve seen companies started in garages turn into billion dollar enterprises, and billion dollar ideas become a reality.

All of this is only possible because of one thing: the Internet. Today, people use the Internet constantly for even the tiniest of tasks. It is integral to our society, and life without it is unimaginable. Yet, this very entrepreneurship spirit that made the area famous is threatened.

In fact, the Internet as people know it is threatened because of a ruling by the Federal Communications Commission (FCC) in December 2017 that scrapped regulations known as “net neutrality.”

Net neutrality is the movement to preserve the Internet as a free and equal space by allowing the government to regulate Internet Service Providers (ISPs) such as Verizon, AT&T and Comcast. Essentially, it’s a rulebook for these ISPs that places certain limits on aspects of their business, such as pricing.

Junior Grace Lam puts it as “the concept that everyone can have equal access to the internet, regardless of whether they are Amazon or the corner bakery.”

Stanford student Debnil Sur said net neutrality serves the crucial function of putting power in the hands of the consumer.

“Net neutrality is the principle that Internet service providers should provide equal access to all content, without favoring or blocking certain websites,” Sur said. “This lets consumers choose what they see, rather than placing undue power in the hands of a few telecommunications companies.”

Without these regulations, people are at the mercy of ISPs, and there are a couple of major drawbacks to scaling back net neutrality laws.

The first looming threat is paid prioritization, otherwise known as the practice of charging higher rates for faster Internet access. According to Lam, in 2015, the FCC passed net neutrality laws that prohibited ISPs from allowing paid prioritization, but by repealing them, they are once again fair game.

“[Net neutrality] gives startups an equal chance to compete on the internet with the tech giants,” Lam said. “With the repeal of net neutrality, ISPs are free to charge for a fast and slow lane which could potentially raise prices for consumers.”

Paid prioritization has negative effects on both small corporations and consumers, and is best understood through a hypothetical scenario. Suppose Verizon charged a flat $100 for everyone when net neutrality was in place. Without net neutrality laws, this is no longer mandatory. The company is free to charge a “deluxe lane” for $150, and a “mediocre lane” for $100.

Large companies such as Amazon or Google have no trouble meeting the new price and continuing to get premium service, but small startups and consumers just scraping by are often unable to. Currently, most of the startups in Palo Alto use the internet to market their products and reach new audiences. If, all of a sudden, they were using a slower internet service, innovation could be stifled in Silicon Valley because startups would simply not be able to compete with large corporations who could get their content out faster.

According to The San Jose Mercury News, paid prioritization has been likened to a “digital toll-road” for delivery trucks. Imagine that a large-scale chain retailer such as Walmart is allowed to go at 75 miles per hour because they can afford it, but your local mom and pop shop can only go at 40 miles per hour. Once again, the smaller retailer will have no chance of keeping up with the already well-established companies. To make things worse, this discrepancy is only possible because laws banning such practices have been repealed, making a once-level playing field uneven.

The second major concern surrounding the repeal of net neutrality regards the power of ISPs to block or, in extreme cases, censor content.

“Another part of net neutrality is freedom on the internet and protection from censorship. One of the biggest concerns is that with the repeal of net neutrality, ISPs could potentially block certain content, violating the freedom of the Internet.”

Grace Lam

As The New York Times explains, net neutrality has been referred to as the First Amendment of the Internet because of the valuable protections it provides in ensuring the freedom of speech on the internet.

Add to this a 2015 FCC report, which shows that nearly 50 percent of Americans only have a choice between two ISPs and a Vox article that details that four ISPs — Verizon, AT&T, Comcast and Time Warner Cable — account for around 60 percent of internet subscriptions; it becomes clear that there is a oligopoly in the ISP market. However, it is more concerning the power to control the information of the masses lies in the hands of the few. Furthermore, in a time in which news media has come under fire, a monopolistic approach to delivering news only harms the reputation of journalism.

However, there are some benefits to the repeal. According to Sur, instead of punishing all ISPs regardless of their actions, the repeal allows companies who are behaving honestly to be unscathed.

“Currently, regulation is pre-emptive,” Sur said. “The benefit of repeal is that it alters the regulation to after-the-fact: the FCC will take action if they see anti-competitive behavior. It’s like shifting the justice system of the Internet from guilty until proven innocent to innocent until proven guilty.”

This line of reasoning is what more critics of net neutrality point to. They wish for a more “pro-business” attitude.

Led by Ajit Pai, the chairman of the FCC, former Verizon lawyer and ardent defender of ISPs, one of the most prevalent arguments of the net neutrality critics is that claims of supporters are hypothetical and that net neutrality harms small ISPs.

Both these arguments are simply false. The Verge reports that in May 2014, Netflix accused six ISPs of throttling their content, and in June 2017, Verizon was found guilty of throttling Netflix content a second time, a direct violation of net neutrality. In 2007, Comcast was also caught throttling content of their competitors, while Comcast-owned channels were unaffected.

In addition, the Free Press reports investments in internet companies are up from 2015 (when net neutrality laws were passed), signaling that the laws have had no negative effect in stifling businesses. Lastly, several small ISPs have expressed support for net neutrality laws because they make sure that larger ISPs can’t use dirty tactics to push them out of the market.

The country is currently in a very precarious position and faces a highly uncertain future. Sur reflects this sentiment.

“It’s ultimately unclear what the real effects of repeal are or will be,” Sur said. “Smaller businesses could have slower online traffic and therefore lose sales. In turn, consumers may be functionally restricted to outlets that can afford to pay for fast internet. Ultimately, it’ll depend on the intent of mega-corporations — which can be a scary thought.”

While the monstrosity known as paid prioritization has not become mainstream yet, it’s this lack of clarity and reassurance causing widespread panic. The power of the most powerful tool we know, the internet, lies in the hands of a few corporations. The repeal of net neutrality poses a large threat for everyone, but Palo Alto and Silicon Valley as a whole is uniquely posed to be affected the most.

The startup culture we are known for is under attack, which is why a multitude of large tech companies such as Google and Facebook have openly called for net neutrality laws. Most recently, 50 senators have endorsed legislation to reinstate net neutrality laws, but this bill would still have to pass through a Republican-majority House and be signed by President Donald Trump before it becomes law. The battle to preserve the Internet will not be an easy one, but it is an important one.

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