Donald Trump wants to build another wall. Not a physical wall to keep out illegal immigrants, like his proposed Mexican border project, but a virtual wall around the internet. And just as with Mexico, he wants the people behind the wall to pay for it.
President Trump seems to want to dismantle the main internet policy of his predecessor, that of ensuring net neutrality, also known as the “open internet”. To do this, he has appointed the most vocal Republican critic of President Obama’s internet policies, Ajit Pai, as chair of the Federal Communications Commission (FCC), the largest and most powerful internet regulatory body in the world.
Net neutrality is the principle that telecoms providers that connect you to the internet should not throttle your access depending on what services and content you use. For example, your mobile phone company should not be able to reduce your use of Skype or WhatsApp by reducing the speed of those services so that you use their calling and messaging functions instead. Without net neutrality, certain services and websites would be able to pay internet providers so that customers can access them with faster speeds, disadvantaging those companies without such a deal.
Telecoms providers’ attempts to do this led to a growing international consensus among governments on net neutrality. From 2009, many European and Latin American countries introduced regulations and laws to promote or guarantee net neutrality. In the US, opposition from big telecoms and cable corporations in the courts meant it took six years of Obama’s presidency to begin to effectively implement net neutrality rules.
To get around net neutrality rules, some telecoms companies have more recently begun using a “zero rating” approach of offering customers a preferential bundle of certain services that do not use up data allowances. These “sponsored data” plans don’t prevent access to any other site or service. But they still disadvantage smaller content providers, including the likes of the BBC and Wikipedia, that cannot afford to negotiate inclusion in sponsored data plans as the likes of Facebook and Google can.
By the end of 2016, regulators in the EU and India had produced further guidelines banning zero-rating plans. And the FCC under Obama was challenging companies using the zero-rating strategy. All those other national regulators are in the midst of their investigations - which is why they are susceptible to the FCC’s do-nothing.
But, in the US at least, that is now history as we enter the Trump era. The new FCC chairman has argued the net neutrality rules over-regulate innovation, even quoting the Emperor from Star Wars to invoke his opposition. He prefers deregulation to allow companies to compete without explicit consumer protection rules to guarantee an open internet.
Since his appointment, Pai has closed the inquiry that was implementing Obama’s policy, and he is highly unlikely to agree to another one. Pai will most probably continue to act towards net neutrality by exercising masterly inactivity, failing to enforce the regulations.
Behind the wall
That will allow the big US telecoms and cable companies to erect paywalls around their content, giving customers free access to affiliated services but making them pay for rival content, especially high definition video. That means lower costs for video services affiliated to AT&T, Verizon and Comcast but higher costs for independent providers such as Netflix.
Who else is affected by an end to US net neutrality? In short, those innovators unable to strike a deal to get inside the telecoms and cable companies’ paywalls. Facebook’s deals with mobile operators have enabled it to offer zero-rated content in many countries. They may now hope the US approval for zero rating will help their arguments in India, Brazil and other huge developing markets. Google and and even NetFlix may be big enough to look after their interests, too.
But small innovators will have no guaranteed minimum service level to design new services. That could impact the development of the Internet of Things, 5G mobile networks and cloud computing services. Having to ask permission to run your service on the internet is a major issue for start-ups that are effectively three engineers in a garage (as Google and Facebook once were). And this may affect new companies’ decisions on where to start their innovations.