Internet/Broadband

In “,” Bob Crandall conducts a series of event studies to explore how investors view the effects of the rules on the firms most likely to be affected. Crandall tracks daily equity prices to measure how investors believe the net neutrality regulations will affect Internet service providers (ISPs) and new and traditional media companies (edge companies, or ECs). Overall, Crandall’s analysis identified a limited market response to net neutrality, suggesting that investors did not expect net neutrality regulations to effect significant change in the market. In addition, the small changes in EC equities suggest that investors also believed that net neutrality regulations might not be the boon to EC growth and success that net neutrality proponents expect it to be. This result is particularly notable given the fervor that has developed around this issue. Both proponents and opponents of the FCC’s 2015 Open Internet order argue that regulations or lack thereof will have dire consequences. Crandall’s analysis suggests that the reality may be far more modest.

A Republican effort to reauthorize the Federal Communications Commission for the first time in 27 years has network neutrality advocates nervous as they worry that stronger congressional control over the agency would hamper its oversight of internet providers. In proposing a discussion draft at a hearing in July on the reauthorization of the agency, House Communications Subcommittee Chairman Marsha Blackburn (R-TN), said it was necessary “to restore a culture of humility that was lacking” at the commission under its previous leadership. There have been efforts to reauthorize the agency since 1990, including one in 2016, but none have passed. Now, the reauthorization of the FCC is “at the top of the list” after lawmakers return from the August recess, Senate Commerce Committee Chairman John Thune (R-SD) said.

The most recent move to reauthorize the FCC has net neutrality supporters suspicious. Gigi Sohn, who was counselor to then-FCC Chairman Tom Wheeler, said the draft bill appears to be punishing the FCC for implementing the 2015 Open Internet Order.

The current network neutrality fight is really a wide-ranging power struggle between internet service providers and internet activists, between Republicans and Democrats. The battle is only partly about the ends—a free internet—and much more about the means: potential heavy regulation of ISPs as monopolies. Classifying ISPs as “common carriers,” under Title II of the 1934 Communications Act, means they could be regulated like monopolies.

That could go as far as setting rates for broadband, like public utilities commissions do for electricity, according to ISPs and other critics. Tom Wheeler’s FCC promised not to go this far, by forbearing, or refraining, from utilizing most of Title II. ISPs aren’t buying it. “Even if the FCC decides to forbear from regulating [ISPs] from certain or many provisions of Title II in the near term, the fact that at any time it could implement additional rules under Title II jurisdiction creates uncertainty in the industry,” says Comcast. Verizon and Comcast now advocate Section 706 regulations almost identical to what they fought against because they are so spooked by the prospect of Title II monopoly regulation—and perhaps because they know they can beat it in a lawsuit.

In arguing against the FCC’s net neutrality regulations, ISPs, Republicans in Congress, and the FCC chairman are saying that Title II is overkill. The previous FCC majority’s goal was to set some standards for equal access to the internet. Those who oppose the decision say it went overboard by pulling out a big club used to smash 19th- and 20th-century monopolies, not to nurture and fine-tune modern tech providers. But what if those modern tech providers are, in fact, acting like monopolies from 100 years ago?

[Commentary] The internet is fundamental to economic opportunity, social action and innovation in the modern age. It has the power to democratize information, it allows us to communicate instantly and effectively, and in recent years, it has facilitated innovation and been the catalyst for social justice movements. That’s why the National Association for the Advancement of Colored People (NAACP) supports a free and open internet.

You may be wondering why the NAACP is weighing in on net neutrality. Throughout our 108 year history, the NAACP has always opposed discrimination and has fought for justice and equal opportunity for all. We see the fight for net neutrality as an extension of that mission. In fact, during our 108th annual convention in Baltimore, our board of directors and members unanimously passed a resolution firmly stating our position on net neutrality.

With the fate of net neutrality on the line, the NAACP urges Federal Communications Commission Chairman Ajit Pai to respect the congressional intent behind Title II of the Telecommunications Act, to protect the free flow of information and not jeopardize it by removing high-speed broadband from the equalizing framework of Title II. ISPs should not be able to discriminate against any information, or against any groups of people, based on their profit margins or their whims. Information is power and no one should be allowed to strip that power away—and definitely not on our watch.

[Derrick Johnson is interim president and CEO of the NAACP and founder of One Voice Inc.]

[Commentary] Private businesses can and should have the discretion to block web content they find objectionable. That discretion is, however, precisely the opposite position taken by Google and others in the network neutrality debate at the Federal Communications Commission. Under current FCC rules (47 CFR 8.5), “A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not block lawful content...” If they were broadband Internet access service providers, GoDaddy, Google, and Scaleway would be prohibited by current federal law from blocking access to Daily Stormer. But none of these entities meets the FCC’s technical definition of a “broadband Internet access service provider.” Instead each of these entities has the power and the discretion to block Internet content that it dislikes. That discretion, however, is difficult to exercise.

[Harold Furchtgott-Roth is a senior fellow at the Hudson Institute]

Cox is now charging its customers $50 extra each month for unlimited data.

Cox also introduced a $30-per-month charge that adds 500GB to the standard 1TB data plan. Cox customers who go over the 1TB cap without having purchased extra or unlimited data pay a $10 charge for each additional 50GB. Naturally, "unused data does not roll over," Cox says. Cox, the third-largest cable company in the US after Comcast and Charter, has about 6 million residential and business customers in 18 states. It has rolled the data caps out on a city-by-city basis, so not all Cox customers face the caps yet.

Silicon Valley significantly escalated its war on white supremacy, choking off the ability of hate groups to raise money online, removing them from Internet search engines, and preventing some sites from registering at all.

The new moves go beyond censoring individual stories or posts. Tech companies such as Google, GoDaddy and PayPal are now reversing their hands-off approach about content supported by their services and making it much more difficult for “alt-right” organizations to reach mass audiences. But the actions are also heightening concerns over how tech companies are becoming the arbiters of free speech in America. And in response, right-wing technologists are building parallel digital services that cater to their own movement. Gab.ai, a social network for promoting free speech, was founded shortly after the presidential election by Silicon Valley engineers alienated by the region’s liberalism. Other conservatives have founded Infogalactic, a Wikipedia for the alt-right, as well as crowdfunding tools Hatreon and WeSearchr. The latter was used to raise money for James Damore, a white engineer who was fired after criticizing Google’s diversity policy. “If there needs to be two versions of the Internet so be it,” Gab.ai tweeted. The company’s spokesman, Utsav Sanduja, later warned of a “revolt” in Silicon Valley against the way tech companies are trying control the national debate.

Anxiety about the health of competition in the US economy — and elsewhere — is growing. The concern may be well founded but taking forceful action will require economists to provide some practical ways of proving and measuring the harm caused by increasing market power in the digital economy.

The forces driving concentration do not affect the US alone. In all digital markets, the cost structure of high upfront costs and low additional or marginal costs means there are large economies of scale. The broad impact of digital technology has been to increase the scope of the markets many businesses can hope to reach. In pre-digital days, the question an economist would ask is whether the efficiencies gained by big or merging companies would be passed on to consumers in the form of lower prices. Another key question was whether it would still be possible for new entrants to break into the market. Digital platforms make these questions harder to answer.

• One much-needed tool is how to assess consumer benefits.
• A second issue is how to take into account the interactions between markets, given that most platforms and tech companies steadily expand into other activities and markets.
• A third issue, perhaps the most important, is the effect increasing concentration has on incentives to innovate and invest.

[Diane Coyle is professor of economics at the University of Manchester]

We measure households’ willingness-to-pay for changes in key home broadband Internet connection features using data from two nationally administered, discrete choice surveys. Both surveys include price, data caps, and download and upload bandwidth, but only one includes latency. Together, these surveys allow us to measure tradeoffs between bandwidth and other connectivity features such as price and data caps, and perhaps most notably, provide the only empirical evidence to date of tradeoffs between bandwidth and latency. We find that households' valuation of bandwidth is highly concave, with relatively little added value beyond 100 Mbps.

For example, households are willing to pay about $2.34 per Mbps ($14 total) monthly to increase bandwidth from 4 Mbps to 10 Mbps, $1.57 per Mbps ($24) to increase from 10 to 25 Mbps, and only $0.02 per Mbps ($19) for an increase from 100 Mbps to 1000 Mbps. We also find households willing to pay about $8.66 per month to reduce latency from levels obtained with satellite Internet service to levels more common to wired service. Household valuation of increased data caps is also concave as caps increase from 300 GB to 1000 GB, although consumers place a significant premium on unlimited service. Our findings provide the first relative valuation of bandwidth and latency and suggest that current U.S. policy may be overpenalizing latency relative to reductions in bandwidth and data caps. For example, we find that in its CAF Phase II Auction, the FCC is imposing a bidding penalty for latency that is about five times higher than what our WTP estimates suggest it should be relative to bandwidth offered.

[Commentary] Although the Federal Communications Commission said it intends to alter the Open Internet rules, it won’t fill in specifics until probably this fall, after the comments are analyzed. That makes it hard to pin down precise effects on cost, although that hasn’t prevented predictions.

Tim Wu, a Columbia University law professor who came up with the phrase “net neutrality,” said it’s clear the rule changes would bring price hikes in a betrayal of the populist rhetoric that helped decide the election. “Did Trump voters really vote for higher cable bills?’’ he asked in a New York Times opinion piece the week the FCC announced its review. “Cable costs have gone up year after year, by multiples of the cost of living index,’’ said Michael Copps, a former FCC commissioner and now a special adviser to Common Cause. “The more monopoly power you have, the more prices are going to go up.’’ Opponents of net neutrality say the business model wouldn’t change with the new rules, so rates should remain stable. “I don’t think you would see very much difference,’’ said Daniel Lyons, a professor at Boston College specializing in law and telecommunications.

The more likely outcome, though, is that prices will go up for some, and perhaps down for others, while consumers have more options based on how and how much they use the internet. A key part of the likely change will be “paid-prioritization,’’ which means companies could pay for faster and dedicated bandwidth as well as better positioning for their content – the same way a Google ad goes to the top of your search listing. Those costs are almost certainly going to come back to consumers in one way or another.

[Anders Gyllenhaal is senior editor at McClatchy]