Net neutrality rules are likely doomed, but the debate isn't going away

  • Net neutrality advocates say broadband internet providers would charge more for faster speeds without the FCC protections.
  • Opponents argue the rules are effectively price controls that stifle investment and limit consumers' options.
  • Federal Communications Commission Chairman Ajit Pai has said he wants to repeal the Obama-era rules.

The Federal Communications Commission's vote on "net neutrality" rules, scheduled for Thursday, holds major implications for the future of the internet — but it's not always clear who will foot the bill.

FCC Chairman Ajit Pai says he intends to repeal the rules that keep internet service providers from treating online content unequally. The regulations prohibit ISPs, such as Verizon, Comcast or AT&T, from slowing or censoring traffic to certain websites.

Advocates say net neutrality is a bulwark against ISPs abusing their power by forcing or prioritizing some online content against their competitors. Doing so would create an internet that handicaps smaller businesses and limits customers' freedom to access whatever websites they want.

"Net neutrality is actually what gives people choices," said Evan Greer, campaign director for the pro-net neutrality activist group Fight for the Future. "If we get rid of net neutrality protections, it allows the largest, most incumbent web companies to essentially pay protection money to ISPs to solidify their monopoly status and squash competition."

Demonstrators, supporting net neutrality, protest a plan by the Federal Communications Commission (FCC) to repeal restrictions on internet service providers during a protest outside a Verizon store on December 7, 2017 in Chicago, Illinois.
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Demonstrators, supporting net neutrality, protest a plan by the Federal Communications Commission (FCC) to repeal restrictions on internet service providers during a protest outside a Verizon store on December 7, 2017 in Chicago, Illinois.

Crushing that competition, she said, opens the door for fewer companies with more control to charge higher prices. "It essentially amounts to a tax on the entire economy."

Public opinion, while still largely in favor of the regulations, has narrowed in recent months. Net neutrality enjoyed strong bipartisan public support in June, but recent polling shows just a slim majority of U.S. voters still favor the rules, according to data from Morning Consult and Politico.

The apparent public support for net neutrality, opponents say, is largely a matter of successful branding.

"This is the brilliance of marketing," said Roslyn Layton, a scholar at the American Enterprise Institute, a conservative think tank. "The political left tends to win on net neutrality because the framing is better," she said.

Layton blames what she considers onerous FCC regulations, not the free market, for creating a costly and unequal internet for consumers.

In a July report on the consumer impact of the rules, Layton and AEI argued that "the Open Internet rules against blocking and throttling, although seemingly consumer-centric, are powerful price controls and legal tools to compel broadband providers to deliver traffic regardless of the marginal cost to networks and frequently at zero price."

It's not just the additional costs: A Phoenix Center study concluded that the threat of reclassifying broadband internet service under the FCC's purview may have reduced investment from the telecommunications sector between $30 billion and $40 billion annually from 2011 to 2015.

Net neutrality supporters, however, aren't buying it. "I think that's totally bogus," Greer said. "If you want to talk about fees getting passed onto consumers, that's what is going to happen if paid prioritization is allowed."

Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.

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