The Internet has dramatically changed how I and the three billion people, who have access to the Internet, live our lives. It has created new jobs, provided unprecedented access to information, made people more productive, facilitated global trade and political expression, and reduced inequality all over the world. It is tough to imagine life without the Internet today. When I go to online dating sites where I have to answer what are the top five things I cannot live without, usually the iPhone (access to the Internet everywhere) is on the top of my list.
Telecommunication companies like AT&T, Verizon, and Comcast have done a great job building the infrastructure that enables us to access the Internet. There is a fundamental rule about the Internet called Net Neutrality that treats all traffic as equal, i.e., a telecommunication company cannot give preferential treatment to traffic. For example, Forbes and Fortune are treated equally as users.
Now, some of these telecommunications companies (telcos) are lobbying to be able to create a tiered system for the Internet – a virtual fast lane and slow lane. If things go according to the telcos’ plans, a company like Fortune can pay to Verizon, to have its traffic on the fast lane resulting in a better user-experience. Then, Forbes will have no choice but to pay up to Verizon. So, in this imagined world, the telecommunication companies make more money and the costs for content providers like Forbes will go up. How will the content companies recoup these costs? They will charge their customers more. You and I will pay more for everything on the Internet. What if you are a startup that wants to compete with Forbes and Fortune? How will you compete? You will have to pay up to Comcast as well. The costs of starting a new business will go up. And, that means less competition for existing players and less innovation. Do you see why you should care about Net Neutrality?
I can see why telecommunication companies want to maximize their profits and returns to shareholders. All companies do that so they are not doing anything unusual. The crux of the debate is what's good for corporations vs. what's good for citizens of this nation and the world.
I recently sat down with the Honorable Terry Kramer, former US Ambassador and telecommunication executive, to get his views on Net Neutrality. I have known Terry for five years and we served on the World Affairs Council board together. Following are the edited excerpts from a telephone interview:
Chander: What is Net Neutrality?
Terry: In essence, Net Neutrality is the idea that all traffic on the Internet should be treated equally. Carriers of Internet traffic (telecommunication companies) should not be able to decide if some traffic is better than other traffic or charge for the delivery of data traffic globally. This was a position we advocated globally while I was leading the U.S. delegation to the ITU World Conference on International Telecommunications.
Chander: Is there a difference between how Net Neutrality is applied to wireline networks vs. wireless networks?
Terry: The basic idea is the same; that is, all traffic should be treated equally. However, wireless networks are more dynamic in nature. The coverage and speeds you get depend on your physical location and how many other people are using the network. Wireless networks are much more limited in capacity since they use specific airwaves to carry the traffic and these airwaves are in short supply.
In the US, wireless telecommunication operators like AT&T and Verizon now have metered plans, that is, you can only use a certain amount of data with your monthly subscription. You pay more to use more. This is done to overcome the capacity issue. On the other hand, the wireline operators, like Comcast, charge different rates based on the speed you get for the Internet connection. In addition, the extra cost of delivering Internet traffic on a wireline network is not the same as it is for a wireless network.
The US system is not broken and we have to take steps to protect it!
Chander: Well, The US is number 33 in the latest Ookla speed rankings for wireless broadband download and number 28 in wireline broadband download. Small countries like Estonia are ahead of us. I think we can do better. Moving on, in a world without Net Neutrality, how will the next Google or Facebook get started?
Terry: Without Net Neutrality, small companies and NGOs (Non-Governmental Organizations) could be harmed the most. And that is not the spirit of our country's political and economic beliefs. Without Net Neutrality, content companies could be forced to pay by the amount of traffic they generate. Small players and NGOs do not have the ability to pay these costs. A result? We may see a reduction in Internet traffic. This would hurt both telcos and Internet companies. While it's understandable the telcos are seeking to protect the current and future investments they need to make, I believe everyone wants to avoid the "slippery slope" of introducing more and more fees for content players to deliver their traffic and in essence risk the future vitality of these businesses-many of whom are small and growing today.
For startups, the lack of Net Neutrality could increase the costs of raising capital since the predictability of startup costs decreases. Hence, we might see less venture capital going to Internet startups.
Enabling startups and small businesses is a competitive advantage of the United States. We don't want to risk losing that.
Chander: Recently, President Obama weighed in on Net Neutrality. What exactly did the President tell the Federal Communications Commission (FCC)?
Terry: The FCC does not take "orders" from the President as an independent regulatory agency. Given the importance of this issue to the National interest, the President presented his view to the FCC. However, the FCC is still deciding on its approach to this issue. .
Currently, broadband is classified as an information service and as a result, the FCC has limited authority over what it can tell the telecommunication companies to do. Verizon took the FCC to court on this matter and the FCC lost. The FCC is an independent agency and its job is to regulate and protect the interest of Americans. In order for the FCC to have authority over the Internet, the Internet must be reclassified as Title II of the Telecom Act of 1934. Wireline telephone service is governed under this jurisdiction. Until this reclassification, there will continue to be court cases and no one is going to win.
Chander: China’s ecommerce is bigger than ours. What you do think China's views are on Net Neutrality?
Terry: During our ITU negotiations, China seemed more interested in the "political side" of the Internet than the commercial side. The Chinese government was more focused on the ability monitor traffic flows--in essence what many would be concerned represents censorship. . They seemed more focused on traffic monitoring than they did the economics of charging for delivery of traffic.
Chander: Why don't we make broadband a utility like the electricity?
Terry: It will inhibit investment. I am pro Net Neutrality but I do realize that regulation can be overdone. If broadband is regulated like a utility, it could discourage network investment, competition and innovation amongst the telecommunications companies. . It wouldn't be good for consumers in the long run. What we need is a set of rules of engagement from the FCC that fosters competition and brings innovation and choice to consumers.
Chander: You have worked for the US State Department, for a telecommunication company [Vodafone], for startups, and you live in the San Francisco Bay Area where much of the innovation happens as it relates to the Internet. Hence, you have a very unique perspective on the Net Neutrality issue. The telecommunication companies and the Internet startups in the Bay Area are on the opposite ends of the debate. How did you pick the pro Net Neutrality side of the debate?
Terry: You cannot look at Net Neutrality in a polarized way. Overall, everyone has benefited from Net Neutrality. The Internet has been the single biggest driver of job growth in the US. The increased Internet traffic flows have helped the telecommunications companies. The Internet is reducing income inequality, increasing innovation and capital investments. Also, it is making life easier for consumers. It is also giving consumers more choice and making employees more productive. Why would you want to mess up such a great thing [Net Neutrality] for our country?
This article was originally published on Forbes.com on December 16th, 2014.