Published On: Wed, Feb 24th, 2021

California Net Neutrality Upheld In Federal Court – But Is This a Good Thing?

What the heck does net neutrality mean anyway?

Net Neutrality is one of America’s hot topics these days. And a federal court just upheld California’s net neutrality laws. But what exactly does net neutrality mean and is it a good or bad for consumers, for small businesses, big business, commerce or free speech?

The law which will soon go into effect was first passed in 2018. It was enacted after the Trump administration rolled back net neutrality polices which had been imposed by President Obama. The challenge to the law was brought in a federal court because the plaintiffs argued that such a policy is something which should be handled only by the federal government. They maintained that it would cause chaos if policies changed from state to state.

“A state-by-state approach to Internet regulation will confuse consumers and deter innovation, just as the importance of broadband for all has never been more apparent,” the Cellular Telecommunications and Internet Association, ACA Connects, the National Cable and Telecommunications Association and USTelecom said in a joint statement.

The Department of Justice under President Trump had joined the suit on the side of the plaintiffs. But the new Biden administration reversed course and dropped DOJ support.

What many people are asking today is, why is net neutrality so controversial and what exactly does it mean?

Well the idea simply means that Internet Service Providers (ISP) and the companies which offer high speed internet access like local cable providers should not be allowed to control the flow of bandwidth for individual websites. So net neutrality kind of means net equality for all websites.

Think about radio. The radio stations can and do pay higher fees for more bandwidth. But this only allows them to broadcast to greater distances, not to crowd out their competition. Each station is still only available on one frequency.

The ISPs and others want to be allowed to charge internet companies fees for greater bandwidth and better access to people when they go on line. This would mean that the big companies like Amazon and Facebook could easily crowd out any competition as they have big enough pockets to afford such fees. But what about the little guy?

Small businesses which cannot afford the extra fees will surely lose out. So the big box retailers and online stores like Amazon and Alibaba might be able to squeeze them out for good. Consumers’ rights groups argue that this would lead to less competition and higher prices. They also point out that this would take choice away from people when they go online.

Free speech advocates are also concerned. They point out that smaller news websites and blogs would be forced out of the market by the major ones which are owned by big corporations that can certainly afford to pay the fees as a part of doing business. Consumers would then be limited in sources of information they would have access to while surfing the web.

The ISP companies and local broadband internet providers compare charging such fees to what cable television is allowed to do all over America. Cable companies can negotiate with the different cable channels for whatever fees they need to pay to carry their signals. The bigger and more popular a channel like CNN or MTV, the higher a price they can charge. But the big cable companies can also use the threat of dropping channels entirely to negotiate lower fees.

What is more, cable companies pass the fees onto the consumer with the prices that they charge for various package deals.

The charging of websites fees for greater access, however, means that the ISPs will earn more money. They will not need to pay the websites in the way that local cable companies must pay for the channels which they carry. So they argue that the added revenue could be passed on to consumer in the way of lower fees, thereby saving millions of people a lot of money each year.

Free market advocates also oppose net neutrality. They argue that the market should always decide these things. If consumers think that cable companies charge too much then they would simply stop getting cable since it is clearly not an essential item. And indeed many people have done just that in recent years as more and more content is offered for live streaming.

The states, however, see it differently. For them ISPs and the cable/phone companies which offer the high speed access are local utilities like the water and power companies. As a result they can, and should, be regulated locally as utilities are regulated.

Apparently U.S. District Court Judge John A. Mendez agreed with this argument. His ruling did not deal with the validity of net neutrality as a policy. The judge merely ruled that an individual state does have the authority to regulate local internet access. At least it does so for now.

The judge pointed out that his ruling only applies in the absence of any federal statute on the matter. So now the ball is the Congress’ court, so to speak. But of course this matter is so important that it will surely need to be settled by the Supreme Court.

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