My take on net neutrality.
The common refrain is "It undermines innovation and competition". (That's actually a quote.) I think the phrase is unweildy, so let's just use "choice", as in "free market choice."
Now let's consider the traditional ISP. which worked like this (consumer gives $$ ISP gives access):
+-----------+ +----------+
| ISP | | Consumer |
| $$ <----| |
| | | |
a.a.com ---->------------->| |
| | | |
| | | |
b.b.com ---->------------->| |
| | | |
| | | |
c.c.com ---->------------->| |
| | | |
+-----------+ +----------+
ISPs want the choice, first of all, to decide that the consumers not have access to b.b.com:
+-----------+ +----------+
| ISP | | Consumer |
| $$ <----| |
| | | |
a.a.com ---->------------->| |
| | | |
| | | |
b.b.com ----X | | |
| | | |
| | | |
c.c.com ---->------------->| |
| | | |
+-----------+ +----------+
There are generally two reasons for this, though it is usually presented as one: "b.b.com consumes too much bandwidth." This is a false argument. I am one pair of eyes, I can pretty much watch one video. Generally, one video takes X bandwidth. This is emphasized by the fact of the second reason, which is that the ISP wants to substitute its own video service for b.b.com:
+-----------+ +----------+
| ISP | | Consumer |
| $$ <----| |
| | | |
a.a.com ---->------------->| |
| | | |
| | | |
b.b.com ----X | | |
| our.b ----->| |
| | | |
c.c.com ---->------------->| |
| | | |
+-----------+ +----------+
It is also belied by the fact that ISP's will generally unlock b.b.com if you pay more:
+-----------+ +----------+
| ISP | | Consumer |
| $$ <----| |
| | | |
a.a.com ---->------------->| |
| | | |
| $$ <----------| |
b.b.com ----->>----------->| |
| our.b ----->| |
| | | |
c.c.com ---->------------->| |
| | | |
+-----------+ +----------+
See? Looks like bandwidth isn't much of a problem, not really.
Then there's d.d.com. It is a new choice, a new innovation. They need clicks to succeed, but the ISP can hold them up, "You want clicks, pay us":
+-----------+ +----------+
| ISP | | Consumer |
| $$ <----| |
| | | |
a.a.com ---->------------->| |
| | | |
| $$ <----------| |
b.b.com ----->>----------->| |
| our.b ----->| |
| | | |
c.c.com ---->------------->| |
| | | |
d.d.com----->$$ | | |
d.d.com ----->>----------->| |
| | | |
+-----------+ +----------+
Better yet, the ISP can combine both for c.c.com:
+-----------+ +----------+
| ISP | | Consumer |
| $$ <----| |
| | | |
a.a.com ---->------------->| |
| | | |
| $$ <----------| |
b.b.com ----->>----------->| |
| our.b ----->| |
| | | |
c.c.com ------>$$ $$<------| |
c.c.com ------->>->>------>| |
| | | |
d.d.com----->$$ | | |
d.d.com ----->>----------->| |
| | | |
+-----------+ +----------+
So, in the unregulated, non-net neutrality environment, the ISP's are in an enviable and powerful position for choice. Why does that matter? Because, using 25MBps as the standard, 50% of the people in the U.S. have access to 1 provider (access to no more than 2, 70%); and the only way the consumer can reach the services is via that ISP; and the only way the service can reach the clicks is via the same ISP.
So in summary, the non-neutrality environment:
- The ISP: nearly unlimited monopoly power to charge what it wants to who it wants; to pick winning and losing services. Basically, unlimited choice.
- The consumer: most often a choice of 1 ISP and subject to its whims; must pay what it demands for the services wanted; and the ISP may choose to make some services unavailable at any price, substituting its own (inferior) choices.
- The rest of the web: if it wants clicks, must pay the ISP what it demands and may be denied access at any price if the ISP chooses to substitute its own offering.
So when opponents say, "net neutrality undermines innovation and competition," what they really are saying is that the ISP (and ISPs alone) would have reduced free market choice. They ignore the fact that, absent net neutrality, the ISPs restrict everyone else's free market choice: consumers and web services alike.
Yes, ISP's need to compete--but that doesn't mean to throw around their elephant-monopoly weight. Yes they need to innovate, but that doesn't mean coming up with ever more ways to extort (yes, extort) more money from everyone else; to stifle everyone else's innovations.
Net neutrality increases consumer free market choice and web service free market choice. Why is that bad?