October 9, 2023
By: Dr. Edward Longe and Turner Loesel
Early last week, Federal Communications Commission (FCC) Chairwoman Jessica Rosenworcel announced plans to reinstate net neutrality rules on internet providers to promote an “open, fast, and fair” internet. While the promise of an open, fast, and fair internet is shared almost across the board, the reinstatement of “net neutrality rules,” as outlined by the FCC, risks disrupting a regulatory environment that has seen increased private investment and speeds.
This announcement was made swiftly after the confirmation of Anna Gomez as the agency’s fifth commissioner, tipping the FCC’s 2-2 split in favor of Democrats. With control of the FCC, the Democrats can finally deliver a campaign promise made by then-candidate Joe Biden, who consistently promised to reinstate Obama-era regulations.
While the Democrats wanted a reinstatement of net neutrality rules, the reality remains that it is a solution in search of a problem.
So, what exactly is “net neutrality”? Broadly, net neutrality mandates that internet service providers (ISPs) provide equal access to all lawful content, no matter the source. The proposed rules would reclassify ISPs as Common Carriers under the 1934 Communications Act. Once classified as a Common Carrier, the FCC has greater authority to regulate these entities, through mechanisms like regulating rates and network management practices. This designation also prohibits ISPs from blocking, throttling, or engaging in paid prioritization of online content.
The recent history of net neutrality dates back to 2015 when then-chair Thomas Wheeler announced the Open Internet Order (OIO), which expanded government control over how ISPs operate and reflect the current plans of Chair Rosenworcel. In 2018, then-chair Ajit Pai rolled back Wheeler’s order in favor of a light touch regulatory approach, arguing it would provide “stronger incentives to build networks, especially in unserved areas, and to upgrade networks to gigabit speeds and 5G.”
Despite apocalyptic concerns that rescinding net neutrality would see the end of the internet or that we would get the internet one word at a time, Chair Pai was correct. In fact, the internet flourished.
In the years following the repeal and the creation of a more favorable regulatory environment, private broadband investment increased significantly. In 2017, ISPs reported investing around $76 billion in their networks. By 2022, after the repeal of OIO regulations, that figure skyrocketed to over $102 billion. Comparatively, Congress could only provide $42.5 billion in infrastructure through the BEAD program, “less than half of what the industry invested in last year alone.”
Following increased investment after the demise of OIO, Americans experienced record speeds, allowing them to do more online. In October 2020, over two years after the repeal of neutrality took effect, the agency reported that “average download speeds for fixed broadband in the United States have doubled, increasing by over 99%.” Customers could do more online with faster internet speeds, such as stream high-definition movies, receive virtual healthcare, and attend virtual school.
Independent researchers have consistently verified these claims. After the FCC scrapped net neutrality rules, U.S. internet speeds rose by 15%. Those gains continued in the years following, with speed testers reporting that in 2023, “Americans are getting over 210 Mbps of download speed and about 23 Mbps of upload speed through their fixed broadband connections.” In 2015, the average download speed was just 39 Mbps.
As speeds increased, the average price of broadband fell, providing more Americans access to the benefits of connectivity. Studies of broadband pricing have shown between 2021 and 2022, the overall cost of broadband declined by almost 15%. Notably, these price declines occurred while the U.S. economy suffered record inflation, making affording everyday essentials a problem for American households. With lower prices, more Americans were able to receive what used to be a luxury and enjoy the benefits of connectivity.
Increased investment also allowed for greater network resiliency. When COVID spread, and dining room tables became home offices, American ISPs were able to meet this increased demand without issue. Across the Atlantic, where net neutrality rules have depressed investment, the story was very different, with the European Union demanding providers throttle, or slow, service.
While it is impossible to draw a causal relationship between the demise of net neutrality, the explosion in internet speeds, and the decline in prices, the FCC should not interfere with the regulatory environment that allowed such outcomes.
The years following the demise of the Open Internet Order were undoubtedly the heyday for American broadband, with private investment up, record speeds, and prices declining for every American. Despite these positive outcomes, the FCC intends to walk back on five years of progress in search of a solution to a problem that simply does not exist.
Once again, it will be American consumers who pay the price.