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December 14th, 2017

Interview: Roberto Gallardo – Net Neutrality

Roberto Gallardo, Ph.D., is a community and regional economics specialist at the Purdue Center for Regional Development, specializing in the use and application of broadband and other information technologies in rural communities. He is the former director of the Intelligent Community Institute at Mississippi State University Extension Service where he and his team conducted research and provided outreach services to help rural Mississippi communities transition into and benefit from the digital age.

We interviewed Dr. Gallardo via email about the impact of the Federal Communications Commission’s December 14, 2017 decision to end its policy of net neutrality. The policy formerly required internet service providers (ISPs) to treat all internet content equally without blocking, slowing or giving priority treatment to particular websites or online services.

Dr. Gallardo at TEDxJackson 2015. Photo by Tate Nations.

There’s been a lot of debate about net neutrality this year, leading up to today’s FCC decision. What‚Äôs at stake, and why should people care?

GALLARDO: Net neutrality is the principle that all internet traffic should be treated equally, regardless of source or destination. In other words, enforceable net neutrality restricts the power of internet service providers to influence loading speeds for specific websites or apps. While the internet thrived under a minimum regulation scheme prior to 2015, the Obama FCC in that year reclassified the internet from being considered information services under Title I to common carriers under Title II (along with electricity and the telephone). One of the reasons for this change was due to some carriers not counting certain websites or applications towards data caps. Keep in mind, many broadband providers now own or want to own content producing companies. For example, Comcast owns NBC and both merged into NBCUniversal. Verizon purchased Yahoo and, although AT&T failed in its attempt to purchase Time Warner, it doesn’t charge its mobile customers for the data they use watching shows from DirecTV, which it owns.

The internet under Title II allows the FCC to enforce neutrality regulations, as is the case with electricity and telephone. Today, the Trump FCC is voting to reclassify the internet back to Title I. Proponents of this “repeal” or reclassification argue that the problem simply does not exist and that the lack of net neutrality is an imaginary threat. Moreover, Title II common carriers are heavily regulated and repeal proponents argue it is negatively impacting innovation and investment in broadband networks, widening the digital divide. The proposed repeal does require the providers to disclose to their users what exactly they do to web traffic. Opponents argue repealing net neutrality will allow broadband providers to favor their own content, demanding other content to pay a fee to be delivered faster, and/or outright block or throttle (slow down) lawful websites and apps. Net neutrality proponents argue that, as a result, broadband companies could become gatekeepers of the internet.

At this point, it is unknown what the broadband providers will actually do once the internet is moved back to Title I. However, as FCC commissioner Rosenworcel argued: “For the first time, broadband providers will have the technical capability, the business incentive, and legal authority to discriminate in the provision of internet access.”

Obviously, giant companies like Google, Netflix and Facebook will be affected. But what’s the potential impact for small and medium-sized businesses and startups here in Mississippi? Do you expect the end of net neutrality to stifle innovation, as some have suggested?

GALLARDO: All we can do at this point is assume things since we don’t know for a fact how a lack of net neutrality will manifest itself. While the internet did thrive without formal net neutrality rules, we do not know how providers will behave this time around. However, a couple of scenarios are worth entertaining.

One of the largest potentials of the internet is that it levels the playing field. It can ‚Äúdemocratize entrepreneurship.‚Äù Virtually anybody launching a venture can do so from anywhere and almost immediately have access to national and global markets as well as unprecedented online resources, relationships, and services ‚Ä쬆including raising funds through crowdfunding. What if providers demand a fee to make sure this startup’s is delivered at speeds comparable to their larger, more established competitors? Well, that startup will be at a disadvantage. Would Facebook be here if net neutrality would not have been in place when MySpace was king?

Companies like Amazon, Google, Apple, and Netflix can surely afford paying fees, if they are indeed implemented. But what about the startups, the new kid on the block? Entrepreneurs are concerned that large companies will spend heavily to dominate fast-lane access. After all, milliseconds of difference are sufficient to cause bad reviews for a product or service. Ultimately, the cost could be passed on to the customers making access to internet content more expensive.

Many rural areas in Mississippi have no access to fixed broadband internet. How do you think the repeal of net neutrality will affect these communities?

However, after analyzing FCC form 477 data for December 2016 v1, investments in fixed broadband of at least advertised 25/3 in Mississippi increased between 2015 and 2016, after net neutrality regulations were enabled. (Editor’s note: 25/3 is the current benchmark for high-speed internet ‚Ä쬆download speeds of 25 Mbps and upload speeds of 3 Mpbs.) The number of records submitted by providers serving Mississippi at the block level (only for consumers ‚Äì does not include services to businesses) increased from 684,759 in 2015 to 690,500 in 2016. Of these, records that met the 25/3 criteria went from 45,929 in 2015 to 171,278 in 2016, an increase of more than 270%. The majority of this increase was due to satellite technology advertising 25/3 services. So, either providers got better at reporting their own data or, indeed, 25/3 investments were made even with net neutrality regulations in place.

Now, remember that the FCC will require providers to disclose exactly what they are doing regarding internet traffic. This rule allows the consumer to monitor the provider’s behavior and switch providers, if needed. The problem is, many areas in the nation, including Mississippi, have only one 25/3 fixed broadband provider. Analyzing the FCC Form 477 December 2016 v1 dataset, almost 400,000 Mississippians or 13.3 percent of the state’s 2.98 million residents in 2016 lived in census tracts with only one 25/3 provider. If satellite technology is removed, the number increases to about 621,000 Mississippians or 20.8 percent of the state’s 2016 population lived in tracts with only one 25/3 provider.

What about education? A lot of schools and students rely on free web video services to supplement classroom instruction. Do you think the repeal of net neutrality rules will have a positive or negative effect on the digital divide in our schools?

GALLARDO: Again, I’m not sure what providers will do once net neutrality regulations are removed. I doubt providers would block education-related content or demand fees for faster delivery. The same thought would apply to healthcare. However, both healthcare and education content require live feeds and videos, which require larger bandwidth ‚Ä쬆just ask Netflix! This idea is one of the arguments made by repeal proponents for enabling fast lanes, which would ensure ‚Äúheavy‚Äù content producers like Netflix also pitch in their share of maintaining and improving ever more data-hungry networks. But we shall see how it all unfolds.

Do you see any other possible benefits that could come from the FCC’s net neutrality decision?

GALLARDO: If what proponents say will happen indeed does, then repealing net neutrality could unleash broadband network investments. It remains to be seen if these investments will occur in rural communities. These investments are, of course, sorely needed to reduce the access and availability divide that’s leaving rural communities behind. Time will tell if proponents or opponents were right. Or if it’s a mix of both.

Any final thoughts?

GALLARDO: Internet applications continue to evolve and are now an integral part of the quality of life of individuals and communities. If repealing net neutrality results in the worst-case scenarios discussed here, the potential of internet technology will be seriously undermined. I’m afraid rural areas will be affected the most. On the other hand, perhaps a ‚Äúfractured‚Äù internet will indeed unleash innovation and competition, resulting in a vastly better internet. Only time will tell.

Related post
Interview: Chip Pickering – Net Neutrality – Part II

Randy Lynn

Randy Lynn

Partner/Creative Director
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