Electricity v. Internet: Why Do We Treat the Markets Differently?

First off, Net Neutrality is not Open Internet. For our purposes here, we will focus on defining the Open Internet, and how that framework was a critical part of the Internet’s inception, while the model is identical to how many consumers choose their electricity provider today.

Open Internet is the practice of allowing Internet Service Providers (ISPs) to openly compete for consumers using the government protected framework laid down by a service provider (i.e. AT&T, or Verizon). Consumers can, in turn, choose any ISP that suits their needs without concerns of any restrictions imposed by the service provider, such as restricting content access or limiting services used.

This approach was how the U.S. oversaw Internet access for the American public in the early 1990’s. But then, in the early 2000s, the FCC changed its policy and began closing off the local networks. Independent ISPs were forced out in favor of a local duopoly between telephone and cable companies. These players now dominate the entire market and do not much compete on price or terms and conditions, leaving innumerable consumers without any real options.

This was of course a boon for the companies allowed to control our access, but it disrupted the balance and threatened the rest of the Internet. The local companies began to ration availability and speed, kept prices high and then began to restrict users’ online content sources. Ultimately they began to capture users’ private usage information and sell it to third parties as a means to even further increase profits. In the face of consumer abuses by those companies, the FCC would create the patchwork solution called Net Neutrality.

History should be used as way to avoid making the same bad mistakes. However, in this case, some policy makers do not believe service providers should be treated as a public utility because they think people don’t need to use the Internet. But that’s not close to reality. Most people in the U.S. today operate online out of necessity, from small businesses processing payments to the everyday commerce of paying bills, many of which can ONLY be paid online. Another excuse some policymakers use to prevent the Open Internet from making a return is they do not want to force big companies to make their infrastructure available to competitors who did not invest in the framework. What they do not consider is that those companies were offered exclusive government-protected contracts, and unlimited access to our property to lay down that infrastructure, as well as a hundred-year monopoly head start.

Communications used to be, and should be, handled like the competitive retail electricity service markets in many states that give consumers a choice, along with the economic benefits associated with that open marketplace. Texas, for example, gives one company the exclusive contract to lay down and operate the local distribution infrastructure that is the means to transport electricity to consumers, but it is entirely wholesale in nature. Retail providers pay the local company to use the distribution lines and get their energy to the consumer. If the infrastructure owner wants to provide retail service it must create a separate retail entity and pay the same price as all others for use of the local network. Consumers in most Texas markets have hundreds of service provider options (just like they did for ISPs before the FCC changed its policy), and this was done with the express consent and support of the legislature, many of whom make up the current Texas congressional delegation.

The same lawmakers and experts that tout the open electricity marketplace prevent the same system from governing Internet access, depriving consumers the benefits of a competitive marketplace in the name of protectionism, and ultimately, data collection in the name of national security.

We fundamentally believe a healthy ISP market is critical to putting us back in control of our personal data, and to increasing the innovation economy as a whole.

For a more detailed, and technical explanation on the Open Internet, please contact Carlos Espinosa at Policy@GoldenFrog.com.