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Net Neutrality Public Good

net neutrality public good
Source: Global Net Neutrality Coalition

Net neutrality public good is very important. Without it, service providers can punish competitive services with higher prices and consumers can lose a lot of choice. 

Until this month, most countries in the Americas and Europe, as well as India and Japan, enforced net neutrality, shown in blue above. This month, the United States “went yellow”, joining Russia and China as the only major countries without official net neutrality. What does this mean?

Let’s start with the phrase “net neutrality public good”. In economics, the term public good has a very special meaning. It refers to a service or resource that is important to society. So important, in fact, that it must be regulated to ensure its availability to society. In short, a public good is meant to be available to anyone to use without effecting its availability to others. (Economists refer to these characteristics as non-excludable and non-rivalrous.) This principle was applied to Internet service by President Obama in 2014.

Examples of public goods are police, fire and military services; roads and public transportation; and in some countries, health care. Generally, public goods are provided by governments, regulated industries, and sometimes cooperatives. Public goods are usually not provided naturally by free market economic forces. They require some form of coercion by the state.

Up until this point, most western societies have considered the Internet to be a common resource and a public good. They have implemented this philosophy through something called net neutrality. According to Wikipedia, net neutrality is the principle that Internet service providers must treat all data on the Internet the same, and not discriminate or charge differently by user, content, website, platform, application, type of attached equipment, or method of communication. This has been enforced either by law, regulation or voluntary guidelines.

In the home of the Internet, net neutrality has now been removed by the FCC.

Net Neutrality Public Good No More – So What?

Net Neutrality has never meant that service providers could not charge more for faster speeds or amount of data. What it has meant is that service providers could not implement differential pricing based on content. In short, you could charge differently for how fast packets of data traveled, or how many packets were consumed. But not for what those packets contained.

Now, in some respects, the idea of a public good is hard to maintain. The hard part is how to ration the use of the resource. For example in countries like Canada, our public health care system is rationed. Simply because there is not enough money in the system for unlimited provision of services. Road systems are now subject to differential pricing in many countries which have congestion problems. Price is normally used as the mechanism to ration use.

Today’s question is what exactly is going to be rationed or priced differently: data or content.

Many countries have telecommunication regulation that has long ensured a separation between carriage versus content. These regulations are increasingly important as media and internet companies merge. And that is the reason that we should maintain net neutrality public good. It’s about ensuring a level playing field for consumers and providers of internet services.

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