Right now the Internet consists of you on your computer, and everyone else on their computers, each connected through a modem or radio that attaches to the worldwide network. A block of data coming from anywhere in the world has an equal chance of reaching you in a few milliseconds, no matter what it is. There is no difference over the net between packets of data from Netflix, HBO Go, Hulu, the New York Times, Chase Bank, your credit union, your school, except for physical distance. This is always the case unless the Internet connections for those entities have problems on their end.
This incentivizes everyone to buy as much network capacity as their service will consume at peak times, so that all their customers experience no delays in service delivery. As a consumer, you might choose, for example, to pay less money for a wireless phone connection, and avoid watching online videos on your phone.
That means that when the Internet is “slow” or “down”, the cause is generally merely technical, requiring technical people to repair or increase capacity on the parts of the network they control. Netflix meets Verizon or Comcast halfway, in turn they both agree to handle all the traffic you request delivery for and make sure it can happen. This is an agreement structure known as “peering”, and it usually happens between companies you haven’t heard of, with companies you have. Peering agreements have the effect of passing the cost of transmitting traffic to the transmitter, and the cost of receiving to the receiver, spread out, of course, among all the transmitters and receivers. Sometimes, money changes hands. Often, these companies recognize that peering without paying each other is in their mutual interest, since all their customers want to be connected to one another.
What the FCC did today was affirm that that’s exactly what they want to keep happening. The cost of your internet connection to anyone consists of only the cost of the connection. Netflix et. al. recapture their costs of connection through your subscription fee, directly with them, or through advertising.
What Verizon/Comcast/AT&T etc wanted to win was the right to proceed without regulation, so that as they added capacity to their networks, they could cordon off portions of it for websites and services they own. For example, Comcast owns NBC/Universal. They also own parts of Hulu. But, they do not own Disney (ABC networks, and ESPN). It is in their self-interest to make NBC.com or Hulu load fast, no matter how much traffic is pouring in from Netflix for Comcast customers. What they wanted was the right to surcharge you directly for unpredictable traffic like that, or permit it to languish on an un-upgraded secondary Internet.It would have turned Netflix into a surcharge on your cable bill in addition to the subscription fees Netflix already charges, because the economic incentive there is obvious: toll roads are almost always better maintained than untolled roads. (I’m thinking of the difference between I-80 and I-90 in Ohio, for example…)
Unless an appeal is affirmed, it is now illegal for them to do that. Because the FCC wanted what is already the case for all Internet connections today, the delays in implementing the rules mean little or nothing.
As with telephone service, where a phone company cannot charge you more to receive a phone call for any other reason than the cost of connecting the call, ISPs cannot degrade Netflix data because it’s Netflix. You will note that within the United States, telephone calls generally cost only the amount needed to attach your phone to the phone network, nothing more. The days of long distance charges are basically gone, because the voice network is large enough and sophisticated enough to accommodate all the calls.
The FCC ruling means that it will be in Verizon/Comcast’s/etc direct interest to overprovision their own network, so that Netflix cannot degrade everything. It makes designing an IP network a little more difficult, but also greases the wheels of commerce by supplying a requirement for an even internet playing field. Overprovisioning means a constant arms race of Internet capacity. The network will be large enough to be cheap for individual consumers.All of that is longhand for a claim that Verizon et. al., when they asserted that Net Neutrality was going to destroy incentives to them to build out their networks further, were blowing acrid smoke out their backsides at us.