The arguments regarding net neutrality are confusing and technical. It’s hard to know what the end of those regulations (now a virtual certainty) will mean for the consumer, especially here in the Happy Valley bubble. Well, a little storefront on Beaver Avenue in State College tells you everything you need to know.
There is a Comcast store there. Well, sort of. The store never had great hours: 9 a.m.-5 p.m. Monday-Friday, closed one hour for lunch. For anyone who works for a living or is in class all day, that was already hard enough to navigate. But now, if you go to that store you will find a shuttered office with a posted sign saying “closed for the season.” I for one didn’t know cable TV had a season. And I think the last time I saw a sign like that, it was at the snack shop at the public golf course.
Most businesses would suffer if they operated like this. Not Comcast. Last year, the company made $19.2 billion. (That snack shop probably netted something less than that).
So how is it that Comcast can be so wildly profitable and yet so, let’s say, arbitrary in their customer service? Easy. In State College, Comcast is a monopoly: Getting TV or internet service from anybody else is difficult, and if you want high speed service, it is impossible. And that means that if you don’t like the service (or lack of service) you receive from Comcast, you cannot leave and go to another provider.
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State College is not unusual in this regard. Most of the U.S. has only one landline internet service provider. In fact, if you want decent internet speeds (25 MBS or more) then the vast majority of Americans — more than 75 percent, in fact — have only one choice.
So what does this have to do with net neutrality? FCC chair Ajit Pai says that the end of these rules will free the market to provide customers with more innovation and better, cheaper service. But that claim rests on a premise that is demonstrably false. The market for internet providers is not free, not in State College and not in most of the United States.
Because of their monopoly, ISPs have very little incentive to offer reasonable accommodation for customers. They would likewise have little incentive to continue to provide neutrality. On the contrary, if they were to abandon it, they would greatly increase their profits. If Comcast cuts a deal with Netflix, say, and leaves Amazon high and dry, then customers who want Amazon will have to pay more. Thus, Comcast profits and consumer costs will go up. What’s more, at the same time, consumer choice will go down. Smaller providers will likely be priced out of the market, unable to compete with the big boys who can pay the ransom that ISPs will be free to demand.
Any monopoly represents a market failure, and when that happens, it is the government’s job to make sure that the consumer’s best interests are protected. That is why net neutrality is part of federal policy, and why it should remain.
Unfortunately, there is little chance that that will happen. For all the railing you hear from advocates, Pai’s side has the votes, 3-2, at the FCC. Unless something dramatic happens, net neutrality is going down.
In State College, this means an already inconvenient situation is likely to get worse. The company that closes their store “for the season” will still have little incentive to remain open, but that’s likely just the beginning of what we can expect in the post-net neutrality world.
Chris Beem teaches at Penn State and resides in State College.