Republicans On Warpath Against Netflix and Net Neutrality

The reason I chose Netflix in the title of this article is because it’s the biggest potential victim of Republican efforts and the one most Americans would immediately notice with higher rates if they win. But this is actually part of a much bigger battle. In the last few days I have noticed a concerted effort by Republicans propagandizing against Net Neutrality by completely changing the terms of the debate and saying that Obama is trying to take over the internet and add more regulations which will lead to higher prices. This is a big load of crap! Even scarier is many Republicans believe it!

As distasteful as it might be for many Republicans, this is a battle where you need to support President Obama. If the FCC lose the fight against cable lobbyists, the entrenched cable monopoly with no competition, yearly rate hikes, and also increasing prices on things like Netflix will be here to stay. Most of the rest of the civilized world has internet access at 1/3 the cost, and 10 times the speed as we have in the U.S. and cable companies are fighting tooth and nail to keep it that way. The FCC meeting on February 26 to reclassify the internet as an essential utility is a very good thing for the consumers and yet thanks to lies and false propaganda many consumers don’t seem to get that point. You have an odd situation where consumers are siding with big cable companies against themselves and their own best self-interest. If this doesn’t prove the power of lobbyists and pundits nothing will.

 

What is Net Neutrality?

It is the principle that Internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites. Net neutrality describes the idea that whoever provides you Internet access—for example, Cox, Comcast, Time Warner, Verizon, and so on—should treat all of your Internet traffic, or packets of data, the same way.

That means they should not be allowed to slow down services like Netflix or other streaming movie services for example. ISP’s don’t like streaming movies because they also sell T.V. services and would rather you pay through the nose to have cable T.V. than Netflix.

Supporters of net neutrality want the FCC to reclassify broadband ISPs as “common carriers,” a designation reserved for companies who are mandated by the government to provide the same service, without discrimination, to everyone. (Think about gas, or electricity, or landline telephone services.) If you are a typical home user you would be an idiot to be opposed to Net Neutrality because it is in your best interest that ISP’s cannot pick and choose what internet streams get a speed penalty to your house.

Only recently we saw some big cable providers that tried to put the squeeze on Netflix and extorted them for money. Netflix will soon have no other option than to raise their prices to pay these higher rates ISP’s are extorting from them.

 

Why are Republicans Opposed to Net Neutrality?

If you are talking about an average person that simply votes Republican, they are not opposed. Well, to be clear they are not opposed once they understand what it it really means to them.  But herein lies the problem. They are not being told the truth. Instead they are being told than King Obama is trying to take over and regulate the internet and raise prices in order to give free internet to the poor. No, I am not making any of that up. That is exactly what Fox news reported yesterday and brought in their panel of “experts” (read Cable industry lobbyist) to explain how this would be bad for consumers.

GOP leaders are mounting a multipronged attack on FCC Chairman Tom Wheeler’s rules, which would tighten regulation of Internet service providers to ensure all Web traffic is treated equally. While the FCC  is expected to approve Wheeler’s proposal at its Feb. 26 meeting, the GOP is doing everything it can to cause a delay or make the move as politically painful as possible. This extends to using pundits on Fox and other places to basically lie to their base and get their support. But let me be absolutely clear once average voters understand the truth about this debate, that net neutrality is basically consumers vs. Big Cable on the other side they overwhelmingly support net neutrality.

All the FCC is trying to do is classify ISPs as common carriers which would allow the FCC to ban what’s known as “paid prioritization.” Paid prioritization would stack the deck against any company trying to challenge the dominance of Netflix (or Facebook, or Twitter, or Google). Only large companies with deep pockets would be able to pay this extortion money to Big Cable and small and innovative competition in the future would suffer since it would be much slower and therefore consumers would get frustrated and stop using it.

Republican arguments against net neutrality are generally founded on a suspicion of government regulation of commerce. They argue that if broadband ISPs cannot collect fees from companies who take up an outsized portion of their bandwidth, they lose the incentive to invest in maintaining and upgrading their current infrastructure, which could hurt consumers. But yet they are completely silent over the fact that most cable companies have monopolies in their markets. Whatever happened to Republicans love for a free market which REQUIRES competition? I will tell you what happened, the cable lobbyists who line their pockets are very happy with the status quo and monopolies. The FCC ruling is simply trying to level the playing field for consumers to a small degree and stop allowing them to extort even more money from companies like Netflix.

ISP’s are Raking in Money

Paul Krugman makes a simple but powerful point about Comcast’s acquisition of Time Warner Cable:

One puzzle about recent U.S. experience has been the disconnect between profits and investment. Profits are at a record high as a share of G.D.P., yet corporations aren’t reinvesting their returns in their businesses. Instead, they’re buying back shares, or accumulating huge piles of cash. This is exactly what you’d expect to see if a lot of those record profits represent monopoly rents.

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Broadband is the area which Krugman, and most other opponents of the Comcast-Time Warner tie-up, are most worried about. It can’t be a good idea to give a single company 37% of the market in broadband, especially when its real monopoly power would be much stronger still:

The reason this deal is scary is that for the vast majority of businesses in 19 of the 20 largest metropolitan areas in the country, their only choice for a high-capacity wired connection will be Comcast. Comcast, in turn, has its own built-in conflicts of interest: It will be serving the interests of its shareholders by keeping investments in its network as low as possible — in particular, making no move to provide the world-class fiber-optic connections that are now standard and cheap in other countries — and extracting as much rent as it can, in all kinds of ways. Comcast, for purposes of today’s public , is calling itself a “cable company.” It no longer is. Comcast sells infrastructure subject to neither competition nor a cop on the beat.

 

In comparison with the rest of the developed world, the US has slower broadband speeds and higher broadband prices than just about everyone else in the developed world. Cable companies have every incentive to price broadband as high as possible to make the marginal extra cost of getting TV as well as small as possible.The reason they do this is around 90% of Americans also subscribe to a TV package from their ISP and this is where they really make their money.

In the US, cable TV rates are very high; as such, the best way to prevent cord-cutting is to ensure that broadband rates are also very high. That’s bad for broadband adoption, but it’s effective at keeping people paying very large sums for TV every month.

There isn’t a market solution, here: there’s only a regulatory solution. The US government regulates the amount that the post office can charge, so that everybody has access to the mail; it also regulates the maximum amount that phone companies can charge for basic landline telephone service.

If Comcast is allowed to buy Time Warner Cable and the Republicans successfully brainwash enough of their voters to believe net neutrality is a bad thing, the current model will become even more entrenched and the USA will slide ever further backwards in the global connectivity race.

Republicans like Sen. Mike Lee have also begun to use the traditionally wonky issue to rile up their base. Sen. Ben Sasse (R-Neb.) sent an email to political supporters likening Wheeler’s plan to Internet censorship in Turkey and Iran and asking for signatures opposing the rules. The subject line of Sasse’s email: “Putin and Obama in charge of the Internet?”

The message is pure hyperbole — Wheeler’s proposal wouldn’t give the FCC control over Internet content — but it underscores how much Republicans are opposed to new forms of what they call government over-regulation and it also demonstrates just how effective the cable lobbyist efforts have paid off.

The question is whether Republican voters are so easily fooled. Having listened to some Republican friends on Facebook  already warn me Obama is taking over the internet I am not very hopeful.

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