Why small ISPs support net neutrality

Dane Jasper, CEO and co-founder of California ISP Sonic, says the real issue of net neutrality is competition between big carriers and smaller players, not just carriers and content providers.

030215 fcc net neutrality tom wheeler
Credit: REUTERS/Yuri Gripas

In the wake of the FCC's landmark decision last week to classify broadband internet access as a public utility, it was easy to see the battle over net neutrality as a conflict between Democrats and Republicans, between the companies that provide content over the internet and companies that supply the "pipes" that deliver that content.

But according to Dane Jasper, CEO and co-founder of California-based ISP Sonic, that would be far too simplistic an analysis. In reality, Jasper says, the warring principles behind net neutrality cut across those lines in surprising ways. As chief executive of a company competing with the big carriers, Jasper clearly has an agenda. But his viewpoint also makes it clear that the carrier industry is not uniformly opposed to net neutrality and Title II regulation.

Too much competition?

Jasper says the FCC's existing rules (casting broadband as an information service instead of a regulated utility in the early 2000's to weaken the 1996 Telecommunications Act) seem to be based on the idea that there could be "too much competition" in broadband. The theory was that only "intermodal" competition—DSL vs. cable vs. powerline vs. wireless—was required, not competition within each technology. The reasoning was that having only a single player in each technology would encourage investment while competition from other technologies would be enough to keep prices in check and ensure good service. 

As it turned out, of course, not all of these technologies turned into viable alternatives, creating what Jasper called "America's intentional broadband duopoly"—and leaving most consumers with just one or two internet options.

"I would argue that when you have failed competitive market, with just one or two choices, you have an effective monopoly," Jasper says.

That's the chief reason for the U.S. internet industry's high prices, privacy issues (too willingly sharing information with various agencies), and "shockingly bad customer service practices," Jasper says.

Outside the U.S., he notes, many regions have more vibrant service at lower prices than are available to domestic consumers. "We wouldn't have to deal with any of these issues if consumers had 30 choices," Jasper says.

"We need 50 companies like Sonic to step up and build networks," he adds. "Hopefully it will mean more competition and drive down prices."

That's the exact opposite of the argument that enforcing net neutrality will inhibit investment in internet infrastructure. The dominant carriers like AT&T, Comcast, Verizon, and their supporters are correct that not being allowed to charge content providers extra for access to "fast lanes" will cost them an incremental revenue stream, Jasper says. But he notes that many smaller carriers like T-Mobile, Sprint, Time-Warner, Frontier, and, yes, Sonic, have clearly stated that they do not anticipate the order will impact their investments or their ability to serve customers. Critically, Jasper says, that's because only the biggest incumbent carriers have enough subscribers to force content providers to pay additional fees. Those revenue streams are simply not available to smaller players. In Jasper's view, that's why many of the smaller carriers and ISPs have ended up on the side of the content providers in support of net neutrality.

See also: Why Comcast's pro-net neutrality ads are totally disingenuous

Interestingly, we haven't seen a similar split on the content side. It makes sense that smaller content providers who can't afford fast-lane payments would be all for net neutrality. But even the biggest bandwidth users like Google and Netflix, which could afford to pay for faster access to their customers, have been clear on their support for the concept.

Everything is political

So why has this become such a partisan issue? Jasper blames the overall polarization of U.S. politics. "If there's anything one party can attack the other over, they will," he says.

Republicans have largely condemned the FCC decision as an impingement of the private property rights of the carriers that have built their networks, even if net neutrality may really be about the ideals of fair and open competition Republicans like to champion, Jasper says.

In addition, he adds, the large carriers have the money for donations and lobbying and advertising designed to push their viewpoint in ways that smaller companies can't match.

It ain't over

So what's next? In the short term, Comcast is already saying it will sue, and other big carriers are likely to join in over the next few weeks as the FCC's actual net neutrality rules are actually released.

Many Republicans would like to take legislative action to reverse the FCC's order, but with Obama likely to veto any such moves, Jasper says, that's mostly just posturing until after the 2016 election.

See also: The battle over net neutrality is just beginning

In the meantime, what effect will Title II net neutrality have on consumers and businesses? "I don't expect impact on pricing," Jasper says. "But it could impact competition, which could affect prices."

In that light, it will be instructive to watch what happens over the coming months. If new competitors pop up and prices stay stable or even drift downward (and perhaps drive improvements in the industry's notoriously bad customer service), it may prove difficult to roll back net neutrality no matter who sits in the White House next.

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