A few weeks ago, Mark Cuban and I had a lengthy email exchange about net neutrality.
Net neutrality is the concept that all traffic on the internet should be treated equally. That means big companies shouldn’t be allowed to pay internet service providers (ISPs) for a so-called “fast lane” to consumers. The fear is that if rich companies are allowed to pay for fast lanes, then smaller startups won’t be able to compete and eventually create more innovative services.
The big guys will get bigger, and no one will be able to stand up to them.
The FCC is in the process of making a big decision that will set the tone for internet access for years to come. One route would be to classify ISPs under Title II, the same classification given to utilities like telephone lines. Another option is to allow companies to pay for those fast lanes, while at the same time guaranteeing others won’t be purposefully slowed down.
Cuban’s stance is that the government shouldn’t be allowed to regulate the internet under something like Title II. Following our email exchange, we caught up in person back stage at Business Insider’s Ignition conference where he later spoke on stage with Henry Blodget. We also had a brief exchange in front of a few hundred people during that talk.
Here’s what it boils down to.
Cuban thinks there’s good enough competition to leave everything as it is without government intervention. But I don’t think that’s the case.
The big problem is that almost all markets are controlled by one broadband ISP. Two if you’re lucky. That gives the ISPs very little incentive to offer innovative services, faster speeds, and competitive pricing because they’re the only game in town.
Cuban’s argument to me was that there are some companies creeping into certain markets with fibre internet, which is much faster than what your cable companies give you. AT&T has said it would like to bring fibre to 100 markets. (It’s since sort of wavered on that pledge.) Google Fibre is already in a few cities, and might come to a few dozen more. That will force the traditional cable companies to react and provide better pricing and services.
But assuming Google and AT&T are able to follow through (and that’s going to be tough and take several years), they will only bring competition to a teeny tiny sliver of the US. Most markets will still only have one provider. And once Comcast finishes acquiring Time Warner Cable, it will control internet access to about a quarter of the country.
That’s nowhere close to a competitive market.
Cuban said to me both on and off stage at Ignition that he’d like things to stay the same. The internet has been fine since the beginning. Why screw with it?
I agree! But unfortunately the FCC has to make a decision following a Supreme Court decision that kicked the can to a regulatory agency to decide how all this stuff should work. It’s not ideal, but it has to happen now because Verizon decided to file a lawsuit.
Cuban’s stance is that you can’t trust the government to regulate the internet because it’s evolving so quickly that it’s impossible to tell what the internet will be in a few years. Today’s regulations might not even apply to the internet of 2020 and beyond. And eventually, he says, the next generation of wireless networks will reach the point where they become viable alternatives to traditional wired broadband. That will provide plenty of competition. Still, that’s at least five or six years away.
That all said, Cuban didn’t have an answer when I asked him what the FCC should decide when the time comes. I think that’s the biggest problem with his argument.
To me, Title II or something similar is the lesser of the two evils the FCC faces. It can either err on the side of caution and write a rule that guarantees all internet traffic is treated equally. Or it can mimic the cable TV model and let the big rich companies pay to get better access to you. And if that happens, it’s going to be tough for future internet companies to compete and disrupt large incumbents.
For the record, I really like Mark Cuban. He’s a smart, passionate guy. We disagree on a lot of stuff, but as my editor Jay Yarow wrote on Ello, he’s extremely personable and accessible. No PR handlers. No suits. No BS.
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