Decades of Internet Freedom Left America Better Suited for the Pandemic
It’s been almost two and half years since the Federal Communications Commission (FCC) adopted the Restoring Internet Freedom Order, which ended so-called “net neutrality” rules by rolling back public utility-style rules for Internet service providers (ISPs). Since then, the net neutrality debate has been primarily focused on how the move is impacting the Internet ecosystem in as close to real-time as possible. The COVID-19 pandemic has dumped fuel on this simmering debate as it has forced more and more of our daily economic activity, from work to leisure, online.
Yet as its name implies, the Restoring Internet Freedom Order was not about introducing a novel form of Internet regulation. For two decades prior to the imposition of utility-style rules in 2015, ISPs were regulated under the same approach as they are now. While what has happened since 2015, and subsequently 2017, is important to consider, if we’re trying to figure out which approach to Internet regulation has been better in the context of something as severe and widespread as a pandemic, then the last five years are not nearly as instructive as the last 25.
This is not to say we should compare two years of one form of regulation versus 20-plus years of another. A far more instructive exercise is to compare differing regulatory regimes that existed in the same time but in different, yet comparable parts of the world. The European approach to ISP regulation provides us with such an opportunity.
In 2014, just prior to the implementation of utility-style regulation of ISPs in the U.S., University of Pennsylvania Law Professor Christopher Yoo looked at investment and performance data as well as Internet usage data in the U.S. and Europe. He noted that Europe “has long subjected the Internet to the regulatory regime applicable to the telephone system,” i.e. utility regulation. The results were striking.
Yoo found that broadband investment per household in the U.S. was over double that of Europe in 2012. As a consequence of greater investment, 82 percent of U.S. households enjoyed access to high-speed broadband, defined in this case as 25 megabits-per-second download speeds, compared to just 54 percent in Europe. The difference was even more stark when only observing rural areas. In Europe, only 12 percent of rural households had access to high-speed broadband. In America, nearly half did.
Greater investment in and access to the Internet for Americans has naturally resulted in greater Internet usage. Yoo’s study found that the average American consumed approximately 50 percent more bandwidth than his or her European counterparts. This means more working from home, more streaming, more video gaming, and more ordering anything one’s heart desires with a few clicks as a part of American life.
Other studies showed similar results. A 2013 study found that had U.S. broadband and other communications investment matched that of Europe since the 1990s, “US labour productivity growth would have been 25-30 % lower[.]”
In 2014, the FCC began the process of applying utility-style regulation to ISPs, finalizing the new rules in 2015. Broadband infrastructure investment declined by $500 million between 2014 and 2015 by $500 million and by $2.7 billion between 2015 and 2016. These declines are significant given that they occurred outside of a recession, indicating the new rules were the primary culprit.
While broadband investment has since rebounded following the restoring Internet Freedom Order’s implementation, the decades-long trend of more significant Internet usage, enabled by greater investment, undoubtedly left the American economy far more resilient to the impacts of the pandemic, as bad as they may still be, than had a utility-style approach been in place all along.