What killing net neutrality means for the internet

The controversial Obama-era net neutrality rules are on the chopping block, and both sides in the fight agree that rolling back the rules will shake up the internet landscape.

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The rules set restrictions on internet service providers that prevent them from prioritizing web traffic and slowing down content. Supporters say it created a level internet playing field. But the broadband industry sees the rules as over-regulation.

Federal Communications Commission (FCC) Chairman Ajit Pai on Tuesday unveiled his plan for rolling back net neutrality.

His proposal would let internet service providers voluntarily promise to uphold net neutrality principles by including them in their terms of service with customers. The FCC would also hand oversight of those companies to another agency: the Federal Trade Commission (FTC).Undoing net neutrality would mean big changes for how customers access the internet, the plans and services that broadband companies provide, and how web companies reach their consumers.

Here are four ways the internet will change if Pai gets his way on net neutrality:

1. More free data plans

Under the changes, mobile broadband providers would be able to let consumers access certain content without using up their data plans.

Verizon, for example, allows its customers to stream some NFL games without data charges. And T-Mobile lets some of its subscribers stream Netflix, HBO and Hulu without counting them against their data limits as part of its Binge On service.

Data-free apps have been popular with consumers, but net neutrality supporters worry they allow broadband providers to give preference to content providers they have deals with. Former FCC Chairman Tom Wheeler also argued that free data arrangements make it harder for smaller content creators to get attention.

If net neutrality goes, consumers could see more telecommunications companies offer such plans.

The FCC could still decide to keep some rules on free data deals, but that's unlikely under Pai.

“Free data plans have proven to be popular among consumers, particularly those with low incomes, because they allow consumers to enjoy content without data limits or charges,” he said in February. “They have also enhanced competition."

“Preemptive government regulation did not produce that result. The free market did,” he added.

If net neutrality goes out the window, so will the restrictions limiting those free data plans, making it easier for customers to access some content — but content their providers favor.

2. Internet fast lanes

Without the net neutrality rules, consumer groups and smaller internet companies fear broadband providers could offer faster internet speeds to companies that pay up and slow down those don't or can't pony up.

Known as paid prioritization, it’s the post-net neutrality scenario that most worries the rules' supporters.

Broadband companies could ask video-streaming giants like Netflix, which have cut into cable profits, to pay big bucks to ensure that their content reaches customers without any interference.

But critics also worry that startups and younger companies won't be able to get a foothold if they are forced to pay more to get access to strong streaming or download speeds.

Wheeler and Sens. Ron Wyden (D-Ore.) and Al Franken (D-Minn.) in a Washington Post op-ed on Wednesday said the absence of fast lanes allowed YouTube, a then-small upstart service in 2005, to overtake Google Video.

“Internet service providers treated YouTube’s videos the same as they did Google’s, and Google couldn’t pay the ISPs [internet service providers] to gain an unfair advantage, like a fast lane into consumers’ homes,” they wrote. “Well, it turned out that people liked YouTube a lot more than Google Video, so YouTube thrived.”

Net neutrality critics, though, argue that services like Netflix that take up lots of bandwidth should be forced to pay more.

Former President George W. Bush adviser Scott Cleland, an advocate for broadband businesses, argued in a Hill op-ed that by blocking paid prioritization, “the previous FCC forced consumers to subsidize the outsized bandwidth usage costs of the most profitable companies in America.”

3. More challenges for the little guy

Smaller internet service providers and internet startups could be in for a tough time.

Net neutrality critics say that without the neutrality rules, the playing field will favor established or dominant companies — such as Charter Communications, which acquired Time Warner Cable, or web giants like Google.

Only established companies will be able to compete in the new environment, they fear, with deep pockets to get into internet fast lanes and the money to cut deals for content to package in their data plans.

Eight hundred startups, innovators and investors sent a letter to Pai on Wednesday arguing that his proposal to roll back net neutrality could hurt their industry.

“Without net neutrality, the incumbents who provide access to the Internet would be able to pick winners or losers in the market,” they wrote.

“They could impede traffic from our services in order to favor their own services or established competitors. Or they could impose new tolls on us, inhibiting consumer choice.”

Smaller internet service providers have many of the same concerns.

Repealing net neutrality "could toss the streaming and Internet economy back into chaos, taking consumers back to a time when ISPs like Comcast throttled Netflix and consumers had to buffer their way through a binge,” said Chip Pickering, CEO of Incompas, a trade association that represents smaller broadband providers.

4. A new regulator for telecoms

Under Pai’s proposal, broadband companies like AT&T, Comcast and Verizon would no longer be regulated by the FCC. The chairman wants to remove their designation as “common carriers,” which allowed his agency to regulate them like public utilities.

Undoing that would cede authority over broadband providers back to the FTC.

But critics argue the FTC lacks the teeth to effectively regulate telecommunications companies in the way the FCC can.

“The Federal Trade Commission is a tiny enforcement agency without any rulemaking authority,” said Andrew Schwartzman, a Georgetown University Law Center professor specializing in communications and technology.

Critics point to the challenges of regulating companies that handle vast amounts of consumer data, which they say will be even harder after the repeal earlier this year of internet privacy rules that stemmed from net neutrality.

“They [the FTC] are focused on whether a company like Walmart properly protects its customers privacy information when they have an account on the internet. Telecom is different. The nature of the info they have is much, much more significant,” Schwartzman continued.

The FTC differs from the FCC in that it doesn’t have the authority to make pre-emptive rules. It would act if companies didn't honor their terms of service with customers.

“It’s an unworkable scheme and relies on a higher level of trust than most people have for their ISPs,” Schwartzman argued.

But the FTC's acting Republican chairman, Maureen Ohlhausen, has dismissed those criticisms.

“Net neutrality regulation reflects a lack of confidence in market forces that I do not share,” Ohlhausen wrote in 2016. “Antitrust can protect the competitive sphere in which edge providers and ISPs operate.”

Some small internet service providers also believe that they could stand to benefit from FTC oversight instead of the FCC’s, especially if they are no longer regulated like public utilities.

In his speech announcing the net neutrality changes, Pai cited 22 broadband providers, each with under 1,000 customers, that claimed that aspect of net neutrality “affected [their] ability to obtain financing.”

Some of those smaller broadband companies say they can offer "innovative" new services without the FCC's net neutrality rules