Skip to main content

Net neutrality is dead. It’s time to fear Mickey Mouse

Net neutrality is dead. It’s time to fear Mickey Mouse

Share this story

Mickey Mouse Face Apple Watch

It’s a red letter day for the media industry. Disney just took control of 21st Century Fox’s media empire, and the Federal Communications Commission voted to repeal net neutrality regulations that prevent internet providers from discriminatory behavior. These two industry-shaking events will set media companies on a dramatic collision course with ISPs. It is the conflict that threatens the internet.

The death of net neutrality will not look like an apocalypse

This week you might have seen lots of talk about fast and slow lanes, blocked websites, and the end of the internet. But the death of net neutrality is not going to look like a sudden apocalypse. It’s going to look more like things we’ve already seen: data caps, “free” data for apps, and service bundling, like an AT&T mobile plan that comes with HBO. These schemes will change the internet slowly, and they might even seem boring.

More and more of these little schemes will add up over time as ISPs merge with more media companies and own more content. These mergers will create huge conflicts of interest, because companies that own access to the internet will be tempted to rig it in favor of their own shows and services. Some of these schemes will show up on an internet bill, while others will be decided in backroom corporate warfare that leaves customers stuck in the middle and in the dark. The next Comcast versus Netflix might be Comcast versus Disney.

So let’s talk about Disney. Combined with Fox, it now has massive leverage over the content industry. It can use that leverage to compete with Comcast, AT&T, and Verizon, because, like Disney, those ISPs are trying to sell people their own video services. Because Disney now owns so much content, other media companies have greater incentive to consolidate to improve their bargaining positions. And ISPs have greater incentive to merge with media companies so they can reap profit from the content that travels on their networks. It’s an escalating cycle of consolidation.

Here are some obvious conflicts that have already resulted from the Disney merger:

  • Disney now has a controlling stake in Hulu
  • Hulu was jointly owned by Disney (30%), Fox (30%), Comcast (30%) and Time Warner(10%) to compete with YouTube; now Disney owns more than both Comcast and Time Warner combined
  • Comcast owns NBCUniversal, which broadcasts shows on Hulu
  • Time Warner is about to be owned by AT&T, which is a competitor of Comcast
  • Time Warner is a competitor of both NBC and Disney
  • Comcast and AT&T control the network that people use to watch content from Disney, Time Warner, and NBC
  • (This is just a fun place to put this disclosure: Comcast’s NBCU division is a minority investor in Vox Media, which owns The Verge.)

If this all sounds confusing to you, that’s because it’s confusing. In this world of mergers and overlapping conglomerates, the internet will be a pawn between companies that want to sell you television.

Net neutrality regulations kept ISPs from the worst possible discriminatory behaviors, including paid prioritization, throttling traffic, and blocking websites or services completely. But ISPs quickly pushed these limits after the 2015 Open Internet Order went into effect, and they faced no consequences. The Republican FCC that just killed net neutrality said that all of this represented “hypothetical harm,” which is a lie, because there’s real evidence that ISPs are already trying to do these things.

T-Mobile discriminated between types of content by giving customers unlimited access to music, and then video, from huge media brands. It even throttled video traffic and misled consumers about it, calling the practice “optimization.” AT&T zero-rated DirecTV data, discriminating against other video distributors. Verizon similarly zero-rated its Go90 video service. A report under Chairman Tom Wheeler’s FCC said AT&T and Verizon’s zero-rating programs violated net neutrality, but that inquiry was dropped by current FCC chairman Ajit Pai.

ISP conglomerates have massive conflicts of interest

Compounding the problem is that most people have terrible choices for internet service in America, if they even have a choice at all. That means a lot of customers are trapped by their ISP: if Comcast makes a deal you don’t like, and it’s your only choice for ISP, there’s nothing you can do about it. This gives the ISPs a ton of leverage against competitors, because they can’t send their content through other providers to reach their customers. The reason Comcast had so much leverage against Netflix is because many of Comcast’s customers couldn’t get Netflix from anyone else.

Vertically integrated ISPs like Comcast and Verizon have huge incentives to make up for the decline in cable television revenue by making the internet more like cable, and they are already working on that by bundling video services with internet plans. (ISPs are also buying internet companies to compete with Google and Facebook, creating even more conflicts of interest.) Think about it: why wouldn’t you privilege the media companies you own if your customers have few or no choices about where to buy their internet service?

US regulators have publicly recognized the threat of consolidation with their actions, even if they still allow these hugely problematic mergers to occur. A consequence of Comcast buying NBCUniversal was that Comcast had to enter a consent decree that enforced net neutrality rules to make sure it didn’t put NBC’s competitors at a disadvantage. But that decree ends in 2018 — just as the FCC’s net neutrality regulations are also eliminated. Comcast has promised it won’t behave badly, but without regulation all we have is trust. Comcast has not earned that trust.

The net neutrality discussion is fundamentally about how speech ought to be treated in a free society. The vision that was given the force of law in the FCC’s Open Internet Order required ISPs to play fairly: to treat all traffic the same and let their customers decide what to say and where to go without coercion from the operators of the utility.

So this is the threat to the internet: media companies and ISPs are consolidating at an alarming scale, these arrangements create massive conflicts of interest, and these conflicts of interest threaten the integrity of the internet without vital fairness regulations. We can’t talk about net neutrality anymore without talking about Mickey Mouse.

Correction: A previous version of this story implied Hulu was originally a joint venture of Comcast and Time Warner. It was a joint venture of Disney, Fox, and Comcast.