The Reason of Internet Neutrality Abolition in United States: A New

Form of Restriction on Technology Accessibility

Yohanes William Santoso

Department of International Relations Universitas Airlangga

Keywords: internet neutrality, technology accessibility, and neoliberalism

Abstract: The existence of the idea of internet neutrality has been a long-standing debate. Internet neutrality debate

generally focuses on the implications raised for service providers, content providers, and users in general. In

the United States, the idea was enforced in 2015. But then, by the end of 2017, the Federal Communications

Commission (FCC) decided to repeal the internet neutrality rules that once maintained equality of access on

the network. This phenomenon then allows internet service providers to impose different rates for each service

used by consumers and content providers. This paper attempts to answer questions as to whether the abolition

of internet neutrality can be said as a new form of technology accessibility restrictions. In this study, the

authors found that there are similar patterns between technological access restrictions through intellectual

property rights and access restrictions due to the abolition of internet neutrality. This finding is based on the

reason for the abolition of internet neutrality in the United States. In addition, the authors also argue that the

phenomenon of the abolition of internet neutrality can be one form of influence neoliberalisme in the era of

information globalization.

1 INTRODUCING

Neutrality has led to debate in the international world.

It is proved by various debates related to its

application and its implications for the economy and

social welfare (Hanh and Wallersten 2006). In the

United States, internet neutrality has been debated

since the 1990s in the Federal Communications

Commission (FCC), as the regulator of information

and communication services providers. By 2015,

internet neutrality is officially implemented in the

United States during the era of Obama's

administration and when the FCC is led by the

Democrats. Internet neutrality becomes a rule that

prohibits internet service providers to slow or block

access to certain sites or services. However, by the

end of 2017, the FCC voted to revoke the rules of

internet neutrality. This action is intended to liberate

companies such as AT&T and Verizon to legally

decelerate the access speed, block applications, and

charge more price toward content providers and users

for priority access (Fung 2018). The results of the

voting formally decide that the rules of internet

neutrality will be abolished.

The FCC's decision to remove internet neutrality

then goes against some of the globalization theses

which view that the globalization leads to

technological development also leads to an expansion

of access to the technology. The FCC's reason for

removing internet neutrality is interesting to discuss.

Furthermore, the author will describe the cause of the

abolition of internet neutrality in the United States by

focusing on economic and social reasons. Then the

author will describe the theoretical framework related

to the thesis of globalization that leads to the

expansion of access to information and the thesis of

globalization which views that technological progress

is also faced with the limitations of accessibility of

these technologies. The author will analyze the

phenomenon of the abolition of internet neutrality in

the United States. Broadly speaking, the author argue

that the abolition of internet neutrality became an

example of restrictions on technology accessibility in

the era of globalization. Although technology and

information are constantly evolving, there is a price

to pay for innovation and investment to offset

increasing access.

Santoso, Y.

The Reason of Internet Neutrality Abolition in United States: A New Form of Restriction on Technology Accessibility.

DOI: 10.5220/0010276800002309

In Proceedings of Airlangga Conference on International Relations (ACIR 2018) - Politics, Economy, and Security in Changing Indo-Paciﬁc Region, pages 337-342

ISBN: 978-989-758-493-0

337

2 DEFINITION OF INTERNET

NEUTRALITY AND ITS

APPLICATION IN THE

UNITED STATES

There are various reasons for the abolition of internet

neutrality in the United States, but in this paper, the

author will focus on social and economic aspects.

Before explaining about the reasons, the author will

explain about the definition of internet neutrality,

followed by the application of Internet neutrality in

the Obama administration and its implications. There

are various definitions related to internet neutrality,

and there are no certain definitions are mutually

agreed upon. Hahn and Wallsten (2006) state that

there is no particular definition that can be widely

accepted, but in general, internet neutrality means that

internet service providers only charge once to

consumers. Internet service providers are prohibited

to side with a particular content provider and are

prohibited from charging content providers for

sending information over the internet to users. While

Njoroge et al. (2010) defines internet neutrality as a

policy that mandates Internet service providers to

provide open access, preventing them from any form

of discrimination against content providers. In his

writings, Krämer et al. (2013) views that internet

neutrality prohibits internet service providers to speed

up, slow down, or block Internet traffic based on its

source, ownership, and purpose. Gilroy (2015)

considers that in general, internet neutrality includes

the general principles that network owners who

compose and provide Internet access should not

control how consumers use the network. In addition,

internet service providers should not discriminate

content provider access to the network. In general, the

author argue that internet neutrality can be defined as

the principle that Internet service providers should

treat all data on the internet fairly and not discriminate

against network users and content providers.

The implementation of internet neutrality in the

Obama administration was officially agreed on

February 26, 2015 when the FCC decided to support

a strong internet neutrality rule to keep the internet

open and free (Obama 2015). Formerly, the attempts

to implement internet neutrality in the United States

have emerged in 2007 when Obama declared his

support for a free and open Internet. Implementation

of internet neutrality, according to Obama (2014) can

support the creation of an ecosystem that allows

investment and innovation. This is based on the belief

that with the existence of internet neutrality, new

innovators in the field of technology and information

will have equal opportunity in providing digital

access with existing large companies. Obama (2014)

also considers that the FCC should create a new set of

rules that protect internet neutrality and ensure that no

company is capable of acting as a gatekeeper that

limits what can be accessed within the network. There

are four things that are regulated by internet neutrality

in the United States (Obama 2014). First, internet

service providers are prohibited from blocking

consumer demand for accessing sites or services with

legal content. Secondly, internet service providers are

prohibited to intentionally decelerate or accelerate

access for some content. Third, the implementation of

transparency authority in overseeing internet service

providers. Last is paid prioritization, means no

service may be placed on a slow lane because it does

not pay a certain fee.

3 REASONS FOR THE

ABOLITION OF INTERNET

NEUTRALITY IN THE UNITED

STATES

The debate about internet neutrality is in fact related

to various aspects, particularly on social, political,

and economic aspects. The debate leads to a decision

either to impose or remove internet neutrality in the

United States. Referring to the writings of Hanh and

Wallsten (2006), internet neutrality will lead to a

decline of economic prosperity. Internet neutrality is

seen would lower the incentives for Internet access

providers and can prevent the development of new

services. The application of internet neutrality is also

seen as a threat towards the consumers because of the

consequences of such regulations that lead to a

decrease in investment and innovation for internet

service providers. But on the other hand, content

providers can gain benefit from internet neutrality

because of the two-sided market theory, Internet

neutrality practices can subsidize the creation of new

content and drive innovation while avoiding Internet

fragmentation (Lee and Wu 2009). Nevertheless,

there is an argument that the absence of internet

neutrality can lead to social welfare. Cheng et al.

(2011) from a policy perspective explains that service

providers are the beneficiaries in the absence of

internet neutrality. This is due to the privileged access

fees paid by content providers. Meanwhile, the

absence of internet neutrality improves social welfare

in cases when a content provider pays for preferential

treatment. Musacchio et al. (2009) also explained that

conditions without internet neutrality lead to social

ACIR 2018 - Airlangga Conference on International Relations

338

welfare when the ratio between ad level parameters

and user price sensitivity is low or high. As for the

author, social welfare is still a relative implication and

depends on certain conditions.

In general, the implementation of internet

neutrality in the United States is considered to bring

harm to internet service providers because it lowers

the level of investment and innovation in the

provision of internet services. Referring to the

Consumer Communication Services (Stratecast 2010)

model of analysis, the existence of internet neutrality

lowers the investment level of Internet service

providers due to increased risk. However, according

to Hooton (2017), existing empirical data show that

internet neutrality does not lead to economic threats

in the form of a decrease in investment. Hooton

(2017) noticed that there was no causal impact from

FCC policies on the investment of internet service

provider companies. Despite these facts, economic

factors can be considered as a major reason for the

FCC to abolish internet neutrality. In addition, these

economic factors lead to the drive in doing innovation

that also decreases. The author sees that technological

innovation can not run fast if not offset by the

advantages of existing technology. Given the

neutrality of the internet, service providers can not

take much advantage because there is no price

differentiation in accessing technology. Therefore,

innovation would be hampered.

4 GLOBALIZATION:

INFORMATION

TECHNOLOGY AND

ACCESSIBILITY

The phenomenon of the removal of internet neutrality

can be related to Manuel Castells' thesis of the

information society and the limitations on technology

accessibility. The era of globalization has brought

progress and development in various aspects of life,

especially in terms of information. Globalization

characterized by global events worldwide has proven

that globalization is influenced by the revolution of

communications and information technology (Held

2000). Globalization can also be said as the beginning

of an information age that emphasizes the importance

of the role of information in contemporary society

(Webster 2002). Such change is proved by the fact

that society has undergone a transition from industrial

society to the information society that began in the

1970s (Castells 2010). The main characteristic of the

information society can be seen in its structure

consisting of networks and not individual actors. In

addition, the information society also works through

a constant flow of information in technology (Castells

2010). According to Castells (2010), the existing and

emerging networks are the main features that define

the information age. In Castells's thesis of the

information age, there is the emergence of a network

society that can be associated with users, service

providers, and content providers on the internet.

Furthermore, Castells (2010) sees a structural

change in the global economy occurring within the

span of the 1970s to the 1990s. Castells describes the

new economy based on a model of the development

of informationalism, with the network as an important

attribute in it. In the new informational economy

described by Castells (2010), there are new indicators

in looking at the company's competitive level of

knowledge related to technology, information, and

access to the network. The author then saw that in the

era of information globalization, access to the

network becomes an important factor that determines

the flow of such information. But then, there is the

fact that the network used in the information age is

also included in technological innovation. As a form

of innovation, there is the view that innovation in the

globalization era should be appreciated by enforcing

intellectual property rights which would limit the

people's access to the technology.

Entering the era of globalization, technological

developments are accelerating and bringing new

agendas and questions, particularly in relation to the

accessibility of these technologies. The existence of

intellectual property rights is a proof that despite the

advances in technology and new discoveries, not all

individuals is able to access the technology without

paying the price. Referring to the writings of Dharos

and Braithwaite (2002), the progress and

development of technology, followed by the

recognition of intellectual property rights granted to

the owners of the work. The right allows the work

owner to obtain royalties from any access made to his

work. The existence of such appreciation for the work

is seen can improve future innovation, the

competitive level among innovators, to lead to

economic growth (Dharos and Braithwaite 2002). But

then, it creates new problems, especially if the

implementation is over-done and includes technology

that should be public goods. Dharos and Braithwaite

(2002) also see that over-implementation can lead to

human rights abuses. A common case is that limits on

access due to the application of intellectual property

rights result in the difficulty for developing countries

in accessing technology. OOne of the most crucial

areas of technology but has access restrictions is

The Reason of Internet Neutrality Abolition in United States: A New Form of Restriction on Technology Accessibility

339

health, because of patents on drugs or methods of

making these drugs. For example, AIDS drug patents

make African countries have difficulty in accessing,

even though there are life-threatened AIDS sufferer

(Dharos and Braithwaite 2002).

Meanwhile, Maskus (2000) considers that

intellectual property rights can play an important role

in fostering economic development. Intellectual

property rights can have a positive role when talking

about how to grow new business, rationalize industry

inefficiency, and influence technology acquisition

and creation. However, intellectual property rights

pose a threat to economic development when there is

an increase in certain fines for a product of imitation

and permit monopolistic conduct by the owner of

intellectual property rights. Mascus (2000) also

describes empirical evidence on related issues that

support the view that product innovation is

considered sensitive to the presence of intellectual

property rights in third world countries, when FDI

and technology transfer are increasing but patent

rights policies are strengthened. Overall there is a

positive impact of growth, but this impact depends on

the competitive conditions of the economy. The

author sees that intellectual property rights are one

example of limits to technological accessibility in the

era of globalization. Using the same principle, the

author argue that the abolition of internet neutrality in

the United States can be the beginning for

accessibility restrictions on information.

5 ABOLITION OF INTERNET

NEUTRALITY: NEW FORM OF

RESTRICTION ON

ACCESSIBILITY OF

TECHNOLOGY

In this part, the author will present an analysis of the

FCC's decision to remove internet neutrality in the

United States by the end of 2017. The author's

analysis will focus on proving that the abolition of

internet neutrality can be said to be a new form of

access restrictions on technology. The analysis will

begin by looking at the reason for the abolition of

internet neutrality. Referring to the existing reasons,

the author will try to see the similarity of the pattern

with efforts to limit the accessibility of existing

technologies. In addition, the phenomenon also

shows that neoliberalization in the era of

globalization has led to the capitalization of

information. The phenomenon of the abolition of

internet neutrality then also dismisses the view that

globalization has led to free and open access to

available information.

Referring to the reasons why FCC removes

internet neutrality that the author has exposed earlier,

it can be seen that there are two main reasons which

are interconnected, namely economic factors as well

as investment and innovation. On the economic

aspect, the existence of internet neutrality requires

every service provider to treat users and content

providers equally. This also means that users and

content providers can access all of the available

services without any additional rate. It can be seen

that the accessibility level of internet neutrality

scenario is at a high level. The condition is indeed

beneficial to users and content providers, but internet

service providers are disadvantaged as there is no

additional profit gained through service tariff

differentiation. This is supported by the opinion of

Hanh and Wallsten (2006) who see that internet

neutrality can decrease incentives for service

providers. The condition of decreasing incentives

then leads to a decline in the ability of service

providers to develop and innovate in providing

networks. Therefore, internet neutrality can be

viewed as a factor that slows down technological

development even though economically beneficial to

network society.

Both of these reasons actually have the same

pattern with the reason of technology restrictions in

the era of globalization which is then applied in a new

form. The pattern that the author sees refers to the

explanation of Dharos and Braithwaite (2002) are as

follows. First, there are technological innovations in

the era of globalization, in the case of internet

neutrality, the Internet network is the innovation.

Secondly, as a result of these innovations, there is a

dilemma between opening high accessibility or

getting high profits in order to support further

innovation developments. Third, a step is taken to

enforce access restrictions on the grounds to

appreciate the work and encourage the level of

competition among innovators so that it can lead to

economic growth. But the third pattern has an oddity

because there is ambiguity in seeing the innovator.

The author considers that the content provider can

also be regarded as an innovator, for example a

startup company engaged in digital content. But with

the abolition of internet neutrality and the possibility

of imposing tariffs on content providers, it can be

seen that the only innovator is the internet services

providers.

Furthermore, the author also considers that the

abolition of internet neutrality become a form of

capitalization of information in the era of

ACIR 2018 - Airlangga Conference on International Relations

340

globalization. This is supported by the fact that

without internet neutrality, service providers can

charge more to access certain services on the internet.

The capitalization of such information can be said as

a form of neoliberalism influence in shaping the

economy of network society era. Neoliberalism is

closely related to globalization because globalization

is often described by the widespread trade, economic

integration, to capitalism. Neoliberalism views that

the global economy should be an open and free

market (Scholte 2005). There are three pillars of

neoliberalism presented by Scholte that is

privatization, liberalization, and deregulation.

Privatization means the transfer of ownership of

production assets from the public sector to the private

sector. Liberalization means the formal abolition of

the movement of goods, services and capital between

countries. While deregulation does not mean the

abolition of the rules as a whole, but only intended in

regulations that inhibit the dynamics of market

movements.

Referring to the three pillars, it can be analyzed

that, internet service providers which generally

dominated the private sector has made internet

services as a commodity in the era of the infomational

economy. With the abolition of internet neutrality,

deregulation took place which ultimately aimed at

creating a more favorable market flow. Furthermore,

this phenomenon also proves that the general view on

globalization that opens new systems as referring to

Giddens (2013) and Castells (2010) related to

information society that allows access to information

is not always true. In addition to being proven by the

limitations that will arise due to the abolition of

internet neutrality, the author also considers that

neoliberalism is also influential in making access to

information as a commodity. Other than that, the

abolition of internet neutrality can be a new form of

restrictions on access to technologies that were once

restricted by intellectual property rights.

6 CONCLUSION

Based on those explanation, the authors can conclude

that FCC's decision to remove internet neutrality is

caused by the encouragement of some internet service

providers. The main reason is that existence of

internet neutrality prohibits service providers to

collect tarriff from certain services and require the

accessibility of all services. It can be said to be

detrimental to service providers because the income

earned becomes less diverse and opportunities for

development and innovation become smaller. The

decision became one of the new forms of technology

access restrictions. Referring to the principles and

patterns that exist on access restrictions through

intellectual property rights, the author can see the

similarity of repeated patterns in this case. Although

later, there is still ambiguity with regard to those who

are perceived as innovators who should receive

incentives, between service providers or content

providers. Then, the author also emphasizes the

influence of neoliberalism in the FCC decision.

Neoliberalism in this case means making internet

services as a commodity to achieve profit or capital

accumulation for Internet service providers through

the implementation of tariffs in accordance with the

services used. But there are contradictions with

neoliberalization, especially in the use of deregulation

which has been equivalent to internet neutrality.

Therefore, deregulation in this study is better

understood as deregulation of existing rules that

inhibits the accumulation of capital, such as internet

neutrality.

The author believes that there are still some gaps

in this study. Some of them lie in the existence of

some conflicting principles and patterns but still can

be used to explain the case. Such is the ambiguity of

the innovator who receives incentives in a pattern of

constraints on technology access between intellectual

property rights and internet neutrality. The abolition

of internet neutrality can allow service providers to

get incentives for different services or quick access

points, but there are content providers who should

also be included in the innovator's side as they

provide content to the information society. As in the

case of the abolition of internet neutrality, content

providers can potentially be billed more capable of

quick access in delivering content to users. This is in

contrast to incentives in intellectual property rights

that provide incentives to innovators and encourage

innovators to develop new things. Scenarios on

networks without internet neutrality can lead to a

decline in the number of content provider innovators,

but it does provide a boost for internet service

providers to innovate developing the best

technologies. However, there is no guarantee that

with internet neutrality, content providers will race to

create innovation and take advantage of existing

freedom of access. Similar to conditions without

internet neutrality, it is uncertain whether service

providers will compete for innovation because of

more resource-rich outcomes.

The Reason of Internet Neutrality Abolition in United States: A New Form of Restriction on Technology Accessibility

341

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