Consequences of ISP domination in the USA

Price gouging and consumer choice

Consumer price gouging is the most visible and most objectionable consequence of the lack of ISP competition. Corporate ISPs can name the price that consumers must pay, increasing the cost of service year-on-year with no improvement in quality.

Incentives in the current cable internet system are fundamentally misaligned because ISPs are not paid per unit of bandwidth. Since they aren’t paid per bandwidth unit, Big Cable places data caps on their plans, charging users for exceeding their monthly contract limit.

95% of the cost of the internet connection from the exchange node to the house is in the final mile. The problem of the last mile and price gouging will not be resolved as long as ISPs maintain complete control over bandwidth delivery through physical connections.

Loss of Privacy

Beyond extortionary pricing, a lack of ISP competition has insidious implications for personal privacy, both at the corporate and government levels. Recent US legislative changes have opened the door for ISPs to collect data on consumer browsing habits, data that they can then utilize to generate revenue through advertising. Previously proposed regulations would have forced ISPs to gain explicit consent from consumers for selling or sharing sensitive personal browsing data. These regulations never came into effect and have now been shelved, paving the way for Comcast, Verizon and Spectrum to profit from the sale of user data without explicit user permission.

Big Cable protested a purported ‘competitive disadvantage’ enjoyed by web service giants Facebook and Google, who harvest enormous troves of data by consumer opt-in use of their products. The difference is profound with ISP monopolies, as there is no choice for the consumer to opt out of such data harvesting. Imagine the Post Office being permitted to read every letter you send without your consent. All users who aren’t employing privacy-protecting tools like VPNs will be subject to their website browsing history and all unsecured traffic being harvested and sold by their ISP.

ISPs and Surveillance

In addition to corporate spying for profit, the current cable internet model facilitates all-encompassing US-government mandated spying for its citizens. The Communications Assistance for Law Enforcement Act (CALEA) mandates instant law enforcement and intelligence access to calls, websites and VOIP content of all users. When this legislation was enacted in 1994, it was intended to assist agencies in conducting targeted telephone wiretapping of suspected criminal activities. With the rise of the internet, it has since morphed into carte-blanche access to total voice, telephone internet data and metadata of the entire population. The onerous compliance of CALEA has had a centralizing effect on the ISP market, contributing to the rise of the ISP mega-corporations.

Not only are US citizens paying exorbitant fees to corporate ISPs for internet access, they are also paying to have their browsing habits harvested, sent to the central US surveillance apparatus and mined by their ISP for marketing purposes. Consumer choice and price extortion are even more significant in rural areas, owing to the low population density. These problems are inherent in the legacy model of internet provision that relies on physical cables and the select few mega-ISPs administering the infrastructure.

Domestic Cyberbalkanization — the fight for Net Neutrality and an open Web

The final blow to the integrity of the internet in the USA was the repeal of Net Neutrality. Before its abolishment under the guise of free-market deregulation, Net Neutrality regulations prevented ISPs from throttling, or blocking specific types of internet traffic or treating certain types of internet packets differently.

Why would ISPs want to treat traffic differently? Maintaining high-bandwidth capacity infrastructure is costly. By throttling and blocking bandwidth-intensive traffic sources, ISPs reduce costs and improve profit margins. ISPs can throttle data through deep packet inspection of traffic on their networks since the information packets by default are unencrypted. ISPs have a long history of blocking and throttling specific web domains or internet traffic.

In 2007 Comcast was found to be throttling BitTorrent traffic on its network, rendering the BitTorrent unusable for its customers. In 2014, Comcast customers attempting to access Netflix experienced unusably poor speed and service. It was later revealed that Comcast was deliberately throttling Netflix user traffic. Comcast then forced Netflix to pay a premium for their traffic to be unthrottled, a form of toll or charge to gain access to Comcast’s cable customers. Comcast had performed a blatant mafia-style shakedown of its corporate rival, and Netflix had no choice but to comply. Similar throttling tactics have been consistently reported online by users of YouTube — this is tested simply by activating a VPN, which obscures the traffic type and restores video loading speed.

Throttling has set the scene for clashes between corporate titans with opposing interests — Big Cable of Comcast, Verizon & AT&T pitted against content providers and video streaming giants. The resolution of these corporate skirmishes is the formation of ‘paid peering’ agreements and content delivery network arrangements. Such agreements inevitably lead to shortchanging the consumer, as ISPs funnel internet traffic into paid ‘toll lanes,’ creating a stratified, multi-tiered internet where in-demand content is hidden behind expensive paywalls. This is the process of domestic cyberbalkanization, a fractal representation what we are observing globally, as covered in Part I.

The second highly undesirable consequence of the repeal of Net Neutrality is further entrenchment of ISP domination and the status quo. Consumer choice is reduced as access to certain content becomes bottlenecked at specific ISPs. The potential for ISPs to shape the content of the web increases, as they act as gatekeepers to web content, only permitting access to sites that fit with their corporate agenda. We are forced to confront the frightening possibility of a US internet that increasingly resembles China’s firewalled and censored national internet where power is concentrated to a minimal number of corporations.

There are current proposals to increase competition and reduce the monopolistic effect of ISPs. Local loop unbundling is one plan in which physical infrastructure shared among many telecommunications providers could improve consumer choice in metropolitan areas, however this still leaves Big Cable as owners of the physical fiber cables. Municipal broadband schemes face political and bureaucratic hurdles aimed specifically at discouraging competition. The rise of 5G cellular data in the developed world also holds hope for great competition of internet access but suffers from the same centralization and privacy-invading drawbacks of the current wired ISP model.

A diverse range of ISP providers that increase consumer choice might bring the cost of access down, but does nothing to fight domestic cyberbalkanization in the aftermath of the Net Neutrality repeal nor the increasing weaponization of the internet against the people on behalf of corporations and governments.

The repeal of Net Neutrality stands as the crowning achievement of the Big Cable oligarchs in their profit-driven exploitation of the American consumer, the culmination of decades of lobbying and regulatory capture. It will have profoundly negative consequences for average internet users and overwhelmingly favors the established order of entrenching the ISP monopoly and crushing the possibility of change from within the system. It also demonstrates that government regulation is insufficient to defend the rights of the people. The cogs of domestic cyberbalkanization are well in motion and the ground is ripe for an internet revolution that re-asserts the individual right to fair and affordable internet access.