Another Trump Legacy: Spreading Price Discrimination on the Internet

Consumers are already feeling the pain of the president reversing net neutrality.

If you are one of the 169 million Americans who use AT&T wireless services to access the internet with your tablet or cell phone, you may have noticed something weird going on your July data bill. For subscribers who decided to stream Hamilton on Disney+ with their cellular device instead of re-watching episodes of The Sopranos on HBO Max, your bill might be significantly higher this month.

That’s because, as the telecommunications giant revealed in June, it is now engaging in a new form of discrimination.  If you’re an AT&T customer you can watch unlimited amounts of content on AT&T’s subsidiary, HBO Max, without it counting toward your data cap. But if you want to watch content produced by independent companies, like Netflix and Disney+, that will count toward your data cap, making it more expensive to stream those channels for more than a short time each month. Other telecoms, such as Verizon, have enacted similar pricing policies.

If Hillary Clinton had been elected President, this kind of data discrimination could not occur. Net neutrality, the policy enacted during the Obama administration, but repealed in 2017 under the Trump administration, would have still been enforced.

Net neutrality prohibited internet service providers (ISPs) and other telecommunications companies such as AT&T or Comcast from engaging in discrimination against different kinds of users. It guaranteed that all consumers would be able to access the entire internet at the same speed—and at the same price. It ensured that all content providers trying to reach those consumers over the internet would be able to do so on equal terms.

But after Trump’s appointees at the Federal Commutations Commission (FCC) repealed the policy, it has become nearly impossible to avoid that kind of discrimination. Consumers now have few choices for internet access. In a recent study using FCC data, the Institute for Local Self-Reliance found that 40 percent of Americans only have one monopoly provider to obtain broadband in their area. Additionally, due to aggressive bundling and a lack of alternative providers, Americans also typically access the internet, watch television, and use their smartphones all from the same provider.

Because extreme market concentration makes it so hard or impossible for most consumers to switch internet providers, big telecom platforms know they get away with using price discrimination to favor content they own and to steer customers away from content owned by others. For example, if an AT&T customer doesn’t much care to watch shows on HBO Max and resents paying extra to watch shows on Netflix or Disney+, there’s not really much he or she can do about it because of AT&T’s monopoly power. And that leads telecoms and other ISPs functioning not as neutral platforms, but as private censors. They wind up deciding for us what programs we can watch at what price and speed.

Since the repeal of net neutrality, this and other kinds of discrimination keep spreading across the internet. Cox Communications has even started discriminating against whole neighborhoods by throttling down data speeds in places it thinks are making “excessive usage” of the internet.

When the FCC adopted net neutrality during the Obama Administration, it was merely applying to the internet the same principles of non-discrimination that previous generations of Americans had applied to other large communications networks like telegraphs and telephone. But after Trump appointees gained control of the FCC, they argued that net neutrality was unworkable it was discouraging investment in telecommunications infrastructure. A subsequent analysis conducted by George Washington University, however, showed that their concerns were misrepresentative at best and outright lies at worst.

The report analyzed financial data from more than 8,500 companies, including major telecoms, and concluded that net neutrality had “no impact on telecommunication industry investment levels.” In fact, since the repeal of net neutrality, major ISPs such as AT&T, Comcast, and Charter have lowered their cable capital investment by more than 10 percent. Moreover, the U.S. has continued to have more expensive internet than comparable countries, as well as slower internet speeds, having recently fallen out of the top 10.

Numerous polls show overwhelming bipartisan support for net neutrality to prevent dominant telecommunications companies from manipulating consumer’s internet access. Acknowledging these benefits, Democratic presidential nominee Joe Biden recently announced his intent to restore net neutrality should he win the general election this November. As affirmed by the Supreme Court, all a Biden administration would need to do is appoint favorable FCC commissioners.  Let’s hope he gets the chance.

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Daniel A. Hanley

Daniel A. Hanley is a Policy Analyst at the Open Markets Institute.