Disney’s deal announced Thursday to buy some premium 21st Century Fox properties for $52.4 billion underscores how technology is remaking the media landscape. This discomfits some, but the Federal Communications Commission is right to let markets steer competition and innovation.
The FCC on Thursday voted 3-2 to approve chairman Ajit Pai’s plan to repeal “net neutrality” rules backed by the Obama Administration that reclassified internet-service providers as common carriers under Title II of the Communications Act of 1934. Title II prohibits “any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services.”
By effectively deeming the internet a utility, former chairman Tom Wheeler turned the FCC into a political gatekeeper. The rules prohibited broadband providers from blocking, throttling and favoring content, which Mr. Wheeler ostensibly intended to help large content providers like Google and Netflix gain leverage against cable companies.
But as always in politics, treatment under the rules would depend on ideology and partisanship. Even as liberals howl that the Justice Department’s lawsuit to block AT&T’s merger with Time Warner is motivated by President Trump’s animus to CNN, they want FCC control over the internet. The left’s outcry at Mr. Pai “killing” internet freedom has been so overwrought that the FCC meeting room had to be cleared Thursday for a security threat.
Bans on throttling content may poll well, but the regulations have created uncertainty about what the FCC would or wouldn’t allow. This has throttled investment. Price discrimination and paid prioritization are used by many businesses. Netflix charges higher prices to subscribers who stream content on multiple devices. Has this made the internet less free?
Mr. Pai’s rules would require that broadband providers disclose discriminatory practices. Thus cable companies would have to be transparent if they throttle content when users reach a data cap or if they speed up live sports programming. Consumers can choose broadband providers and plans accordingly. The Federal Trade Commission will have authority to police predatory and monopolistic practices, as it had prior to Mr. Wheeler’s power grab.
Mr. Pai’s net-neutrality rollback will also support growth in content. Both content producers and consumers will benefit from increased investment in faster wireless and fiber technology. Apple is pouring $1 billion into original content to compete with Amazon, Netflix and YouTube.
Disney is buying the 21st Century Fox assets to compete with Netflix and other streaming services, build leverage with cable companies and establish a global footprint. Netflix has more than 47 million international subscribers and streams in nearly every country. Fox (which shares the Murdoch family’s ownership with our parent company, News Corp.) will keep its news and main sports channels, which can offer “live” content to consumers. The antitrust concerns should be negligible.
Consumers will also benefit from the slow breakdown of the cable monopoly as they customize “bundles” like Hulu or a Disney stream that may cost less. Americans will also enjoy new distribution options, which could have been barred by the net-neutrality rules.
This week T-Mobile announced its acquisition of Layer3 TV, a Denver startup that streams high-definition channels online and will compete with AT&T’s DirecTV Now. Verizon Wireless last month said it will start delivering high-speed broadband to homes over its wireless network late next year. Google and AT&T are experimenting with similar services that will be cheaper than digging dirt to lay cable. This could be a boon for rural America.
By the way, Google has vigorously promoted net neutrality in theory but less in practice. While Google says it remains “committed to the net neutrality policies,” the search engine uses opaque algorithms to prioritize and discriminate against content, sometimes in ways that undercut competitors. Net neutrality for thee, but not me. Google ought to be transparent about its practices.
Technology and markets change faster than the speed of regulation, which Ajit Pai’s FCC has recognized by taking a neutral position and restoring the promise of internet freedom.