Why Verizon’s 5G Home may have killed the need for net neutrality rules

4 min read

A few days ago Verizon started to subscribe people for its new wireless 5G Home internet service.

While analysts believe that 5G providers may be poised to disrupt wired broadband monopolies, the real effect might be that the advent of 5G will obviate the need for net neutrality rules, the laws that require broadband providers to treat all internet traffic equally.

5G is the next generation of cellular networks that promise to deliver ultrafast speeds and pave the way for a range of new applications, including automotive (e.g. machine to machine communications between autonomous vehicles), health care (e.g. remote examinations and operations), Internet of Things (e.g. connecting thousands of sensors in rural areas that measure moisture, fertilization and nutrition levels), and more.

5G but like wired broadband

According to Verizon, the 5G Home service will start on October 1 in Houston, Indianapolis, Los Angeles and Sacramento, California. Verizon advertises that the service, which will cost $50 for existing Verizon subscribers and $70 for others, will provide a minimum of 300 Mbps download speed up to 1 Gbps with no data caps (at least for now).

In August 2018, the US had an average download speed of over 100 Mbps for fixed broadband (ISPs that aren’t mobile providers like Comcast), according to SpeedTest Global Index, with an approximately 35 percent increase compared to the same month last year. That makes Verizon’s 5G Home service at least three times faster than the average US internet speed.

Technically, Verizon’s new service isn’t even 5G, except for using millimeter-wave spectrum, which is part of the 5G specifications. The second and final part of the specifications have been agreed upon just in June, while the first part, aimed at the non-standalone version, was finalized at the end of 2017. For now, Verizon uses its proprietary standard that only works with its own equipment.

But this is a major achievement nonetheless. Delivering broadband home internet to users without digging up trenches filled with fiber or coaxial cables is a feat to be proud of. While many argue that 5G will revolutionize several industries, Verizon’s cableless, broadband home internet service may have a shattering effect on the case for net neutrality rules.

Net neutrality’s most solid argument

In August, the Internet Association, which includes companies like Google, Amazon, eBay, and Facebook, joined other advocacy groups to file an intervenor brief  as part of a broader effort to save net neutrality rules.

The filing outlines three key areas where the FCC has allegedly acted arbitrarily and capriciously when nulling the net neutrality rules:

  1. FCC’s claim that net neutrality’s protections aren’t necessary to keep the internet open
  2. FCC’s failure to estimate the costs and benefits of lifting net neutrality’s protections
  3. FCC’s claim of having no legal authority to impose net neutrality

Legal quarrels aside, the first point is the most important one that makes the case for net neutrality rules. The filing reads: “The broadband marketplace cannot effectively discipline ISP gatekeepers because a lack of competition and high switching costs prevent even fully-informed consumers from responding to unwanted ISP practices.”

“Nearly 50 percent of Americans are served by only one or zero wireline broadband service providers meeting the current FCC speed benchmark of 25 megabits per second download and 3 megabits per second upload,” the filing adds.

So the Internet Association argues that due to a lack of competition, we need regulations to keep ISPs from doing things like throttling certain services, or charging more for accessing certain other services.

While the argument sounds solid, not everyone agrees that ISPs have much violated net neutrality principles without state regulations.

Timothy Brennan, Professor of Public Policy and Economics at UMBC, says that “there is almost no evidence that ISPs failed to act according to net neutrality principles, [there has been] perhaps 4 instances in 10 years.”

But proponents of net neutrality regulations have a long list of violations over the years. Denelle Dixon, Mozilla Chief Legal and Business Officer, for instance deems net neutrality crucial for the future of the internet arguing that it “prohibits ISPs from engaging in prioritization, blocking or throttling of content and services online. As a result, net neutrality serves to enable free speech, competition, innovation and user choice online.”

The race for 5G and the disruption of wired broadband

While the pro and con arguments of net neutrality can become very politicized, the race for 5G may be able to root out the problem. AT&T claims to start its mobile 5G network by the end of the year and T-Mobile is on its quest to create a nationwide 5G network in less than two years aiming for up to 4 Gbps speeds.

Wired broadband connections are inherently expensive and duplicating wired connections across the country is in many cases economically infeasible, which leads to less (or even no) choice and monopolies in wired broadband internet.

But history shows that mobile carriers may be a different case. Professor Anna Nagurney, director of the Virtual Center for Super Networks at UMass Amherst, says that it’s true that “5G will succeed in densely populated areas where there are enough users to make the business case,” but “because users expect service almost everywhere in the US, the buildout will occur in a large part of rural areas.”

In fact, Citi’s Disruptive Innovations VI, published in August, recognizes 5G technology among its 10-tem list of disruptive technologies and alludes to a disruption of wired broadband monopolies.

“Creating small private networks, either in a single building or distributed across multiple locations, has long been the purview of wired access solutions augmented with limited wireless or Wi-Fi networks. With 5G, that could be reversed given the lower cost of installing, maintaining, and updating a wireless network,” writes analyst Michael Rollins.

Analysts at Cowen also write in their quarterly update published in August that “we see 5G fixed wireless broadband as the largest existential threat to broadband providers, by far. For now, the largest threats are coming from Verizon and T-Mobile.”

Through the deployment of 5G networks, T-Mobile is also trying to become a viable broadband alternative for US homes, especially in rural America. As part of its merger pitch with Sprint, T-Mobile released a Public Interest Statement where the carrier says that by 2021 it will provide data rates in excess of 100 Mbps to two thirds of the US population, and by 2024 to 90 percent.

It’s fair to say that the monopoly on wired broadband internet access in large parts of the US isn’t the only reason why net neutrality regulations could be necessary. In fact, behemoth cellular network providers like Verizon and AT&T have been at the center of some of the best known net neutrality violations—Verizon blocking tethering apps and AT&T blocking Apple’s FaceTime. But in both cases the companies backed off: either through FFC’s intervention or due to a consumer backlash. A lack of monopoly, FCC oversight, and fear of public outcry has in large been able to keep mobile network companies in check.

With mobile providers entering the arena of home internet broadband, the market forces that rise from a nationwide competition will spur innovation in the long run and bring better services at lower prices to the consumer.

Let’s hope that market forces will be able to keep ISPs in line and consumers can reap the benefits of true competition, while government agencies and FCC are ready to act fast if things go sideways.

Advertisements

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.