FedEx jets: why the internet is nothing like the postal service.

Net neutrality has certainly taken a beating of late on both sides of the border. In the United States last week, a federal court effectively killed what few rules there were that prevented internet providers from discriminating between different types of traffic. That followed an announcement a few weeks ago by AT&T that it was introducing a “sponsored data” feature for smartphones that would allow websites and online service providers to pay for exempting their content from users’ monthly data caps.

In Canada, meanwhile, a version of that is ongoing with Bell offering its own mobile television at a rate that’s significantly discounted from regular online video. Canada has rules that enshrine net neutrality and they have indeed been invoked in a complaint about Bell’s service to the Canadian Radio-television and Telecommunications Commission.

In each of these cases, the very notion of net neutrality - or the idea that the traffic and content that flows across the internet should be free from unnecessary discrimination by network providers - will be sorely tested this year. On the downside for users, internet providers have now had several years to adjust to the principle and have gotten pretty good at figuring out ways around it, hence the increasing usage of data caps as a way to privilege certain services. On the plus side for advocates, the providers still haven’t been able to counter the principle itself, which has the advantage of being tied to such fundamental long-term concerns as innovation and competition.

The net neutrality concept first started to bubble up in 2007, when U.S. cable provider Comcast was caught blocking Bittorrent, a peer-to-peer protocol used for file-sharing. In 2008, Bell was similarly found to be slowing the same application in Canada. In both cases, the internet providers argued that the sizable traffic resulting from file-sharing was congesting their networks. Critics suggested the interference was due more to the fact that many of the files being shared were TV shows and movies, which the service providers were of course in the business of selling.

In the U.S., this ultimately led to the Federal Communications Commission issuing an order that prevented ISPs from blocking lawful content or services, at least on the wired side (wireless was exempt). In Canada, the CRTC issued a similar framework for Internet Traffic Management Practices, which essentially forbids discriminatory practices and urges service providers to find other means for managing congestion.

With the striking down of the FCC’s order, there is now the fear that ISPs will engage in anti-competitive behaviour, this time slowing down or even blocking the likes of Netflix or Skype. The more real competitive threat, however, is that service providers are going to increasingly use usage limits as their discrimination tools.

Executives and lobbyists have a host of reasons for why preferential treatment should be allowed online, most of them illustrated by analogies to other, similar services. The mail system, for example, has long worked on a prioritized basis. If you want your letter or package to arrive faster, you pay more for it, so why shouldn’t the same go on the internet?

That sort of thing isn’t allowed on electricity grids, which is also something that the internet is often compared to. Most countries have common carrier laws, which prevent electricity suppliers from discriminating based on what users plug into their end of the system - in other words, electric companies can’t charge differently or provide better or worse service to, say, one particular toaster manufacturer over another.

But ISP lobbyists suggest electricity isn’t that different from the internet because it is a usage-based utility, and a non-neutral market has in fact emerged around it. You can, for example, buy an energy-efficient washing machine that uses less electricity than others. It’s up to the appliance manufacturers as to whether they want to make such machines, and then to consumers as to whether they’re willing to buy them.

In this vein, efforts such as AT&T’s sponsored data and Bell’s mobile TV are in line with what’s going on elsewhere. Truth be told, they’re good arguments.

There is, however, one major difference between the internet and any other utility. A lone individual probably couldn’t launch a competing postal courier service or appliance maker - say, a respective rival to FedEx or GE - regardless of how much he or she wanted to because the obstacles are simply too great. The same doesn’t hold true online.

Perhaps the greatest thing about the internet is the fact that it does allow that lone individual to turn an idea into a business and challenge much larger companies and institutions without having to face many of the same road blocks. The internet routinely creates David-versus-Goliath scenarios and frequently results in entirely new businesses, which results in more jobs and wealth and societal improvement overall.

So yes, the internet is like the postal and electricity systems in certain ways and perhaps access to it should be allowed to follow similar patterns. But it also serves an incredibly important role as an enabler and incubator of innovation and positive forward momentum for society as a whole, which is something that simply will not continue if those lone individuals become disadvantaged by getting their services blocked, slowed or effectively taxed by usage limits.

There are the arguments for status quo equality with other utilities, and then there is the case for progress. These are the facts that regulators, politicians and other authorities would do well to remember this year as the core of net neutrality is once again dissected and debated.