What US Airlines Can Teach Us About the Debate Over Net Neutrality

If you flew a U.S. airline over the holidays, you probably paid extra to stow your bag, or for some extra leg room. If you’re not a frequent flyer, you saw some of your fellow travelers board the plane before you in a special fast lane.

These à la carte extras, some available to only a privileged few, help explain why the US carriers consistently earn dismal scores on consumer satisfaction surveys, putting airlines right down there with cable companies. Wait a minute—cable companies? Fast lanes? This sounds like we’re talking about net neutrality—and in a way, we are.

Consider how the proliferation of fees have affected airline business practices. As legal theorist Tim Wu points out (paywall) this week in the New Yorker, service fees create bad incentives for the treatment of customers who aren’t paying them:

[I]n order for fees to work, there needs be something worth paying to avoid. That necessitates, at some level, a strategy that can be described as “calculated misery.” Basic service, without fees, must be sufficiently degraded in order to make people want to pay to escape it. And that’s where the suffering begins. … The necessity of degrading basic service provides a partial explanation for the fact that, in the past decade, the major airlines have done what they can to make flying basic economy, particularly on longer flights, an intolerable experience.

It’s not coincidental that Wu sees this dynamic at work—he came up with the term “net neutrality.” (He might have turned the topic into a front-burner issue for New York state politics, had he won his recent bid for lieutenant governor.)

Lately, the battle over enforcing net neutrality has played out in a debate about whether internet service providers should be able to offer “fast lanes” or “paid prioritization” to those willing to fork over more money to get their data across the tubes faster.

One reason open internet activists and, to some extent, US internet regulators, are uncomfortable with the idea is that they fear that everyone who doesn’t pay will be treated unfairly. As the US Federal Communications Commission put it in a 2011 document (pdf):

[I]f broadband providers can profitably charge edge providers for prioritized access to end users, they will have an incentive to degrade or decline to increase the quality of the service they provide to non-prioritized traffic. … Even more damaging, broadband providers might withhold or decline to expand capacity in order to ‘‘squeeze’’ non-prioritized traffic, a strategy that would increase the likelihood of network congestion and confront edge providers with a choice between accepting low-quality transmission or paying fees for prioritized access to end users.

In other words, the fast-lane effect. You can see the fast-lane problem play out at water parks, too.

Of course, identifying the bad incentives in these fee-driven models isn’t the same as figuring out how to make these businesses work with out them. But unlike airlines, a troubled industry at best, internet companies tend to have solid profit margins, so regulators with the public interest in mind will think twice before okaying fast lines for the most important infrastructure of the 21st century.