The debate over net neutrality has been marked by extreme rhetoric. Those that support regulation designed to keep the Internet “free” and “open” assert that Internet access providers left to their own devices will interfere in the marketplace, thereby stifling innovation and competition.
This is a legitimate concern. A free and open marketplace will generally serve the public interest. Public interest types agree, but challenge whether the marketplace is free and open, particularly if the companies that transport your data to the Internet (telephone, cable and wireless companies) are free to limit your access. The response is that rational actors would not limit such access for fear of consumers’ responses.
The issues are complex, but it is worth taking a moment to note something simple: limiting access to the Internet can be an entirely rational business activity, even for the largest and most sophisticated consumer-oriented companies.
How do we know? Last week the FCC fined Marriott International (the hotel company) and Marriott Hotel Services (which manages hotels) US$600,000 for blocking their customers’ Wi-Fi hotspot access to the Internet. See the Consent Decree here.
What the FCC found is that at the Gaylord Opryland hotel, Marriott monitored—and jammed—guests’ use of hotspots (e.g., iPhones or similar devices) to access the Internet. In regulatory-speak, the Marriott operated a “containment capability that, when activated [sent] de-authentication packets to Wi-Fi Internet access points in the hotel that [were] not part of Marriott’s [authorized system and which Marriott classified] as ‘rogue.’”
Sounds kind of crazy, doesn’t it? Classifying a cell phone as a “rogue” device in this day and age? But it is not. Marriott charged exhibitors at a conference in the Opryland hotel between US$250 and US$1000 per device for access to the hotel’s Wi-Fi. And, the attendees using personal hotspots were clearly on hotel property. Therefore, it was entirely rational for the hotel to conclude that access to the Internet should be on Marriott’s terms. Blocking outside Wi-Fi is just as rational a commercial behavior as charging US$20 for two scrambled eggs through room service.
With the FCC’s enforcement action, we’ll never know whether the counterargument— that Marriott would have stopped this practice on its own if customers became sufficiently dissatisfied with it—is right or wrong. However, the Marriott saga demonstrates that net neutrality is not an artificial or hypothetical concern.