Wolff: It's not really net neutrality

Michael Wolff | USA TODAY

Net neutrality is a hands-down victory for the digital industry, except that nobody anywhere can tell you what has been won.

It is a resounding defeat for the broadband business, particularly for Comcast, except that Comcast, if you're inclined to bet, will probably still come out ahead.

Net neutrality is a curious piece of regulation that has been spurred on by popular umbrage and letter-writing campaigns (or the modern social media equivalent), but which has been fashioned and will continue to be fashioned by a process of negotiation and defined by a language, wholly opaque to the public.

The gulf here is as big as that between calls for tax relief and the tax code itself. That is, there is no net neutrality, there are only the details of net neutrality, inevitably so fine and shaded and compromised that in the end such regulation might better be known as the "net self-Interest rules."

In effect, we have arrived at a moment in time in which we pass from a, relatively speaking, anything-goes Internet (the current model or standard of net neutrality) into a profoundly regulated and proscribed Internet.

Of course, net neutrality advocates have been arguing that the Internet is increasingly controlled by big broadband holders like Comcast, and hence, to restore balance, it needs to be controlled by government regulation. That may well be true. But the larger and more important effect is not about balance or restoring the status quo, but that the Internet passes into some new, more formal arena wherein the powers that be — all of them — get to flex their muscles and try to beat the others.

Instead of being an organic thing (again, that's the model for net neutrality), it becomes the legislated and regulated product of the leverage of many different interest groups.

This is not necessarily bad, and in many ways, given all of the competing interests and the Internet's level of economic significance, inevitable. But it is important, or at least sensible, to understand that this has nothing whatsoever to do with neutrality or with maintaining the free-for-all quality of the Internet.

In fact, it doesn't have much to do with the Internet at all. It has to do with television — or the fact that the Internet is becoming television-like, or a form of television, or, in many ways, a competitor to, or frenenmy of, television. The interests of the old pre-video Internet (the one we think of as neutral) are subsumed by this new video-Internet and its overriding interests.

In brief, the present Internet age crystallized as follows: by relative happenstance, cable providers, selling TV and broadband packages, came to control Internet access; at the same time, many large digital platforms (Netflix, Amazon, Facebook, Google/YouTube, etc.) increasingly saw video as a big revenue and profit driver — and, indeed, the overwhelming amount of Internet data traffic is now video traffic. Hence, the issue became one form of television vs. another form of television. Not all that different from when broadcast and cable appeared to be inimical and opposing businesses.

Now, the Internet may have existed happily and freely in an unregulated and neutral world, but television never has. Television is everywhere a regulated business. This is in part because the complications of delivering video favor a monopoly, and in part because the power of television is politically meaningful enough for politicians to want a hand in it (and, given its reliance on public infrastructure, have an excuse for it).

Fairly, the present net neutrality battle can be reduced to a struggle between Comcast and the Internet, or, even, Comcast and Netflix. Netflix, with its over-the-top delivery model, threatens Comcast's cable subscription package model. But Netflix needs Comcast to deliver its product, giving Comcast a weapon in a natural effort to stymie Netflix's growth.

In this faceoff, Netflix is the good guy, and hence represents net neutrality, although it is no more neutral in its interests than Comcast. And Comcast is the bad guy, representing non-neutrality, or profound bias (it's hard to seem like more of a bad guy than Comcast). And, by most accounts, with last week's FCC vote the good guys have won. It's a popular, symbolic, everybody's-happy result – even Comcast is now making friendly noises toward net neutrality.

But the real outcome, the real nature and effect of the regulation, will now come out of a process of legal and political challenges, such that what has really been agreed to is a kind of net negotiation. And that is only a backdrop to an even more determinative business reality. Because, remember, we're not in the Internet business anymore, we're in the television business, which is all about, as Sumner Redstone once memorably put it, hits and splits. That is, no regulation is going to help you if you don't have hits, and, in television, where you'll always have partners, your success depends on the leverage you have to advantageously divide the money that comes in.

HBO and Netflix, for instance, make similar amounts of revenue, but HBO does nearly $2 billion in profit, and Netflix practically nothing. This is largely because Comcast and the other cable operators absorb the cost of HBO's marketing, billing and customer service.

Hence, if there is a world in which Netflix and other Internet video providers don't ultimately make a deal with Comcast and other cable operators to deliver their product as part of the ever-growing video menu, I can't imagine it.

That's a kind of new net understanding or new net television epoch, but let's not call it net neutrality.