Goodbye Net Neutrality: What Does It Mean For Business and Consumers?

The US Federal Communications Commission’s (FCC) vote to repeal the regulation commonly known as net neutrality has left many Americans wondering what it means for them.
Just two years after rules went into effect, Thursday’s vote to end net neutrality means that the FCC will no longer regulate Internet Service Providers regarding tiered pricing and delivery.

What is net neutrality?

Approved by the FCC in 2015 under the Obama administration, net neutrality was designed to give equal and fair treatment to all internet traffic. Internet Service Providers (ISPs) were required to treat all internet websites, content and services the same and could not deliberately speed up or slow down traffic from specific websites or apps, nor put their own content at an advantage over rivals.

Net neutrality was based on the idea that the internet should be a public service that everyone has a right to use, like water, gas, electricity and phones, and hence should be regulated. Regulated utilities cannot cut off service at will, charge consumers more for higher-quality delivery, or give preferential treatment to customers.

Under the 2015 regulations, broadband service was classified as a utility under Title II of the Communications Act, giving the FCC broad power over internet providers with rules prohibiting practices like blocking, throttling and paid prioritization.

What Does the Repeal Mean?

Now that the FCC has repealed Title II classification, internet service providers will no longer be treated the same as other regulated utilities and the federal government will no longer regulate high-speed internet delivery.

ISPs can now deliver service at their own discretion and are free to selectively blocking content by certain websites or apps, slow down the transmission of data based on the nature of content of their choosing, and create internet “fast lanes” for companies and consumers able and willing to pay premiums.

Thursday’s repeal largely transfers oversight of internet service to the Federal Trade Commission (FTC). The FCC and the Federal Trade Commission have agreed to jointly enforce the Restoring Internet Freedom Order’s transparency rules, which require ISPs to disclose whether they are throttling or blocking legal content. Any complaints about anti-competitive practices by ISPs will be handled by the FTC who will be responsible for evaluating the reported activity.

There are many questions around the impact of the repeal and what it means for us going forward as individual consumers, business owners and operators.

How Will Consumers Be Impacted?

Given the repeal doesn’t actually go into effect for some months yet and it is still too early to predict exactly what the major ISPs are going to do, there is uncertainty around what the impact will be for consumers. The repeal could change how customers are billed for services.

The Verge reached out to the major ISPs, including Comcast, AT&T, Verizon, T-Mobile, Sprint, and Charter (Spectrum), to gauge their position on the three core tenets of net neutrality of no blocking, no throttling, and no paid prioritization. Many of the telecom providers have expressed that there will not be major changes to their current practices (mainly around throttling and blocking), while others are already hinting at introducing paid prioritization services.

The Verge concluded that “ISPs won’t promise to treat all traffic equally after net neutrality” and note that ISPs are likely to offer fast lanes and prioritization, as well as give advantages to their own content and the content of their partners. Even though a few ISPs are vowing to stand by the principles of net neutrality, it will remain to be seen what policies will change and how consumers will be affected.

It is a very real possibility for ISPs, such as Comcast and Charter, as well as mobile carriers, such as AT&T and Verizon, to charge more for access to certain internet content. Most American’s connect to the internet through a broadband companies, such as AT&T, Charter, Comcast and Verizon many of which are becoming content companies.

Many carriers have their own content businesses and are likely to constrain access to competitors’ content. For example, carriers have amassed substantial content holdings: Comcast acquired NBCUniversal, Verizon acquired Yahoo and AOL, and AT&T looking to acquire Time Warner.

Technology companies and consumer advocacy groups that are against the repeal believe ISPs will charge consumers for high-speed internet and that those who can’t afford it will be left in the “slow lane” with poor connection. It is understood that the repeal could hurt content providers, like Google, Facebook, Twitter and Netflix.

It is too early to tell whether it is going to cost more for high-speed internet or whether content providers like YouTube, Twitter, and other services that are currently free are going to cost money to access. It is likely that broadband providers will begin selling the internet in bundles, similar to how cable TV is sold.
Subscription plans may be split into different packages, for example if you want access to Facebook and Twitter, you may be required to pay a premium for a social media package. While these scenarios and more are possible, it may take some time for changes to take effect.

How Will Businesses Be Impacted?

Carriers now have a big opportunity to reestablish standard practices for buying and selling network capacity. Changes to pricing, a move to content bundling, and new regulations lie ahead. Unequal traffic treatment will allow carriers to either charge by data volume or offer tiered pricing by traffic type, providing a larger range of price points.

If they choose, carriers can now charge more for higher bandwidth or lower latency and new apps and services will likely find it harder to compete with established companies. For example, AT&T, Comcast, or Verizon can now create fast and slow lanes and service packages that let content and application owners pay more for faster or lower latency networks.

With internet providers free to build slow and fast lanes, businesses will have to design around cost and bandwidth uncertainty. Businesses should be prepared to pay money to be seen by consumers as it could be easier to access websites that pay, and harder to access websites that can’t afford to pay.

Enterprise

Many large companies depend on small and medium businesses, consultants, and remote freelancer/contractors. Forrester, in it’s “Quick Take: Innovate Around The Death Of Net Neutrality” report, recommends that enterprises start the conversation with carriers about low-latency needs for their IoT applications, that they revisit SDWAN use, and renew their focus on network engineering.

With telecom giants like AT&T and Verizon now being able to give priority to the movies, TV shows and other videos or music they provide to viewers over their competitors, rival companies such as Sling TV, Amazon, YouTube or fledgling small businesses and startups may be at a disadvantage. Content providers will have to form strategic partnerships or build their own networks.

Content Providers & Distributors

Content providers and distributors will likely be forced to pay a premium to maintain service quality, work with partners that don’t compete to negotiate better rates, or even acquire their own connections.
It is likely that alternative provider networks via cloud service providers, colocation providers, content delivery networks (CDNs), and managed service providers will provide more competition. Businesses will continue to demand software-defined WAN, at high speed for a low price.

Innovators, Small Business and Freelancers

With the potential for carriers to block or throttle certain high-traffic services, and to gain the competitive edge over competing services, smaller companies and start-ups that don’t have deep pockets to pay “tolls” to go in faster lanes or compete for visibility are likely to be disadvantaged.

Costs will likely go up for startup companies, and they may struggle to strike deals with providers and be forced to pay more for their content to be delivered faster. Paid prioritization means that fast lanes will be occupied by big internet and media companies.

Small business owners may be left in an unfair playing field with industry giants paying up to get an edge. E-commerce start-ups could also lose out due to paid prioritization, where their websites and services load slower than those run by internet giants.

Remote workers, including freelancers and franchisees working in the “gig economy” could also face higher costs to do their jobs from home.

What happens next?

Comcast, AT&T, Verizon, T-Mobile, Sprint, Charter (Spectrum), which recently bought Time Warner Cable and became the United States’ second largest cable provider, says it has “no plans” to change its current practices. While it would appear that most ISPs will maintain some basic policies there are no guarantees about future commitments to businesses and consumers regarding content blocking, throttling, or zero-rating or paid fast lanes.

We will continue to wait and keep watch to see which direction ISPs take.  There will be continued attention to this matter and the spotlight will be on carriers, given the potential far-reaching impacts to businesses and consumers.

 

Sources and Further Reading:

The FCC just killed net neutrality
ISPs won’t promise to treat all traffic equally after net neutrality
Forrester Report, Quick Take: Innovate Around The Death Of Net Neutrality
The end of net neutrality: What it all means
Why Net Neutrality Was Repealed and How It Affects You
With the FCC’s repeal of net neutrality, here’s what to expect

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