AIS Blog

What is Net Neutrality and How Does it Affect Your Business?

Posted on 01/15/2018 in Consulting

The Federal Communications Commission’s net neutrality regulations were put in place in 2015 during the Obama administration when Democrats controlled the F.C.C. These rules were dismantled just last month by a vote from the now Republican controlled F.C.C. led by the commission’s new chairman, Ajit Pai.

In response to this rollback, there has been a lot of debate in the media, across party lines and in the tech industry. In all the noise, it can be difficult to decipher exactly what net neutrality is and what it means. In this blog post we attempt to break it down for you: what net neutrality is and how the repeal of the regulations might affect you as a consumer and as a business owner.

Net Neutrality

Established in 2015, the F.C.C. net neutrality rules classified high-speed internet as a public utility, with the goal of ensuring that consumers have open access to all web content. Essentially, the F.C.C. recognized that the Internet has become one of the chief communication outlets for Americans and sought to regulate Internet services as they would phone services. The rules required Internet Service Providers (ISPs) such as AT&T and Comcast to deliver all Internet content equally without prioritizing certain websites.

Last month, the F.C.C. voted to repeal the net neutrality rules, arguing that regulation stymied innovation. The major broadband and telecom companies claim that net neutrality removed their incentives to invest and advance and that as a result of this vote services will eventually improve for everyone.

How Will It Affect Consumers?

It’s important to note that it is unclear when and how much things will change as a result of this repeal. However, we can speculate. As the government will no longer be overseeing broadband companies, these companies will be free to engage in “paid prioritization” and “price discrimination.” This could lead to tiered internet services: high-speed internet offered at higher prices for affluent companies and consumers and low-speed internet for everyone else. The repeal also allows broadband carriers to block media content, if they so choose.

How Will It Affect Businesses?

The repeal could have a similar effect on businesses. Websites and internet and media companies may have to pay higher fees in order to reach their desired audiences. For larger organizations like Google and Amazon, this will not be a problem. However, these higher prices could be prohibitive for smaller companies and startups.

The ISP’s offer a free-market counterargument. They claim that they will adhere to some aspects of net neutrality voluntarily and that market competition will force them to meet consumer demand and provide the best internet service possible to customers. However, several analysts reply that there is little competition in the broadband service market to support that argument. Many households in regional markets have only one ISP available to them. Without competition, these companies would have no reason not to hike prices.

It’s difficult to predict exactly what will happen. Your perspective likely depends on your opinions regarding government regulation. Perhaps market competition will lead to greater innovation and trickle-down benefits. However, the most likely result is that business and consumers alike will see higher prices for approximately the same level of service.

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