Net Neutrality and Why it Matters

Business, Leadership, News, Startups July 14, 2017

Did you notice messages, ads, and calls to action on your favorite sites this week about net neutrality? We did. We’ve been paying close attention to the issue. Wednesday, July 12 was “Net Neutrality Day of Action,” a campaign aimed to raise awareness and encourage consumers to fight back against the desire of the Federal Communications Commission (FCC) to roll back net neutrality.

Many of the Internet’s biggest companies along with numerous activist organizations put up messages and calls to action to sign petitions and contact the FCC about keeping access to the Internet open and equal to all users (AKA keeping net neutrality).

net-neutrality

Amazon, Airbnb, Etsy, Twitter, and Reddit were many companies across the Web participating in A Day for Action.

“Save the Internet” was the call. But does the Internet need saving? What does net neutrality (or the lack thereof) mean? Here’s a breakdown of what net neutrality is and what getting rid of it could mean.

What is net neutrality?

Also sometimes referred to as “open Internet,” net neutrality is the idea that the Internet is a utility and everyone has a right to open and unfettered access to it. In practice, that means that Internet service providers (ISPs) have to offer customers equal access to the Internet. They can’t offer drastically different, better, or faster connections to the Internet for more money, for example. One consequence of offering a faster premium-style Internet package might be that big companies with money could afford to pay for better Internet service and effectively shut out smaller competitors whose websites may load more slowly if they haven’t bought the more expensive premium Internet packages. Search results, customer service, and cloud-based services could be affected by practices such as these, and then companies no longer have a level playing field.

In 2014, FCC Chairman Tom Wheeler won the battle to reclassify ISPs under Title II of the Communications Act of 1934, which gave the FCC authority to regulate ISPs. Strong net neutrality laws ensued. These rules restrict practices, such as paid prioritization and throttling. (“Throttling” means censoring, blocking, or intentionally slowing down the speed of certain websites or content. For example, say Netflix pays for a premium Internet connection and Jill’s Movie Site doesn’t, because she’s a startup and can’t afford it yet. If two households in close proximity to each other and sharing bandwidth try to download a movie at the same time from each service, the Netflix customer will get priority and the Jill’s Movie Site data will be throttled to make more bandwidth for the Netflix customer.)

In 2016, the U.S. broadband industry sued to overturn the FCC’s net neutrality laws and lost. In a statement made shortly after the ruling, FCC Chairman Tom Wheeler said, “Today’s ruling is a victory for consumers and innovators who deserve unfettered access to the entire Web, and it ensures the Internet remains a platform for unparalleled innovation, free expression and economic growth.”

What’s all the fuss about?

Rescinding net neutrality has the potential to put a lot of power and control into a handful of major companies and ISPs. It means ISPs could do things, such as:

  • Make deals with large corporations to prioritize their data or content over their competitors’ data.
  • Throttle data of companies that do not pay them more money or who aren’t their customers.
  • Charge consumers more to have faster Internet and slow down Internet speeds for those who don’t pay.
  • Block apps and services from phones.
  • Prioritize their own services.
  • Slow down access for certain websites.
  • Censor or block certain content.

Opponents to net neutrality say that the FCC restrictions stifle innovation and discourage investment in telecom infrastructure. They say that allowing ISPs to offer premium services and make additional revenue would encourage providers to take that money and invest in more infrastructure and other innovative improvements.

Here’s the problem with that argument: The ISP market is not that competitive. There is little incentive for them to invest in improvements or to provide better service for that matter. Think about the options you have in your city. You most likely have one or two Internet service options, right? You’re not alone.

According to The Verge, 51% of Americans only have one option and 38% only have two options. That’s hardly competition. It’s definitely not lighting a fire under ISPs to provide better service or reduced costs. The U.S. ranks 13th in costs compared to other countries. Yet, the U.S. isn’t even in the top 10 for average Internet speed.

So what do we have? Very little competition, little incentive to improve service or reduce costs to consumers, and a very high incentive to basically hold consumers (including businesses) for ransom. And if you don’t like it, it’s not like there are many other providers to use. They have you.

Net neutrality: Good or bad for competition?

There is a difference between Internet access and the Internet. ISPs are not the Internet. They simply provide access to the Internet. They are gatekeepers, so to speak. The question before us is, how much control should these gatekeepers have? Getting rid of net neutrality would mean the Internet is at risk of being regulated and controlled by the ISP gatekeepers. Without net neutrality, what guarantees would we have that the Internet would remain open and free from the influence and control of major corporations? ISPs would have the power to make companies like Netflix pay money to make sure their services stream at faster rates, or that their content is prioritized over smaller companies that can’t pay for an “ Internet fast lane.” Net neutrality exists to protect the smaller companies that would potentially be outspent and squashed.

Lauren Culbertson, Public Policy Manager of Twitter, wrote on the company blog recently, “Net neutrality is foundational to competitive, free enterprise, entrepreneurial market entry — and reaching global customers. You don’t have to be a big shot to compete. Anyone with a great idea, a unique perspective to share, and a compelling vision can get in the game.”

The blog goes on to explain that without net neutrality, companies like Twitter may not have come into existence, because rarely do startups have the capital to “pay to play” online. Think about if Netflix had been throttled in 2014 when the FCC was threatening to allow ISPs to offer a faster option to service providers? Could Netflix have flourished? Now think about other startups that have become successful and disrupted their industries thanks to the openness of the Internet.

The Verge says it best: “…once you’ve built an economy where giants are cutting deals to get ahead, the ability for smaller companies to disrupt them fades fast. And if every new company has to pay to play, you’re sucking dollars away from innovation and using them to line ISP pockets.”

What You Can Do

What do you think getting rid of net neutrality might do to your business, to your industry – and to competition as a whole? If you want know more, here are some resources to check out.

Save The Open Internet
How to Write An Impactful Net Neutrality Comment