Net Neutrality changes

Dec 14, 2017

Net neutrality is the principle that Internet service providers must treat all data on the Internet the same, and not discriminate or charge differently by user, content, website, platform, application, type of attached equipment, or method of communication.

-Wikipedia: Gilroy, Angele A. (March 11, 2011). Access to Broadband Networks: The Net Neutrality Debate (Report).


So, what does it mean for us?


The easy first take is that the proposed changes to net-neutrality regulations are good for corporations and bad for consumers. There is inherent truth to this. But in scratching the surface, the reality is more complex.


Many questions about the future of net-neutrality remain and may not be known for some time? Though a vote is scheduled by FCC members on Thursday, December 14 (and is expected to pass), it may spend months or longer in appeals and could end up in the Supreme Court. Assuming, at some point, the net neutrality laws are reversed, how will that change impact the various constituencies that have been protected or restricted from the impact of the law?


With net neutrality eliminated, the immediate effect may be that certain internet providers (ISPs, mostly in the form of large internet companies such as Comcast, Charter, Verizon and CenturyLink) could restrict access or bandwidth to certain content distributors (such as Netflix, Facebook and Google). Comcast, for its part, altered its net neutrality pledge on the very same day the FCC announced the proposed changes. On April 26, a page on Comcast’s website stated:


“Comcast won’t  Block access to lawful content.

Comcast won’t throttle back the speed at which content comes to you.

Comcast doesn’t prioritize Internet traffic or create paid fast lanes.

Comcast Internet essentials will make the Internet more accessible to low income.

Comcast will inspire innovation, promoting learning, create access to jobs.”


But on April 27, the day FCC chairman Ajit Pai announced the first version of the plan to eliminate net neutrality laws, the pledge changed to.


“We do not block, slow down, or discriminate against lawful content.

We believe in full transparency in our customer policies.

We are for sustainable and legally enforceable net neutrality protections for our customers. “1


This leaves Comcast quite a bit of wiggle room. If this is a sign of what is to come, consumer beware.


The argument by proponents of net neutrality is that without regulations, big corporations such as Comcast, et. al. will have free reign to block, throttle, speed up or promote whoever they wish. This could be bad for other internet giants like Facebook and Google who rely on the open pipes to deliver their content and services, unrestricted, to consumers. The argument goes that, hypothetically, should Comcast or Verizon go into partnership with Facebook, they could slow down access to a competitor like YouTube. The removal of the regulations puts the internet providers in control and enables them to extract payments from content provider and consumer alike. They could even adopt practices that have been banned in some parts of Europe such as one called a Zero Rating, which gives content from certain distributors away for free while charging for content from their competitors; kind of a reverse block. This could drive consumer behavior and impact businesses in any number of ways.


It may shape up as a tug of war between content and delivery with consumers being the rope. This may ultimately save consumers from being completely at the mercy of the ISPs. Facebook, Netflix and Google will not go quietly and have lobbies in Washington as equally strong as the ISPs.


A likely scenario is ISPs offering various grades of access for different bandwidth or data levels. It could even be divided up by service where consumers buy a different package based on the services (email, web, video, music) that they use, as is happening in some European countries. This could result in segmentation amongst consumers based on socio-economic status and need.


The argument against net neutrality is one of minimal government regulation, a core principle of conservatives. It follows the logic that the current setup stifles innovation and competition. Competition is the most natural market force consumers have in their favor. If competition is allowed to increase, ultimately consumers will benefit. If a powerful few control access, it will come at the expense of consumers. Many industries have had, and then have done away with, regulation over time. Electricity, telecom and airline are all shining examples of marketplaces that were allowed to mature and ultimately offer viable options for consumers and businesses alike.


If the United States ultimately discards regulation on internet access, it sets up a fascinating A/B test between the US and the EU, where regulation is heavy. Which model will prevail? Is regulation good for consumers but bad for corporations? Will it all even out in the end?


Impact on Advertisers

While the jury will be out for awhile on the impact to consumers and corporations, the new model may offer many new opportunities to marketers. As alignments between content and delivery develop under the new parameters, advertisers may have a unique opportunity to insert themselves in the mix and offer benefits to consumers that are not currently available. New partnerships will sprout up and an advertiser may be able to pair itself with a company like Comcast to reach consumers as part of the access Comcast is offering. Purchase a car, get free internet for a year...spend $1,000 at a retailer, don’t pay for mobile access to NBC shows. etc. Additionally we may see hybrid plan offerings that allow free or reduced rate packages for ad supported access where a consumer is served a series of ads before being able to get to their Facebook account, for example. This may open up an era of increased creativity in ad formats as new and yet undiscovered engagement experiences develop and innovation around inserting advertising in them abounds.


Much is still to be written on this topic as we see what plays out in Washington. And while the new regulatory approach will set the stage for internet access for years to come, as written in the New York Times on November 21, it may have a limited term: ““As good as the F.C.C.’s action is for I.S.P.s, it only assures non-regulation of broadband through 2020,” said Paul Gallant, an analyst at the research firm Cowen.”


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