Net neutrality is the concept that broadband providers should remain impartial to both content and content provider.
Editor's note: This is part one of a two part series. The opinions in this piece are solely those of the author.
The skirmish over net neutrality should be viewed as a non-issue for most small businesses.
The concept of net neutrality is to ensure that Internet Service Providers (ISPs) treat all Internet data agnostically without any discrimination as to what type of data is being requested or from what resource the request is made.
In 2015 the FCC issued new net neutrality regulations under the Open Internet Order (OIO), but this year the new FCC repealed net neutrality in a reversal intended to allow content providers and ISPs to deliver services without the confines of government intervention. Furthermore, the rationale for the law's repeal is that provider anti-consumer collusion efforts would be thwarted by the free market competition, thereby eliminating a need for net neutrality efforts in the first place.
For small businesses and corporations, net neutrality is a concern and ISP behavior and performance should be monitored and enforced similarly now as in the past given that the degree to which potential anti-competitive efforts may arise has been greatly overstated. After all, in the two decades of Internet access there have been no signs of restrictive bandwidth collusion.
The regulatory fight over net neutrality is not yet over, and despite whatever rulings are ultimately enacted, small business owners and IT executives should ensure that bandwidth providers contractually provide service level guarantees, monitor and track network performance for adherence, and assign substantive monetary penalties for attributable and verifiable failures.
The FCC voted in December 2017 to repeal the so-called net neutrality legislation enacted by the Obama administration FCC by a vote of 3-2.
As there are strong views on both sides, some members of Congress are fighting to reinstate in what is sure to be a heated and lengthy battle, most agree with the underlying principles. Net neutrality is the concept that broadband providers should remain impartial to both content and content provider, thereby delivering requested resources to users in a manner free of blocking, favor, and throttling.
The initial FCC legislation classified ISPs as common carriers under Title II of the Communications Act to ensure that Internet delivery remained free from any discriminatory practices while assigning the FCC gatekeeper responsibilities in ensuring performance properly ensued. As an aside, these regulations do not apply to cellular network access, an often-overlooked subject in the public debate.
The goal of net neutrality is to is to prevent so-called “fast lane” scenarios wherein ISPs could speed up, degrade, or potentially outright prevent services based on agreements with preferred content providers. Similarly, net neutrality aimed to prevent broadband providers from up-charging customers for access to specific content types or providers.
The new regulation also gave the FCC the power to control pricing, which meant whenever an ISP wanted to change prices or offer new plans, it needed government approval.
Nonetheless, corporations are free to build ecosystems that support and promote preferred products that operate within established anti-monopolistic rulings. Such ecosystems were enacted before the OIO and continued to flourish after OIO.
In reality, net neutrality legislation negatively impacted the investments ISPs made in their infrastructure, which over the long term could result in causing the problems the ruling was intended to prevent. Most of the rhetoric around the need for specific governmental intervention is just that: rhetoric.
The next few sections will summarize the arguments circling the net neutrality debate.
The Net Neutrality Paradox
Lacking net neutrality, concerns arise as to whether:
- some content will be prioritized over other content,
- ISPs will charge content providers for preferred passage,
- ISPs will charge users for faster access.
- And investment will be dissuaded if large content providers retain the option of using capital power to muscle out innovation.
In point of fact, content providers have always used levers including service tiering, ecosystems, and technology reach to improve market position.
None of the aforementioned items are anti-competitive, rather, they are strategic and legal. Like it or not, the “best” product or service frequently loses out to products or services that are more entrenched with or without government interference.
While the Open Internet Order’s destruction forgoes specific requirements language and oversight, the ruling put forth by the current administration does require broadband providers to transparently report discriminatory activities, and monopolistic and predatory practices remain under the purview and protection of the FTC.
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About the author
Mr. Braunstein serves as Chairman/CEO and Executive Director of Research at the Robert Frances Group (RFG). In addition to his corporate role, he helps his clients wrestle with a range of business, management, regulatory, and technology issues.
He has deep and broad experience in business strategy management, business process management, enterprise systems architecture, financing, mission-critical systems, project and portfolio management, procurement, risk management, sustainability, and vendor management. Cal also chaired a Business Operational Risk Council whose membership consisted of a number of top global financial institutions.