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An End to Net Neutrality: How It May Affect You

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Ajit Pai, the Republican chair of the Federal Communications Commission, recently announced that the FCC would reverse requirements instituted in 2015 by the Obama administration. But what does that mean for individuals and small business owners? The possible demise of net neutrality may affect your company in ways you may not yet realize.

Net Neutrality Defined

Prior to the implementation of net neutrality rules in 2015, prices and access related to internet service were almost entirely dictated by the policies of internet service providers (ISPs).However, under net neutrality rules, the internet is considered to be a utility, like electricity, subject at least In part to government regulations. What net neutrality means to consumers is that each legitimate site, regardless of its content or its source, is transmitted in the same manner, at the same speed, and without reserving so-called tiered pricing or “fast lanes” to customers willing to pay higher prices.

Cord-Cutting and Long-Distance Dialing

Voice-over internet protocol (VoIP) services have played a disruptive role in the telecommunications sphere. Back in the day, telephone companies often imposed extra fees for calls to neighboring towns, along with steep charges for long-distance calls. Services like Skype, Vonage and Google Voice allow users to make free or low-cost telephone calls across the country and around the world. As a result, conventional telecommunications providers have been forced to reduce or eliminate add-on fees and long distance charges in order to retain their customers.

Likewise, before the explosion of sites such as Netflix, Hulu, Roku or Sling TV, the only way to watch shows not transmitted over broadcast TV stations (CBS, ABC, NBC, Fox or PBS) was by purchasing a cable subscription. However, monthly charges for cable subscriptions can range well into three figures, especially when premium channels such as HBO or Cinemax are included.

Just as with telephone service, savvy consumers determined that they could watch most, if not all of their favorite shows by combining digital high definition television (HDTV) reception with streaming services and a-la-carte offerings such as HBO Go, while enjoying significant savings over cable costs. The phenomenon of cable-cutting became prevalent, especially among younger consumers, cutting deeply into cable company profit margins.

Tiered Pricing, “Fast Lanes” and Throttling 

Streaming and VoIP services are heavily dependent on access to high-speed internet to satisfy bandwidth-heavy demands. Net neutrality advocates claim that without net neutrality ISPs could throttle competing services, relegating them to slow transmission.

Online content providers, search engines and social networks have also come out strongly against the proposed dismantling of net neutrality. Their claims mirror those of streaming services and VoIP services in that ISPs would be able to throttle online content providers, search engines and social networks for monetary or political reasons.

Net neutrality advocates also claim that ISPs could also engage in tiered pricing. Under tiered pricing, customers who were willing to pay for “premium” level services would receive priority for faster transmission or larger bandwidth allotments via “fast lanes”, while customers who could not (or refuse to) to subscribe to “premium” services would receive stripped down, bare bones service, with slower transmission speeds and limited bandwidth allowances.

Content Blocking

Advocates of net neutrality also warn that ISPs could block certain websites and streaming services altogether – not just illicit sites such as pirated content or child pornography, but also legitimate sites and services. For instance, an ISP that had an exclusive streaming relationship with HBO Go could block its customers from receiving a la carte Cinemax via streaming service, or charge much higher prices to include Cinemax in its internet service package.

Such fears are not merely hypothetical. In 2005, Madison River Communications, based in North Carolina, blocked its customers’ access to Vonage, a voice-over internet protocol (VoIP) telephone service. Also in 2005, Comcast blocked access to BitTorrent, a peer-to-peer transmission service. AT&T forced Apple to block Skype and Google Voice VoIP access on its customers’ iPhones from 2007 to 2009. AT&T, Sprint and Verizon blocked access to Google Wallet from 2011 to 2013, to reduce competition to Isis, a competing service developed by the three telecommunications giants.

“Collateral Damage”

Even if your company does not use streaming video or VoIP services or subscribe to potentially controversial websites, a reversal in net neutrality could still have adverse effects. For example, in 2005, Telus, a Canadian ISP, blocked access to a server that hosted a website that supported a labor strike against the company. In this particular instance, more than 700 unrelated websites that used the same server were also blocked.

In light of the FCC announcement, several ISPs have re-iterated pledges not to engage in throttling or content blocking. However, those pledges seem less firm in regard to tiered pricing and “fast lanes”, which could ultimately translate to higher ISP bills for consumers.

Audrey Henderson

Posted In: Money

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