Mar 11, 2015
[UPDATE: The FCC passed strong net neutrality regulations on February 26, 2015.]
Today, Internet Service Providers (ISPs) are critical players for how consumers receive information on the Internet. Billions of bytes of data are passed through ISP servers per second, allowing content of all types to reach our computer screens. With this transportation of big data being pushed through broadband, ISPs are looking to increase their profits. Their major proposal is transforming themselves from delivery drivers to gatekeepers: charging both content providers and consumers access to specific content at specific speeds, thus eliminating net neutrality.
The long-term effects of allowing ISPs to regulate and monetize speeds of Internet content still remain unknown, and uncertainty in legality, innovation, and investment has continued to slow the FCC in making a decision and polarized the Internet market.
The Polarity in Net Neutrality
From telecom boardrooms to the White House, net neutrality is a controversial and highly debated topic. The long-term effects of allowing ISPs to regulate and monetize speeds of Internet content still remain unknown, and uncertainty in legality, innovation, and investment has continued to slow the FCC in making a decision and polarized the Internet market.
Do ISPs have the right to regulate Internet speeds based on content? For many service providers, the ability to regulate the content that passes through their servers is viewed as their right and the basis of a free market place. As with other businesses, paying for premium services is routine, and premium ISP services would allow consumers to get Internet content in a quicker and more efficient matter. However, supporters of net neutrality do not see ISPs as creators of faster Internet, but creators of a slower Internet for those who cannot pay premium prices. These supporters view ISPs as common carriers, and believe stifling the flow of the Internet with charges hinders freedom of speech and economic growth for all content providers and consumers.
How will stricter neutrality rules effect innovation? Supporters of a neutral Internet believe net neutrality ensures that big and small content providing companies can afford experimenting on new developments. On the other hand, those against net neutrality believe that strict neutrality rules stifle creative development in ISP business practices, as ideas for service and technology improvements would be subject to government scrutiny. ISP packages and offerings for their consumers and for content providers would be limited, and differentiation for ISP companies would be harder to achieve.
How will the net neutrality debate effect investment in the Internet market? Those against net neutrality argue that even the idea of a more neutral Internet is chasing away investors. For example, Jeff Pulver, co-founder of Vonage, said investors held back in his ventures due to the newly proposed neutrality laws. Pulver said investors feared the FCC would use their neutrality "as a club to force conformity and stop new upstarts. " However, supporters view that net neutrality will have the reverse effect due to the Internet already being neutral today. Because of this, effects of neutrality are more certain, and true uncertainty would arise from changing the currently neutral system to an ISP regulated system. Questions on whether or not ISPs could discriminate prices efficiently, where additional ISP revenue would be invested, and effect on broadband competition still remain unanswered, and the unknown would worry potential investors.
While wireless companies may feel net neutrality is a "broadband problem," neutrality rules can affect wireless indirectly now and directly in the future.
Net Neutrality's Potential Effect on Wireless
While wireless companies may feel net neutrality is a "broadband problem," neutrality rules can affect wireless indirectly now and directly in the future. Currently, there is no economic reason that broadband and wireless should be treated differently, and doing so could potentially disrupt ISPs infrastructure and investment opportunities. For example, if net neutrality rules were passed and only affected broadband structures, ISPs would focus their energy and investment on wireless services. However, content developers would focus on producing applications for broadband services so that they would not have to pay extra fees for premium speeds. This would therefore diminish the value for both platforms, and equal treatment of both infrastructures would ultimately be necessary.
How should the Internet market prepare for Net Neutrality?
A simple FCC decision may not be enough to end the controversy behind net neutrality; ISPs, wireless, and content providers should prepare for a long-drawn battle as neutrality will continue to be a topic for negotiation in future mergers and divestures. Despite the polarized attitudes of the Internet's future, all sectors of the Internet market should seek common ground to secure the value of the Internet in its entirety.
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Dinesh Dhanasekharan is the Chief Technology Officer (CTO) at Excelacom. As CTO, he helps drive the company’s technology strategy, leads the engineering team towards continued delivery of innovative products, and provides executive-level consulting services.More about Dinesh
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