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Net Neutrality's End and What it Means to You

Posted by Andrew Newell on Jan 30, 2018 7:29:18 PM
Andrew Newell

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The End of “Net Neutrality”:  What to Expect as a Consumer and Business OwnerNet Neutrality

Nearly every teenager spends a fair amount of time glued to YouTube, and my two sons are no different.  As the debate over net neutrality unfolded, my sons relayed to me that nearly every YouTube personality they watch made the repeal of the Obama-era “net neutrality” regulations sound like the end of the world.  If it’s a big topic online, my sons are usually interested.  Suddenly, Dad the Boring Telecom Lawyer had something interesting to say, some relevant knowledge, regarding their world.

Thank you, YouTube.  Thank you, FCC.

The dinner table discussions with my sons on net neutrality are a blast, and they got me thinking about the impacts on all businesses, not just people ranting self-importantly on YouTube, who are clearly frightened.  What follows is a quick guide for the business owner, business leader, consumer, or any combination of the three.

Who Pays for the Internet, and Why

Pre-dating regulation, the internet in the United States was still characterized by what has come be known as “net neutrality” principles.  Net neutrality strongly discouraged internet service providers (ISPs) from discriminating among the various individuals, businesses, and other organizations creating traffic on the internet, first through the unwritten rules of the internet, and later, though regulatory decisions so longwinded the ghost of Leo Tolstoy has asked to edit them for brevity.  As a practical matter, FCC actions just maintained the status quo.  While ISPs had expressed their hopes, dreams and even their claimed right to prioritize (or even block) internet traffic, they have generally not chosen to act.

Under the net neutrality regime, ISPs couldn’t limit or deny access to content creators like YouTube and Netflix, so they had no justification for demanding payment from them.  Consumers of that content were a different story; there was no FCC regulation prohibiting ISPs from charging consumers for access to their networks, so, naturally, they did.  Your monthly bill from the Cable Man[1], or Zombie Ma Bell[2], are evidence of that.

For every business owner, the FCC’s exit from the scene creates new questions, including:  with the end of net neutrality regulations, will businesses get two bills?  One as a consumer of internet access, and a new one as a creator of online content, because they publish a website, post a video blog, or sell online?  And what can you do about it?

Consumers and Small Businesses

Fear not.  Net Neutrality was not protecting you from the Cable Man or Zombie Ma Bell.  On the contrary, it guaranteed you would continue to pay the costs associated with the internet through monthly service fees, without any meaningful market competition among them.  I wouldn’t get too caught up in the hype that you will see new bills from your favorite creators either.  The cost of doing business for streaming services like YouTube, Netflix, Pandora and the like may rise at some point, but the markets for those services are hyper-competitive, which limits their ability to raise prices.

E-Commerce Businesses

In other countries that have not followed the net neutrality model, ISPs have engaged in some behaviors that are worthy of concern.  In the future, e-commerce businesses may find their larger competitors have partnered with the Cable Man or Zombie Ma Bell to get prioritized access or visibility on ISP networks.  Companies like Amazon are especially worth watching carefully.  Two other things to help you feel better:  (1) Depending on the specific forms these partnerships take, smaller E-commerce businesses may have legal remedies for this behavior; and (2) It’s hard to imagine a situation that is much worse than the current one, in which Google has nearly absolute control over the visibility of e-commerce businesses, and most are paying outrageous prices for search engine optimization, adwords, and boosted Facebook posts just for the slim chance to survive.

Internet Streaming Businesses and Other High-Volume Internet Content Creators

If the end of net neutrality regulation leads to a fundamental shakeup of the internet economy (and I expect it will, eventually), these businesses will undoubtedly face a variety of new and critical challenges.  ISPs will demand payment for high volumes of traffic, but it may not stop there.  Smaller businesses in this space may face unfair competition from larger competitors that negotiate more favorable terms with ISPs, or worse yet, they may be competing with the ISP itself.  In response, we are likely to see a revival of antitrust law in the post-net neutrality world.  Anti-trust law may very well be a better model for obtaining justice than state and federal regulation have proven to be.

This is a 900-word summary of an incredibly complicated field of regulation.  Rely on it to begin considering what might be coming for your business, or to start a conversation with your teens, who probably know all about net neutrality.  If these issues pose near-term challenges for your business, contact me to talk about them in much greater detail.

[1] The Cable Man is shorthand for the comically short list of cable operators left in the United States after three decades of consolidation.  Comcast is the only one that really matters, so basically the Cable Man is Comcast.  Welcome to the modern world of technology competition!

[2] Zombie Ma Bell is shorthand for the two telephone companies left in the United States that matter, AT&T and Verizon.  Instead of brains, they have eaten their competitors.  While a few non-Zombies remain, don’t mistake them for a heroic hope for the future, like Will Smith in I am Legend or Brad Pitt in World War Z.  They are simply companies whose assets are so unappetizing that even zombies aren’t interested in eating them.

Topics: communications law

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