Business Development Brief: Net Neutrality

Summary

Net neutrality is a term many are not familiar with and those that claim they are can struggle to explain it if asked. The most common question then becomes "How relevant it is to you and what you do online?"

Those that propose the notion would argue that the debate about how networks operate is fundamentally one about the future of the internet for everyone around the world.

To put the issue into easier terms, lets consider trains and the difference between standard and first class. First-class carriages on a crowded commuter train represent special treatment for those that can pay - standard ticket passengers are crammed against each other's armpits because of their unwillingness or inability to pay. Herein we have a good example of net neutrality.

On the net neutrality train, all passengers (ie data) would be treated equally, with no special carriages for those able to pay.

The principle that all traffic on the internet should be treated the same relates to the emergence of the internet and for many encapsulates the whole principle of an open for all internet, free from government governance or corporate control.

So what are the two sides of this argument?

Those in favor: Net neutralists argue that any public internet service provided by Internet Service Providers ("ISPs"), providing the pipes for content, should only run the networks and have no say over how and what content flows to users, as long as it is legal.

Those against: But ISPs argue that if the internet could run on multi-layered basis with some channels slower but free and others are faster and paid for - the revenue it would generate would benefit everyone and raise minimum standards. Providers prepared to pay can go in an internet "fast lane" - is inevitable in today's data-hungry net world is the common argument.

USA versus Europe versus South America

The current debate was really kick-started by a ruling in a case in the US in January 2014, ISP Verizon successfully challenged the US Federal Communications Commission ("FCC") over its net neutrality policy - known formally as the Open Internet rules.

The Court of Appeals negated two of the three open internet rules, opening the way for ISPs to start charging fees to carry bandwidth-hungry data on its networks. In March of 2014, Netflix agreed to pay a fee to Comcast to improve the speed at which its service reached consumers' homes.

The part of the rule change that has sent the industry into uproar is a proposal for so-called fast lanes, allowing ISPs to charge content providers as long as the terms were "commercially reasonable".

Fundamentally, Europe doesn't agree with the US.

In April 2014, the European Parliament ("EU") voted to restrict ISPs from charging services for faster network access. It also judged that mobile and broadband network providers should not be able to block services that competed with their own.

Slovenia and the Netherlands have already incorporated the principle in their national law.

Brazil ,by way of comparison, has a new law that telecom companies cannot change prices based on the amount of content accessed by users. It also states that ISPs cannot interfere with how consumers use the internet. Meanwhile, neighboring Chile was the first country to pass net neutrality legislation, back in 2010.

Why should you care?

Depending on the outcome of all this wrangling, it could either hit your wallet or change your watching habits.

If net neutrality is upheld, ISPs could pass on the cost of delivering bandwidth-hungry; upping the cost of services to pay for delivering faster bandwidth - and raise the monthly fee they charge for internet access. Users may get a charge that reflects their usage, with those using video-on-demand services being charged more.

On the other hand, if ISPs are able to start charging fees for prioritised access to content then users may find that those websites not in the fast lane are slower to load. There are fears that ISPs might block access to rival services or slow them down so much as to be unusable.

Consumers could also be charged more by the content providers forced to pay more to get their services to them in quality.

Anyone thinking this is a US-only issue should note that, following its agreement to pay a fee to Comcast and Verizon, Netflix put up the price for its monthly streaming service in Europe as well as America.