Death of Net Neutrality & Internet


Italy was a wonderful and much needed, although short, vacation.  I’m back in the office and finally caught up, just in time for the corporate world to shut down for the holidays.

To the Newsletter:

Topic of the Week: Death of Net Neutrality & The Internet

Next week, the FCC will vote on repealing the current Net Neutrality regulations.  Unless the FCC has a dramatic change of heart, these regulations are about to have the same fate as my bank account after finishing up holiday shopping. Gone.

Let’s discuss.

What is Net Neutrality?

Per Wikipedia: Net Neutrality is the principal that Internet service providers (“ISPs”) and governments regulating the Internet must treat all data on the Internet the same, and not discriminate or charge differently by user, content, website, platform, application, type of attached equipment, or method of communication. For instance, under these principles, internet service providers are unable to intentionally block, slow down or charge money for specific websites and online content.

In short, these regulations were put in place to give every website an equal opportunity online and to prevent ISPs from having control over what content consumers access.  They prevent Comcast from being able to charge you $10 a month for basic internet and an additional $15 a month for social media apps.

Brief Overview of the Net Neutrality Debate

Net Neutrality regulations were enacted in 2015 by the Obama administration.  However, the debate around Net Neutrality goes back much further.  I can’t believe I’m citing Wikipedia twice in one post, but here is a detailed history of Net Neutrality in the United States if you’re looking for a refresher – link here.

There are two sides to this debate:

On one side, you have the ISPs (AT&T, Comcast, Verizon) who claim current Net Neutrality regulations limit their ability to innovate and invest in new infrastructure.  They also argue repealing the current law will benefit consumers by allowing free market principals to come back into play.  Consumers can choose the best plan for them, and the ISPs can come up with new innovative ways to deliver better quality service.

Sure, because these companies are known for being consumer friendly.  I thoroughly enjoy my 45-minute customer service calls with Comcast.  “Yes Derek, I already restarted the router.”

On the other side, you have the entire technology world (led by Google, Facebook, Netflix, etc.) arguing that an open Internet is a critical public infrastructure.

Net Neutrality prevents ISPs from having control over what information consumers see and from unfairly increasing prices to consumers and internet companies.  They argue that it will be more costly and difficult for new companies to start and compete without net neutrality laws in place.

Besides, it is Google’s algorithms job to tell us what content we can and can’t see.  Back off AT&T.

What’s in the Best Interest of Consumers?

Who’s right? What is in the best interest of the consumer?

In my opinion, both sides are right, but they are focused on different timelines.

Repealing these regulations will shift the power balance in favor of large ISPs in the short term.  There is no getting around that.  ISPs own the pipes to access the Internet.  Consumers will pay more for the same thing, and smaller businesses will be disadvantaged to large companies who can afford fast lanes.  This will be a headache.

However, two new dynamics will come into play that I believe will have positive long-term implications, making the repeal of these laws beneficial to consumers.

First, consumers will have to decide not only what websites/apps are worth their time, but what websites/apps are worth their money.  For the first time, we will have to shop the internet.  Is a package with Facebook in it worth the extra $10 a month?

The internet companies of the world will have to take a hard look in the mirror at whether they are providing a meaningful service to their customers. So while this will result in short-term headaches and difficulties, it could be highly beneficial in the long-run, creating a more competitive and consumer-centric internet.

Second, innovation isn’t born from a period of government regulated contentment. It’s born from frustration from large, slow and inefficient options.  It comes from innovative minds seeking a way to make bad systems better.

It won’t be long before the next generation of telecommunication entrepreneurs create new solutions that consumers flock to.  Some of these solutions could make the current internet infrastructure we know today obsolete.

I’m not alone in this line of thinking.  For example, Fred Wilson advocates for continuation of Net Neutrality laws; however, in his next breath mentions new technologies which could eventually alleviate the need for these laws to begin with.   His opinion is that Net Neutrality laws are required until technology reaches the point where we don’t need them.  Link here.

This last opinion I disagree with and go back to my earlier statement.  Innovation is born from urgency and frustration, not regulated contentment.  Inconveniencing people will make this transition happen faster.

Will this be the death of the internet as we know it today? Maybe.  But perhaps that isn’t a bad thing.

What do you think?  

About the author

Danielle O'Rourke

Recovering Investor. Mom. Wife.

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Danielle O'Rourke

Recovering Investor. Mom. Wife.

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