September 19, 2017
Legal  |  9 min read

Net Neutrality - What You Need to Know

Created with Sketch.
Kathryn Hawkins

Why did late night talk show host John Oliver encourage his viewers to tell a government commission to “Go FCC Yourself,” triggering over 4 million public comments to the Federal Communications Commission (FCC)?

It boils down to a seemingly dry regulatory topic that could have drastic implications for the world of media, news and even small businesses like yours: Net neutrality.

Net neutrality refers to the practice of ensuring internet service providers like AT&T, Comcast, and Verizon offer equal access to all websites. Without it, ISPs could charge customers for lightning-fast connections and force slower speeds on users who don’t pay the higher fee.

Though it may seem trivial, when it comes to the internet, speed is paramount. Google confirmed in 2010 that site speed is a ranking factor on search engine results, and a recent report from DoubleClick (a Google subsidiary) stated 53 percent of mobile visitors abandon a web page if it takes longer than three seconds to load.

Likewise, a 2008 study by the Aberdeen Group found a one-second delay in page load time equals a 16 percent decrease in customer satisfaction and 7 percent loss in conversions. Though that study is nearly a decade old, it’s not unreasonable to assume user expectations are only becoming more demanding as reliance on the web and online shopping increases.

Put simply, slower speeds could create a crushing disadvantage for small business owners.

Net neutrality: Understanding both sides

The concept of net neutrality has been the subject of heated debate—even before Columbia University media law professor Tim Wu coined the term in 2003.

Advocates for net neutrality believe it paves the way for a free and open internet and that both consumers and businesses—regardless of their size—should operate from an even playing field. They also say net neutrality has enabled bootstrapped startups and internet entrepreneurs to thrive. Facebook, for example, was famously (or infamously, for some) started in a dorm room.

Without net neutrality, users could be subjected to a tiered internet, where enterprise companies pay for their content to be accessible at higher speeds while those who can’t afford the premium have their content delivered slower. Even if ISPs don’t actively reduce (or “throttle”) the second group’s speeds, proponents say the principle of psychological adaptation will come into play.

In other words, when people become accustomed to something they perceive as better, they will not willingly subject themselves to something inferior. In this context, a user who gets used to the "fast lane" would find the "slow lane" intolerable by comparison. In time, businesses that cannot afford higher rates would suffer.

Perhaps surprisingly, the country’s largest content providers and technology giants, including Netflix and Amazon, also support net neutrality. Though Netflix executives insist net neutrality regulations wouldn’t impact their profits and their chief concern is for “innovation and smaller firms,” increased ISP fees could potentially cost the streaming company hundreds of millions of dollars.

Net neutrality advocates also point out that ISPs could theoretically block content, including that of their competitors and opposing viewpoints. Without regulation in place, this could lead to censorship that threatens freedom of speech.

Alternatively, opponents say this is a free-market issue and that deregulation encourages competition and innovation, both of which could benefit small businesses in the future. Low-cost airline carriers were able to challenge legacy carriers as a result of government deregulation in 1978. Likewise, deregulation in the telecom industry gave way to less expensive providers like MCI and Sprint.

Some opponents argue that ISPs currently have a functional monopoly in many regions of the United States and therefore, little incentive to improve their services. An unregulated web would generate additional revenue for ISPs—which they insist they would invest in developing faster speeds and better services. These changes could go a long way in improving the industry’s notoriously low rates of customer satisfaction.

The opposition also has some heavy hitters amongst their ranks, in addition to the ISPs that stand to directly benefit from deregulation. A few years ago, internet billionaire and Shark Tank investor Mark Cuban used colorful language to describe what he called the “demonization of big companies.”

Finally, and to some most importantly, critics warn that net neutrality represents a slippery slope that could lead to more and intrusive regulation of the open web.

ISP Regulation: Past and present

In 2015, with support from President Obama and no clear legal restrictions for or against neutrality in place, the Federal Communications Commission voted to classify the internet as a Title II “telecommunications service,” as opposed to a Title I “information service.” At the same time, the FCC classified providers as "common carriers," a designation typically reserved for utility companies.

Before you nod off, understand these are important distinctions. The FCC can place greater regulations on Title II telecommunications services, and it ensures ISPs can be held to all or some of the same regulations as other public utilities. Essentially, the FCC’s vote made it illegal for providers to discriminate based on the customer and/or the nature of the content being consumed. This is where the law stands today.

Like most industry regulation, the politics of net neutrality are often split along party lines. President Trump, Vice President Pence, and several other high-ranking members of the Republican party have all publicly voiced their opposition. Shortly after his inauguration, President Trump appointed Ajit Pai, a former lawyer for Verizon, as the new chairman of the FCC.

In response to the 2015 FCC ruling, Pai said it “saddles small, independent businesses and entrepreneurs with heavy-handed regulations that will push them out of the market.”

The FCC voted in favor of a proposal from Pai to review existing rules around net neutrality in May 2017. This is the first step necessary for reclassifying the internet to a Title I “information service” and, ultimately, eliminating the net neutrality regulations that are currently in place.

This ruling also triggered a 90-day review period that includes a window for public commenting, which the FCC opened from July 17 to August 17—the impetus for John Oliver’s viral segment. On August 11, the FCC extended the deadline to August 30.

More than 22 million comments have been filed, which is a record for the FCC. According to Wired, the majority of comments are in favor of net neutrality but many were filed using obviously fake names, which might make decision-makers question their legitimacy.

Next steps for net neutrality

Though the official window has closed, you can still comment on the proposal as of mid-September on the FCC’s website. (Most people should choose the “Express” option on the left side, according to a “How To” article from TechCrunch.) Be sure to include an explanation of your reasoning as Pai has said that the number of comments "is not as important as the substantive comments that are in the record.”

If you’d like to do more or the comments are disabled, you can reach out to your elected officials as this may one day become a legislative issue. You can also consider supporting advocacy groups that align with your position.

The FCC has not yet announced a date for its final decision, but it’s believed Pai and his committee members will vote in late 2017 or early next year.

2017 Strategic Planning Kit - Download Now

Was this post helpful?

Subscribe to our newsletter

Fresh small business insights and ideas delivered weekly to your inbox, gratis.

You may also like

{{ record.displayCategory | smartCapitalize }} | min read

Before you go...

Get fresh small business insights and ideas delivered weekly to your inbox.

Subscribe to our weekly newsletter!

What you'll get from it:

As a thank you for subscribing, we'll send you a copy of our 2018 Small Business Marketing Trends Report with insights from over 1,000 surveyed business owners. The gifts just keep on coming.

4 Reasons to Subscribe:
  • Weekly tips to dominate sales and marketing

  • Expert small business resources that cost you zero dollars

  • We're focused 100 percent on small business success

  • Righteous GIFs

    GIF of Ferris Bueler principal's assistant

P.S. We'll never give out your information. We'll only use it to send you awesome content and resources, if you're cool with that.