What the death of Net Neutrality means for business down under

Published on the 20/12/2017 | Written by Newsdesk

net neutrality rules_FCC

With the FCC acting on its threat to repeal the regulations commonly known as ‘Net Neutrality’, we take a look at what the move means locally...

First, a refresher: Back in 2015 the US passed laws requiring equal treatment for all internet traffic – effectively preventing ISPs from slowing or otherwise blocking websites. These laws are commonly known as ‘net neutrality’.

The FCC has just repealed those with the counterintuitively titled Restoring Internet Freedom Order. Now carriers – think Comcast, AT&T and Verizon – can offer ‘fast and slow lane’ options on the internet, charging more for higher bandwidths if they so choose.

It’s a pretty terrible move and wildly unpopular to boot. US businesses big and small – including Google, Amazon, Twitter, Facebook, Dropbox, Ebay and thousands of others – have been fighting for the 2015 regulations to stay in place.

It’s all been for nought however, with the FCC just voted to gut net neutrality rules last week.

For Australasia there’s plenty to hate, if only in the dangerous precedent being set by the US, and few are happy except, perhaps, Sky TV.

“The FCC should have left the open Internet orders in place,” said InternetNZ Chief Executive Jordan Carter. “Their decision instead damages the Internet for everyone.”

“The repeal of these American open Internet requirements means that over time, innovation is at risk in the United States. Dominant ISPs or content providers could do deals that make it harder for new services to emerge.”

“If the next Netflix or Google faces discrimination from big ISPs in trying to offer their services, then new innovation is just less likely – and so over time we are all worse off.”

He’s got a point. Comcast, for example, also owns NBC. The repeal of net neutrality laws all but encourages ISPs like Comcast to start favouring certain kinds of content – ie its own – over others.

There’s more bad news too. Australian and New Zealand businesses that rely on hosting from US providers could well suffer from the effects of a stateside shrinking service provider market. You can imagine the problems a streaming service faces if suddenly forced to pay higher premiums for non-throttled internet access – with that expense no doubt passed on to the customer.

“Since so many of the services we use online have been developed in America, what is bad for the Internet there is bad for us all,” said Carter.

The repeal of net neutrality laws also encourages ‘bundling’ behaviours – the kind loathed by mobile users and part of the reason pay TV models like Sky are losing ground to on-demand services so quickly. For consumers, resisting bundling packages may involve having to accept slower speeds or new charges.

Could it happen in Australia?

It’s not out of the realms of possibility. In 2015 Optus proposed a ‘priority’ service for bandwidth-intensive users like Netflix and more recently, Vodafone floated the idea of Google and Facebook of cost-sharing with telcos. But while Australia doesn’t have net neutrality laws specifically, it does have robust consumer protection laws regulating the behaviour of ISPs and for now, that is probably enough to prevent any copycat move being made here.

Similarly, despite the protestations of Sky TV over free (and illegal) video streaming sites, it seems unlikely that New Zealand will face any immediate changes to internet freedom.

“New Zealand doesn’t have the market problems that make network neutrality such a pressing issue in the U.S,” said Carter.

“In particular the fact Chorus, provider of most broadband Internet infrastructure, does not offer retail ISP service and has no deals with content providers gives a layer of security to Kiwi Internet users.”

“Until recently there haven’t been close links between big ISPs and big media or content companies. It is fortuitous that our local market is set up in this way, and has largely avoided the worst risks to a neutral Internet, but we should not take it for granted that this will always be the case without work to keep it that way.”

So for now, just keep calm and carry on?

Glenn O’Donnell, Vice President, Research Director at Forrester Research says that businesses would do well to take just such a pragmatic approach, arguing that “if you become spellbound by the media circus, your competitors will be busy doing something about it – and beating you.”

“The world as you knew it yesterday did not suddenly descend into chaos. This transition will take time to play out.”

“Don’t get despondent and don’t get too overjoyed,” advises O’Donnell. “Just roll up your sleeves and develop a plan to work around the new rules.”

Read the FCC ruling here.

Download Forrester’s research, Innovate around the death of net neutrality, here.


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