Thursday, January 16, 2014

All Internet Traffic Will Not Be Treated Equal

Whether you are an entrepreneur who wants to build on an open network that requires no money to a middle man or just a consumer who has grown reliant on the most innovative communications network ever invented (like me!), you now need to consider the network operators (Verizon, Comcast and AT&T) to be your enemy.  Although, Comcast won’t be able to immediately take advantage of the new ruling. To get government approval for its acquisition of NBCUniversal, Comcast agreed to abide by the Open Internet rules until 2018 regardless of the outcome of this case.

As of today, the Internet which was designed as an open, level-playing field now has the potential of being dominated by a few wealthy and large entities thanks to the US Appeals court throwing out the federal rules requiring that broadband providers treat all internet traffic equally.

A little background on this:
In 2010 the Federal Communications Commission approved the "high-level rules of the road" designed to ensure that internet providers grant everyone equal access to the Web.

This required high-speed internet service providers to treat all types of Web content equally and made sure the availability of Internet information wasn’t determined by the size of someone’s checkbook

The rules were designed to keep the companies that own the internet's real-world infrastructure from playing favorites (slowing down some websites or speeding up others for high paying clients).
This level playing ground concept was termed "net neutrality". 

For average internet users, this guaranteed we'd continue to have access to all web content, regardless of our internet provider's wishes, and whether we get that content as quickly as businesses or individuals able to pay more for it.

Today, a U.S. federal appeals court struck down the Federal Communications Commission's Open Internet Act and pretty much handed control of free speech on the Internet to a handful of companies. Essentially throwing out the federal rules requiring broadband providers to treat all Internet traffic equally.  The ruling raises the prospect that bandwidth-hungry websites like Netflix and Youtube may have to pay tolls to ensure quality service which would throw a wrench in their current business models and potentially raise prices for consumers.

In Netflix's case their business model assumes it will need to make large investments to acquire the rights to TV shows and movies that it offers and also factors in some costs related to moving data efficiently on the Internet's backbone. But a new fee charged by Internet providers, if it were sizable, could dent the company's profit and possibly force it to raise prices for consumers.

For consumers, the ruling could bring on an era of tiered Internet service, in which they get some content at full speed while other websites appear slower because their owners chose not to pay up.

For small businesses and entrepreneurs, the competitive landscape just got a lot more power to the bigger companies able to pay the most.

The argument for this appeal by service providers and their supporters essentially say this is a free-enterprise issue. They say they provide a service and, therefore, should be able to decide how to deliver it and how they charge customers for it.  Providers can now start charging a premium to websites for services and it's only natural that those sites will turn around and pass the cost on to their customers.

Verizon has insisted it isn’t interested in blocking content. Rather, it is hoping to unlock a new marketplace by offering premium services to companies willing to pay more to deliver content faster or more seamlessly to end users. (read this paragraph again!).

There's a lot of noise surrounding this one with some people talking about re-regulating ISPs, others talking about building municipal fiber network, references to Google Fiber and FCC policing broadband use.  I'm honestly not sure what the answer is and trust me, I'll definitely be paying attention to this the meantime, I'm switching to T-Mobile.

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