Here’s a rundown of the new rules and what they could mean for entrepreneurs.
Almost 60 years after the day the music died, we can mark the day net neutrality kicked the bucket.
The Federal Communication Commission (FCC) voted to repeal net neutrality rules, which mandated that internet service providers (ISPs) offer equal access to all content on the internet, in December. The repeal went into effect today, but a heated debate between the rules’ proponents and opponents has been raging for much longer. Here’s what you need to know.
What was repealed?
The Obama administration enacted net neutrality rules in 2015 to regulate ISPs. Here’s what was repealed:
- Under net neutrality, ISPs could not make the decision to block any lawful websites or apps from their customers.
- Rules prohibited ISPs from throttling (or slowing data transmission) for any legal content.
- Providers could not charge a premium for companies and consumers to take advantage of an internet “fast lane” versus a slower model for others.
Why all the controversy?Since the December vote, a public outcry preceded a round of lawsuits from a host of different groups and pressure from dissenting lawmakers to overturn the repeal. They argued that repealing net neutrality could make censorship by ISPs possible — and that the potential fees providers could charge for better service could hurt small businesses. Service providers could now have the freedom to strike private deals with content providers — potentially loading certain content faster or even blocking competitors. In fact, these deals between ISPs and other providers were a chief reason net neutrality rules were enacted in the first place.
“The only entities that will benefit from this are the internet service providers,” says Florian Schaub, assistant professor at the University of Michigan School of Information. He mentions the many areas in the United States where consumers have no choice, with access to just one ISP. If there’s even two or three choices in your area, you’re “one of the lucky ones,” he says.
Proponents, on the other hand, say the repeal will protect consumers by encouraging competition, which could give way to better, faster internet access. FCC chairman Ajit Pai, a former attorney for Verizon, says net neutrality is an antiquated set of rules that discourages innovation. In an op-ed for CNET, Pai wrote that the repeal’s consumer protections include the Federal Trade Commission’s reinstated ability to “police” ISPs for anticompetitive or deceptive practices. The FCC’s order also calls for ISPs to publicly share — on their own website or that of the FCC — how they manage their networks. “This information will allow consumers to make an informed decision about which internet service provider is best for them and give entrepreneurs the information they need as they develop new products and services,” Pai wrote.
How — and when — could it affect consumers?
Consumers likely won’t see any immediate changes, but in coming months, experts say the repeal’s effects could be creeping. In his op-ed, Pai argues that consumers in more rural areas could have better internet access since smaller ISPs will no longer need to invest money in “regulatory compliance.” But there’s also significant evidence that individuals could see more data caps on mobile plans and more bundle options, much akin to the way cable programming operates now.
Here’s a theoretical example: Let’s say one ISP offers access to Facebook and Google for free, but if you’d like to access Hulu and HBO Go, you’d need the “streaming bundle” — or if you want access to the entire open internet, that could mean a pricier package. Other things that could be introduced? Paying extra for a “social media package” or “music package.” Another ISP could have a deal with, say, Netflix, and ensure that company’s content loads faster than that of its competitors — or block competitors’ content completely.
Consumers will also likely see more agreements between ISPs and content providers. An ISP may charge its customers for certain levels or speeds of internet access (via subscription or monthly fee), but it may also charge content providers for access to its customers (for example, paying premiums for faster loading time).
What are the implications for entrepreneurs?
Post-repeal, it’s a possibility that larger companies with more capital could better afford premiums for “paid prioritization” (potentially prioritized, faster-loading websites). In the instance that ISPs do charge more for internet “fast lanes,” entrepreneurs, freelancers and gig workers could also pay more to work from home.
The idea that ISPs could strike partnerships with individual providers to prioritize their content could mean more challenges for small businesses, new companies and startups. In the face of such uncertainty, the best way for entrepreneurs and small-business owners to prepare is to save more. The repeal could mean additional costs to account for when launching or running a business.
“Ultimately, startups and companies need to be prepared to pay additional service charges to ISPs,” Schaub says. The repeal “increases the threshold or initial investment you might need to pull something off.”