The net neutrality repeal has many business owners worried about what it might mean for their company and customers. Should you be concerned?
Lately, the repeal of net neutrality by the Federal Communications Commission is what has been keeping some business owners up at night. It’s a difficult problem to plan for because nobody knows what to plan for. Nobody’s even certain if it will be a problem.
If you’re wondering what the fuss is all about, net neutrality refers to regulations that were put in place in 2015 by the FCC. The rules prevented broadband providers from blocking websites or charging higher prices to access certain content. For instance, for the last two years, there’s been no danger of an internet service provider [ISP] deciding to charge a consumer higher prices because he or she uses the internet more than, say, their neighbors. To do that would have been illegal. But from here on out, that could change.
Internet service providers have also been forbidden from charging a business for utilizing the internet more than another business. For instance, does your business have a lot of content that your customers access? Maybe your customer base is made up of food enthusiasts, and your website has a lot of downloadable videos of how to bake or cook certain recipes—far more bandwidth than, say, an accounting firm website that lacks a lot of flash, bells and whistles. The business owners who have websites without much flash may eventually be glad, whereas the business owners with the content-heavy websites may not be thrilled to have to potentially pay more to keep them running.
With the net neutrality rules no longer in existence, an ISP, in theory, could tell a content provider, such as an entertainment streaming service, that they’ll have to start paying a substantial fee to ensure that consumers are able to quickly stream movies and TV shows. That may not be a major financial setback for a larger company, but if you were told that your business had to pay substantially more for your website to work faster and more efficiently for your customers, would it hurt you?
Right now, the future of the internet is a jumble of conjecture and speculation. Nobody knows what will happen due to the repeal of net neutrality. Maybe the answer is: Nothing much. But what could occur? Some business owners and consultants have a few predictions.
1. Advertising may be affected.
Eric Dahan, co-founder and CEO of Open Influence, a marketing firm with offices around the world, doesn’t think it will shake out well. He offers this opinion: “The entire online advertising industry is based on monetizing people’s attention, and by eliminating net neutrality, the FCC would give the cable companies a monopoly over how you use the internet. This would allow them to manipulate what you can and can’t pay attention to—giving cable companies full control over the online advertising industry.”
The only real debate is whether the repeal of net neutrality will be only moderately negative or utterly disastrous.
—Steve Yi, CEO, MediaAlpha
Steve Yi, co-founder and CEO of MediaAlpha, a platform for selling vertical search media, also sees a possible gloomy future for marketers. After all, if a business has to spend more on its website to acquire and keep customers, it’s going to have less money for other expenses, like marketing. Yi says, “The only real debate is whether the repeal of net neutrality will be only moderately negative or utterly disastrous.”
2. The price businesses pay for the internet may be affected.
Again, this is a fear of what might happen. One could argue that the country existed without net neutrality for about 20 years, up until 2015. And many business owners don’t like regulations; perhaps getting rid of these will ultimately turn out to be a good thing in ways that can’t yet be predicted.
Greg Shepard, CTO of Pepperjam, an international marketing company headquartered in Wilkes Barre, Pennsylvania, is more optimistic than some of his other marketing counterparts. Shepard says that while net neutrality favors big internet businesses, he thinks that a lot of smaller companies will have luck “working with the giants, not against them.”
Shepard points out, “Preferential treatment is given to social channels when it comes to bandwidth under the new guidelines–think Facebook, YouTube, Instagram and Twitter. Optimizing these platforms gives you access to the same internet speed social channels receive and eliminates the consumers’ urge to bounce from their slow journey to your site.”
And Aaron Goldman, CMO of 4C, an international data science and media technology company headquartered in Chicago, has a wait-and-see approach to how he feels about net neutrality.
“The net neutrality vote will not have an immediate impact on most businesses,” Goldman says. However, he does add that there may be long-term implications for some companies if the repeal changes consumer behavior.
“For example, if increased prices for higher bandwidth delivery are passed along to consumers, people may seek alternative vehicles for communications and entertainment. Alternatively, if the major content producers don’t pay for higher bandwidth, the user experience will suffer and that will also force people to find other ways to get their fix,” he says.
But what won’t change is that, as always, businesses will be looking to see what customers are doing.
“The key, as ever, is to keep your fingers on the pulse of your customers—where are they spending their time and how can you reach them effectively? The change to net neutrality may very well change the answers to those questions,” he says.
But clearly, in 2015, when the FCC put the net neutrality regulations in place, possible threats against some businesses were perceived, and some owners fear that far too much power has now been handed to internet service providers, at a time when telecom companies are already extremely powerful.
So how might small businesses be harmed? Aalap Shah, co-founder of SoMe Connect, a digital media agency in Chicago, worries that smaller businesses will either have to pay more for their websites to load faster, which would cut into their profits and put them at a further disadvantage to bigger companies—or that the bigger companies would be enticed to pay more to have lightning speed load times on websites. Either way, Shah sees the smaller businesses losing out.
3. Your internet service provider could compete with your business.
If your ISP has the power to compete with you and the ability to prevent your customers from visiting your online business, that’s a problem.
That’s what troubles David Friend, the CEO of Wasabi, a cloud storage company, and founder of Carbonite, a cloud backup company.
“Net neutrality is about access and distribution,” he says. “For example, suppose the local electric company that provides the wire from the street into your house only let you buy power from their power generating facilities? If someone came along with a way to generate electricity for half the cost, the consumer would be unable to benefit. The consumer would have little recourse.”
Or what if the highways were owned by a car company, Friend says, and Brand X Car Company charged everyone a toll on the highway except for people driving Brand X cars?
Or think about the old phone service. “If you’re old enough, you might remember when the Bell System owned all the phone lines and was the only long-distance carrier you could choose,” Friend says.
“Net neutrality is the same,” he adds.
In other words, with net neutrality, anyone can drive on that highway and pay the same amount, and you can choose your own long-distance carrier. Without net neutrality, the ISPs will be deciding who the winners and losers are.
Offering up another example, Friend points out that in 2005, he founded a computer backup company called Carbonite that now has 1,200 employees.
Friend says that if the internet service providers had decided to compete with Carbonite and weren’t obligated to treat his customer traffic the same as theirs, “they could have just slowed down our traffic and put us out of business. Nobody would care so much about net neutrality if [ISPs] were prohibited from providing backup, or movies, or games, or anything else that runs over the internet.”
Which is the point, of course. ISPs aren’t prohibited from competing with other companies, and so what happens next is anyone’s guess. On the other hand, some have pointed out that businesses, such as internet service providers, generally try to not tick off their customers. So if changes in how businesses and consumers pay for the internet, one would think they’ll come gradually. There are also net neutrality lawsuits brewing, which may delay or reverse the repeal. In fact, in early January, the Internet Association, a trade group representing internet companies, including Google and Facebook, said that it plans on joining a lawsuit against the decision to repeal net neutrality. If the political winds turn down the road, one would imagine the FCC may restore the rules. There are obviously good reasons for business owners to be concerned about the demise of net neutrality, but for the time being, it’s not likely worth losing sleep over.