March 15, 2015 | by Wayne Smith

Net Neutrality Part III: How Will You Be Affected?

The reality of the net neutrality debate is that some players in the game have a lot to win or lose depending upon the forthcoming decision by the D.C. Circuit Court of Appeals. However it is very likely that the decision of the U.S. Court of Appeals will not be final and will be appealed to the Supreme Court, regardless of what that decision will be. Until that time when the final decision is made, the Internet and all of the players I discuss below will continue doing what they do.

Do not be mistaken: There is a lot more at stake than consumers getting fast, unimpeded connectivity, free speech and unlimited data. Not surprisingly, money is at the heart of this debate. Some of the largest companies in the world are on each side of the debate.

The Players

The key players that are “pro” net neutrality include consumers and the information content providers (CPs). CPs include companies such as Google, Netflix, Microsoft, etc. The “anti” net neutrality camp consists of the internet service providers (ISPs) including fixed broadband, mobile broadband and wire-line broadband companies such as Comcast, AT&T and Centurylink. The other parties to the debate include the FCC and the politician/lobby industry.

The Consumer

If the 2015 ruling survives, some consumers will “win” since there is a provision prohibiting state governments from passing laws prohibiting local municipalities from owning and operating network services. This could facilitate competition in certain markets. Both consumers and small CPs should win by preserving equal access rights, getting equal service for similar cost, and maintaining some 1st Amendment rights.

The FCC has stated that it will not be focused on consumer-pricing schemes. If the ruling is overturned, the CPs will likely have to pass along any price increases they receive from the ISPs to the consumer. Similarly, small CPs will have to pay higher prices for equal access and treatment, or in some cases may receive less service at the current price.

The Broadband Providers and Internet Services Companies

Given the parties to the different sides, net neutrality is often referred to as “the battle of the titans.” If the ruling survives, the ISPs will not be able to block or redirect content, throttle users, or strategically price prioritized content. The loss of each of these activities amounts to the loss of a potential revenue stream that could have stimulated the market with preferred service options.

If the ruling is overturned, the ISPs could “win” by leveraging preferred service levels for their pricing models. Competitive foci could shift across the market, for all players, very quickly, and the decision-making by end-users and reasoning for of infrastructure investment may change.

In each scenario above, the impacts on prices and services are up for debate.

Investing in Infrastructure

The ISPs argument that it will reduce investment if the ruling survives is under criticism. The fixed broadband providers and the wire-line providers invest minimally in markets where they have little meaningful competition. It is predicted that they will invest in infrastructure when they are competitively forced to in a market. The ISPs, however, argue that regulations are stifling their market investment. In contrast, innovation in the mobile broadband market is pushed along by the incredible growth in data transport and the need for higher capacity.

It is important to note that once 5G wireless networks are deployed widely, competition among these three segments will increase considerably, since the wireless networks are expected to experience a significant boost from competitive technology.

The FCC, Politicians and Lobbyists

If the ruling survives, the FCC will undergo a transformation to some degree within its authority and future purpose. If it is overturned and upheld in the Supreme Court, the agency’s relevance may be challenged. The ISP industry could begin self-regulation practices.

The politicians and lobbyists “win” in both scenarios. If the ruling is overturned, anti-net neutrality politicians will celebrate the protection of free enterprise. If the ruling stands, the pro-net neutrality camp will celebrate protection of the 1st amendment. Both parties will respond the same way if they lose: They will ask for funding and support to correct the decision through legislation. Any way you look at this, the lobby industry will endure.