Why The Net Neutrality Repeal Is Very, Very Bad For Your Small Business • Part 1

When the Federal Communications Commission (FCC) voted to eighty-six the principle of “net neutrality,” an upheaval overtook the internet – and was swiftly forgotten. Those who knew what the term meant were appalled that the FCC would repeal this massively supported provision, but the news cycle churned on and the outrage subsided. Lest the repeal is overturned (and there’s a dim hope that it might be), you as a business owner must stay abreast to the net neutrality rollback, as well as the powerful and negative ways it could affect your business.

What Is Net Neutrality?

For the uninitiated, net neutrality can basically be diluted to: “equal internet speed for everybody, always.” It prevents your internet service provider from ‘discriminating’ against certain websites (due to their own bias) by putting them in a “slow lane” of internet speed, thereby limiting your access to those sites.

It used to be an obscure, if not mundane public policy issue. But now net neutrality has gained mainstream momentum – finally recognized for its considerable importance to internet users, businesses, and corporate entities alike. The net neutrality debacle is a tale of tangled interests, in which those with the fattest pocketbooks seem to be getting first say. It’s far more complex than a simple clash between ‘corporations’ and ‘internet users.’ Giants like Amazon, Facebook, Google, and Netflix actually stand firmly on the side of the internet user, in favor of protecting net neutrality, while internet service providers (ISPs) like Comcast, Verizon, and TimeWarner Cable fiercely hope to do away with it. To get a better idea of what’s going on here, let’s explore an example.

Comcast is your internet service provider. Comcast is also the parent company of a lot of other brands. Let’s say you use a product from one of Comcast’s child companies, but consider switching to their competitor’s. Your first touchpoint with the competing product/service is to search their website, right? Without net neutrality, Comcast would be able to slow down their competitor’s website, to inhibit you from accessing it. Sure, Comcast does provide you with the internet you’re using. But should they have the right or ability to choose which content you can access? In the absence of net neutrality, they would be able to slow down any site they chose – including those of their competitors and their affiliate’s competitors. Not only that, but ISPs could intentionally put other big name companies in the slow lane, just so they can charge them a fee to get their sites back in the fast lane – if only because ISPs know big name companies could afford to pay it.

For example, brands like Netflix may be forced into paying a fat premium to Comcast, just to ensure their users with Comcast internet would still be able to stream with sufficient speed. This could strangle out startup companies who can’t afford the same premiums that established companies would begrudgingly pay to ISPs. Imagine a scenario in which Netflix doesn’t pay out such a premium: every person with Comcast internet sees their Netflix slowed to a crawl – this could threaten Netflix’s user base, and poise Comcast to offer an alternate streaming service to all the fed-up users who cancel their Netflix accounts. It’s cut throat competition in action. And some would argue – free market capitalism at its finest?

The Politics of Net Neutrality

What is fascinating about the net neutrality debate is that neither side is distinctly Republican or Democrat in principle. It depends, in great part, on your subjective definition of the free market. Free market advocates who are opposed to net neutrality argue that it’s just a government imposed regulation, interfering with the free market by forcing ISPs to play nice. However, it can be equally argued that net neutrality aids the free market, by providing for “a free and open internet.”

A free and open internet, safeguarded by net neutrality, has given start-ups the ability to supplant established brands. Zuckerberg would’ve been no match for MySpace if, when Facebook was nought but a small broke startup, it had been forced to pay outrageous fees to ISPs, just to ensure users could access their site easily and speedily. Under net neutrality rules, any site can be accessed speedily and easily, and this has promoted healthy competition in the marketplace as new brands arise. In the absence of net neutrality, smaller, newer companies are put at a marked disadvantage. More and more businesses are moving “cloud-ward,” and this makes internet presence increasingly crucial to business success – as if it wasn’t important enough already. Net neutrality works to level the playing field for all companies, no matter their status or budget. This way, they can attract traffic fairly, on the strength of their services and content, and not because they bought their way into the internet fast lane.

Rejoin us on Thursday, when Advantage|ForbesBooks explores what will happen when net neutrality disappears in June, and how your business will be affected. To join the Advantage|ForbesBooks family and learn about how to build your authority with a book, click here.

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