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Open for business

Open for business 

On February 26, 2015, the FCC announced that they had ruled in favour of net neutrality. The resulting saw the Internet reclassified from an informational to a key telecommunications service, thus giving it Title II, or common carrier status.

The decision has since sparked a large debate amongst experts and Internet-reliant companies. Companies like Yahoo!, Google, eBay and Netflix are very much in favour of the new net neutrality rules, as they will no longer need to negotiate with ISPs before launching new products or services. On the other side, opponents of net neutrality include Panasonic, IBM, AT&T and Verizon, who believe that the regulations could have negative repercussions.

Despite its good intentions for businesses and consumers alike, the ruling has left many questions unanswered. To put things in perspective, IT in Canada spoke to Robert Neivert, COO of Internet privacy service provider about the ramifications of this monumental decision.

IT in Canada: What led to the decision passed by the FCC?
Neivert: It all started in 2010, when the FCC tried to pass a regulation on the ISPs, asking them to not be biased in their traffic moderation. What that means is that every website’s traffic would have equal access to bandwidth. Verizon decided that this was inappropriate, and they sued the FCC, saying that they had no right to regulate. They actually won that lawsuit, and that forced the government to say that since Verizon had won, they can’t be regulated.

The backlash was that (the FCC) started (going after) Netflix, asking for payment if Netflix wanted to deliver (their service). This caused a cascade where a bunch of companies, including Google and Facebook, petitioned the government to extend the FCC’s coverage to cover data traffic. At that point, they did not propose moving them under Title II because they just wanted to extend the FCC’s regulation.

When the FCC put this up for comment, they received the single largest amount of comments they had ever received, which actually crashed their website multiple times. They received millions of comments from U.S. citizens saying “We want net neutrality; we want this regulated.”

That actually forced the FCC to do something they did not want to do, which was to move the ISPs under Title II. That was not desirable; people did not want that. But it was the only way they could ensure that they could regulate, and it would not be disputed in court.

What started as a very small regulation change has resulted in a major regulation change due to the lawsuit.

ITIC: Why has the new net neutrality regulation created such a powerful debate?
RN: I think there are two key elements here. The first one is that on one side of the regulation, you’re basically telling ISPs that they can’t charge for something. They cannot charge bias on traffic, and they are forced to provide services in other areas.

Second, this is a pretty big change, moving back towards the regulation that was removed in the 1980s. That’s what I think the big debate is. Is the government’s role to ensure that? Title II is basically saying no. Data traffic is infrastructure. It’s like the road system. There needs to be equal access for all Americans.

ITIC: How will businesses and consumers be affected by this decision?
RN: People that are underserved, such as those in rural areas or those who don’t have good attachment points to the Internet actually benefit because the ISPs must now offer them at a reasonable price, and also offer them broadband. There are a lot of small businesses and consumers in poorly-served markets that benefit from this.

That’s the reason why the ruling was passed. Those people could get service, but it would exorbitantly expensive. Those who will directly benefit from this are the people who do not have good connections to the Internet or couldn’t get them before, but were in an area with an ISP.

On the other side, companies like Google, Yahoo! and others can now offer services without having to negotiate with an ISP. This makes a world of difference for them. If you think of a company like Netfilx, they do not have to negotiate with ISPs. It’s a (moderate) win for (the big companies), but it’s definitely a win for a lot of smaller start-ups and companies because once they produce a product or service, they do not have to go through that same negotiation process.

ITIC: Why does this ruling leave many questions unanswered?
RN: The big thing is that the details are not out yet. That is to say they made a general announcement after the vote, which was a 3-2 split, but (the FCC) has yet to release a much larger document with the details, and we’re still waiting for that document to come out. Specifically, (FCC chairman Tom Wheeler) made reference to (several) things he is not going to follow, such as pricing. He said he would not enforce the old pricing (structure).

When Title II was introduced in the 1930s, it included price criteria (for phone service providers). It said that (companies) had to offer things at a certain price point for phone service. (Wheeler) is saying that he will not force ISPs to offer (their services) at a particular price. He wants to remove that clause and modernize Title II. For that reason, because a lot of that (information) has not been released, no one is quite sure how it’s going to be implemented.

Lastly, it is expected that the ISPs will take (the report) to court immediately after it gets filed.

ITIC: What are the benefits of having an open Internet?
RN: Having an open Internet means that any tech company can know that that infrastructure is in place and rely on it for their products and services. It makes it faster and easier for small businesses through these products and services on the Internet because they can always depend on people having access to them, and they themselves don’t have to negotiate to get bandwidth. That makes it easier for businesses to launch.

As an example, let’s assume you own a local hardware store. You can launch a website and you never have to worry that people can’t get to your website. That makes (the situation) a lot easier for you, and it gives you an advantage.

ITIC: Are there any challenges involved with having an open Internet?
RN: There certainly are. Because the ISPs can’t get premium money from the heavy users, there will be a tendency for them to only invest the minimum (amount) necessary. They won’t offer a dramatically improved service.

For example, let’s assume I am an ISP, and I am thinking about streaming Google Fiber. If I can’t get any more money for that, why should I stream it? This puts pressure on ISPs to not grow, except in a competitive environment. And the fact is that they’re not in a competitive environment; most of them are monopolies.

We’re going to see a lot more minimal (investments) that are just enough to get by, but that’s it. They won’t make any radical improvements. This actually slows the ISPs’ growth path because they can’t get premium money. This is why Google Fiber and other companies are trying to introduce competition so that it will move forward because of competitive pressure.

It is my expectation that we won’t see very many speed improvements for a large group of people for quite a bit of time until there is competition.

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