The Federal Communication Commission (FCC) voted 3-2 today in favor for a proposal that would provide a new net neutrality framework. The proposal known as the “Protecting and Promoting the Open Internet” Notice of Proposed Rule Making (NPRM) seeks to close the current gap in legal authority of the FCC, which as of now, cannot prevent Internet Service Providers (ISPs) from threatening the openness of the Internet by blocking content or discriminating against consumers online.
Previous attempts by the FCC to provide a legal framework for net neutrality have been struck down; the most recent being a repeal of their 2010 Open Internet rules by a DC Circuit Appeals Court earlier this year.
But before we dig any deeper, lets step back and talk about Net Neutrality.
Net neutrality is the concept stating that all content or data is delivered to users at the same rate. The Internet works like a giant highway. When a content provider, such as Netflix, Facebook, HBO or Google sends information to a user (i.e the latest episode of House of Cards), this data is transmitted on the highway through an Internet Service Provider, such as Time Warner, Comcast, or Verizon.
What’s at risk with the current lack of legislature or a legal framework is that there is nothing preventing ISPs from doing what is called “prioritization”. Right now all data on the Internet is treated the same, meaning that it is delivered at the same speed. Prioritization is the creation of “fast” and “slow” lanes on the Internet. Large companies like Netflix could pay ISPs to provide faster data delivery to users, essentially isolating or regulating smaller companies to the slower lanes.
These smaller companies would be treated unfairly by the ISPs. Being regulated to the “slow” lane will lead to slow content streams and often little incentive or ability to innovate or grow.
With this proposal, the FCC is trying to figure out which legal framework it should pursue in order to prevent this from happening. There are two main options on the table, each with its own merits and drawbacks.
The first uses Section 706 of the Telecommunications Act of 1996, which states that the FCC has the power to promote broad competition within the broadband information space. The Internet, being a free and open forum of ideas, naturally spurs free market competition and enterprise. It also provides consumer protection from unfair delivery of service.
FCC Chairman Tom Wheeler summed up the section 706 approach in the following quote:
“If a network operator slowed the speed of service below that which the consumer bought, it would be commercially unreasonable and therefore prohibited. If the network operator blocked access to lawful content, it would violate our no-blocking rule and therefore be doubly prohibited.”
The problem with this plan is that the FCC already tried this with the Open Internet order, which got struck down earlier this year. The FCC is seeking public comment as a way to try and get around the D.C. Circuit Court’s ruling. Another potential problem is that ISPs could still create a “fast lane” so long as it is “commercially reasonable.” Existing deals, like the one between Netflix and Comcast to provide faster download times, would be legal under this framework because Netflix is the only person using that highway. Therefore, no consumer is receiving an unfair delivery of service.
The second option is to use Title II of the Communications Act, which would designate ISPs as common carriers, making them a public utility. The FCC has authority to regulate common carriers and, thus, would be able to enforce net neutrality rules and prevent prioritization.
Critics of the Title II approach state that it will create a broadband provider monopoly, driving up prices for the consumer. While the current broadband marketplace may already be in a quasi-monoply, the legal shift would introduce strict regulatory oversight that could stifle innovation. This means that our “smart networks” may become “public pipes.”
As mentioned before, it is important to note that this is not a final ruling. The FCC is simply turning to the public for comment and debate. The hope being that a robust record will provide the closest thing to a democratically created framework without having to turn to Congress. They will vote on a final proposal later this year.
Regardless, the state of Internet regulation is critical to the state of marketing. If “fast” lanes are allowed to exist, companies will begin charging higher fees to the consumer in order to offset broadband connection costs. With some content getting delivered at a faster pace, the advertising costs for those sites will become astronomical. Marketers will compete for that limited “premium” space, pushing smaller companies to the side and potentially leading to an abandonment of the web as a universal advertising medium.
This is especially worrying because many companies are shifting to content marketing strategies. If the content companies create isn’t reaching their target audience, then those companies don’t generate leads or brand awareness. Revenue is lost and businesses fail.
While that may be a picture of the worst-case scenario, it is important to remember that the public has a voice and can reach out to legislators, stay informed and contribute to the discussion.
Stay tuned to Tier10lab for more news and analysis on the Net Neutrality debate and how it could affect Internet Marketing.