Explainer: What's at Stake in the Debate Over Net Neutrality?

 

Beginning on July 12, 2017, some of the most popular websites such as Amazon, Netflix, and Reddit will be launching an online media campaign designed to be hard to ignore. On Wednesday’s “Day of Action,” scores of websites will feature banners, pop-ups or other alerts — like the perpetually spinning wheel — all to encourage users to lobby the U.S. Federal Communications Commission (FCC) or Congress in favor of existing net neutrality regulations amid a proposed change to U.S. rules that regulate internet traffic.

But why all the fuss?

Net neutrality has been a topic of debate since the FCC introduced the Open Internet Order in 2015. The new FCC chairman, Ajit Pai, appointed by the Trump administration, does not favor regulations that enforce net neutrality. He believes net neutrality regulations inhibit competition and that removing net neutrality will incentivize players to invest more in the infrastructure that is expensive and massive.

According to the BBC, “FCC commissioners voted to start the process to end net neutrality rules in May, and the commission is now conducting a public consultation on the issue. Americans have until the end of August to comment on the plans.”
The proposed rollback of net neutrality rules has generated much pushback — like the protest on Wednesday, which could be one of the largest digital protests to date.

To understand what the debate is all about, we talked to Prabhudev Konana, an award-winning faculty member at the McCombs School of Business and expert in online investing and e-business.

Konana explains why online businesses and internet providers are so hyped up about these rules and what it could mean for internet users.

 

Q. What is net neutrality?
Prabhudev Konana: The term “neutral” implies that all traffic that flows through a network [i.e. internet] is treated equally. This implies a service provider [example: ATT or Comcast] will not give priority based on whether the content is from a known or unknown source, the content is from a competitor or not, or the content is objectionable or not.

In other words, net neutrality laws mean network providers cannot deliberately slow down the speed of traffic on their network to favor themselves or favored partners.

The analogy is the internet is like freeways where traffic can flow freely without tolls.

Q. Can you set the stage? What is this argument all about?
The Pro-Net Neutrality Argument:
1. Equal and cheaper access to the internet:
PK: The people in favor of net neutrality argue it allows small players to compete with larger players with deeper pockets, with affordable equal access to the internet.

A lot of services today on the internet (like video and communications) compete with what networks provide already. For example, Netflix competes with online streaming services by Comcast, or Google Voice competes with telephone service by AT&T. Now, removing net neutrality implies network providers can make it harder for competitors to compete without increasing cost to the consumer.

2. Prevent censorship:
PK: It prevents network owners from censoring (i.e., blocking) traffic that they don’t find appealing, and from having control on how and what information is shared. It also prevents governmental control on what information is shared in society.

3. Promote innovation:
PK: There will be lots of new services created on the internet leveraging new technologies like the internet of things, data hosting services, 3-D printing, etc. Removing net neutrality may discourage innovations and entrepreneurship since barriers and cost may increase.

The Anti-Net Neutrality Argument:
1. Unfair cost burden on network providers:
PK: Network service providers like AT&T, Comcast or others favor removing this restriction because these service providers invest tens of billions of dollars and take the risk of creating the networks. AT&T, for instance, invests upward of $20 billion every year on infrastructure investment.

2. There should be internet tolls:
PK: The service providers believe they should be rewarded for the massive traffic that flows through their networks. Removing net neutrality implies network service providers can slow down traffic of competitors or websites that don’t pay them.

3. The internet is a business:
PK: More importantly, these traffic generators compete with network providers by providing voice, data and video services. Cox or AT&T may argue that they could provide better end-to-end, high-quality service if they can prioritize certain traffic on their network. Without that ability, new-age competitors like Google, Netflix, Apple or Amazon impact network providers’ business and generate massive profits without investing much in the infrastructure.

Q. How could this affect me?
PK: The cost to access content may go up on services like YouTube, Netflix and Amazon if service providers choose to charge for that traffic. Also, startups who cannot pay the new tolls may find access to their websites slowed down. Content could be censored on certain networks. And competing streaming services could be made slower.

Q. If the FCC does change the net neutrality rules, how could that impact the business community?
PK: Before net neutrality regulations were passed in 2015, Netflix started paying Comcast for higher-quality service. The business community is afraid if net neutrality is removed, that agreements like this will be standard and potentially very expensive. The fear is real, but much of this debate is speculation. We do not know what will happen actually if net neutrality is, in fact, removed. There are just questions: Will removing net neutrality, in fact, hurt entrepreneurship? Will customers get hurt or will they benefit? Will big network service operators truly create practices to hurt small players? We have to wait and see.

 

 

Faculty in this Article

Prabhudev C. Konana

Professor, IROM

Prabhudev Konana is the Chairman of the Department of Information, Risk, and Operations Management and is a University Distinguished Teaching...

Prabhudev C. Konana teaches in the Texas Executive Education program, featuring open enrollment, custom and certificate classes for executives and organization teams.

About The Author

Sara Robberson Lentz

Sarah is the digital content producer and managing editor in University Communications.

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