Here's Why Net Neutrality Ruling Could Cost You More Money


Big telecoms lost, small business won and the Internet is a fairer place to operate. Surely, this is one black and white issue. Net neutrality is a good thing right? Well, maybe not quite.

The decision by the FCC to preserve net neutrality by reclassifying broadband as a public utility was almost universally acclaimed as a victory for the little over big business. The ruling brings the law in the U.S. up to speed with most of the rest of the world and, in theory, is a good thing.

Wealthy companies like Google or Facebook won't be able to pay to get "fast lanes" on the Internet, thus leveling the playing field for any startups or small businesses looking to enter the market. But the ruling also denies big telecoms a big revenue stream which they would have charged heavily for the fast lanes, and as with everything else, when big businesses lose money, the man on the street ends up paying.

Unlike other public utilities, broadband is not delivered to you by government agencies. Private companies like Verizon and AT&T are upgrading their infrastructure to bring us ever increasing broadband speeds, but this all costs money. If they can't offset their costs by charging the content creators more for things like fast lines, it's inevitable that they will charge consumers or the end customers for the content instead.

Republicans have been using this argument to bash the reclassification for months. Michael Powell, a former Republican FCC chairman who now runs the National Cable and Telecommunications Association, warned that consumers would almost immediately "bear the burden of new taxes and increased costs, and they will likely wait longer for faster and more innovative networks since investment will slow in the face of bureaucratic oversight." While much of this argument is politically motivated -- the alternative could have been worse -- it is hard to argue that consumers won't pay more in the long run.

At the moment, most providers charge a fee that varies depending on the speed of access, but generally customers can download an unlimited amount of data. Ben Thompson of argues that this cannot continue if ISPs can't use discriminatory pricing to raise money: "While I love the idea of unlimited data, I also am aware that nothing comes for free; in the case of unlimited data, the cost we are paying is underinvestment and/or discriminatory treatment of data." 

So the side effect of this net neutrality ruling could well be that providers start charging per bit or byte of data downloaded. In theory, this isn't inequitable. After all, the more electricity you use, the more you pay, so why should broadband be any different.

The problem here is that people aren't used to paying extra for downloading more, and they're not going to like it. This would also negatively affect the underprivileged. Wealthy users won't be put off by higher prices and will continue to consume as much data as they like, whereas the more budget-concerned may have to restrict the amount of data they consume. This may just mean watching less Netflix, but would also restrict their access to information, which is the whole reason broadband is being described as a utility.

That is not to say that the FCC were incorrect in their ruling. The principle of a free and open internet is a good one, but the issue isn't quite as black and white as it has been portrayed in the media. We all like to see big business losing out, but in the end we may well be the ones paying.

Photo: Don Hankins | Flickr

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