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What Does a Repeal of Net Neutrality Mean for Businesses?…

Yesterday, the FCC unveiled plans to overturn the 2015 net neutrality ruling, meaning that internet service providers would be able to prioritize certain types of internet traffic over others rather than treating all traffic equally. But what does this mean to companies who rely on internet access (which in this day and age, is just about every business)?

Let’s first review, at a high level, how the internet works. ISPs, such as Verizon, sell connectivity to end customers at varying speeds for different prices, for example, $79 per month for 100 megabits (Mb) per second. When customers use their Verizon internet connection, the content they are accessing travels from the provider’s cloud (such as Facebook, YouTube, or Netflix) to their home by passing through several providers (called upstream or Tier 1 providers) until it reaches Verizon’s network, which the customer is connected to. This is how the internet works – different service providers connect to each other forming a big mesh (or web…..) and a technology called BGP figures out how to make data flow between different networks, utilizing different connection points.

Think of Verizon as your local town’s streets: it’s up to the town to keep the streets paved, clean, and safe, but to get where you’re going, you likely need to go outside of your town’s boundaries, using roads or on-ramps to access highways controlled by other municipalities.  Those other municipalities are like the providers that Verizon connects to so that you’re able to access any content on the Internet.  So that’s how the internet works. Why then, is net neutrality a big deal?

ISPs generally oversubscribe their networks very heavily, meaning that for every 100 mb of speed they sell to a customer, they don’t actually increase their network capacity by that amount; rather they rely on the fact that most customers will use, on average, a tiny fraction of their allotted bandwidth some of the time, and none of it most of the time, like when everyone is sleeping or out at school and work. The problem is that during peak times, ISPs simply don’t have the network capacity to support all of their customers using a lot of bandwidth at once, and anything involving video, such as YouTube, Netflix, video chat, Facebook Live, Snapchat, etc., is all high bandwidth. When there is not enough capacity, videos are not as clear or smooth as they should be, VoIP calls become choppy, and web browsing can slow down. 

Net neutrality states that the only thing ISPs can do to solve this problem is increase their network capacity, which comes at a cost that inevitably is passed down to consumers in one way or another. And because services, such as Verizon Fios, Xfinity, and AT&T U-verse, state that the speeds are “up to”, they are allowed to oversubscribe their networks as much as they want. (Many business-grade ISPs offer dedicated bandwidth and do not oversubscribe their networks; however, this comes at a significantly higher monthly cost.)

The repeal of net neutrality, however, would mean that ISPs could find ways to prioritize certain types of data (for example, VoIP for business users) over others (YouTube or Netflix), offer options for customers to pay more for priority access if they want it, and for those who need just basic internet for web browsing and email, find a more affordable plan. 

The ISPs are businesses, they ultimately want to collect the most revenue they can for their services. Whether they do this by offering a $25 “upgrade” to gigabit speeds (which 99% of households will not see any benefit from), or $25 for “streaming enhanced” service, as long as they provide a good value, they will have customers. If and when they don’t, competitive options will appear, and more often than not, the consumer will benefit in the end. That’s called capitalism.

In the end, the repeal of net neutrality would mean more competition among ISPs, leading them to invest more heavily in technology and infrastructure improvements.  Buyers would have more choices and better access.  For businesses, they would have more choices to tailor their internet access to meet their specific needs.  A company that relies on real-time services, such as video conferencing, would benefit from purchasing upgraded internet services from their provider.  And more importantly, they would actually see a higher quality, faster internet access.


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