Net neutrality decision is key for digital innovation

On December 14th FCC (USA) will make one of the ‘most controversial’ decisions – repeal or retain ‘net neutrality’.  If the decision is to repeal, it will have far reaching implications on consumers and businesses.  Even though it’s currently US-centric, there are global implications.  The scale of impact will depend on the extent to which the ISPs will go in exercising their rights as per ‘Restoring the internet freedom order’.  

Assuming a greater control by them, the first casualty will be ‘digital innovation’ – especially the pace and diversity. The ‘open internet’ allowed small start-ups with revolutionary ideas to still benefit from scale – in development, adoption and usage.  For example, in the case of an emerging ‘IoT’ provider, the throttling/blocking can seriously impact the adoption and usage rate.  While larger companies with deep pockets might be able to ‘pay up’ for faster connections, it will limit the diversity in innovation.   

When it comes to marketing, especially online – there are mixed implications.  Brands/companies will need to invest in higher quality ‘owned’ content that the consumers will want to pay to access.   Getting the right content in front of the right audience might cost more, but the engagement metrics with that content can potentially be higher.  For example, higher cost of impressions but higher CTR too.  Ad networks and Email service providers might end up paying a higher fee to ISPs to ensure the content reaches the consumers through the ‘fast lane’.  

Gaming/streaming/voice&/video chat industries that require faster connections could see a drop in userbase and usage rate, if consumers will need to pay a higher fee for a faster connection. Again, the pain points will be felt more by small companies who won’t be able to compete with big players to secure a ‘preferred partner’ tie-up with ISPs.

Global implications are also many.  Apart from setting a bad precedent for other countries to follow, a higher service cost borne by global companies (like Netflix) can trickle down to users around the globe. US based companies providing global Cloud services have two problems to tackle.  One is potentially higher fees to ISPs for ‘faster connection’ and the other is cost of encryption of data to prevent ISPs from having access. Logically, these costs might be offset by higher license fees.  

There is one industry that can benefit from the ‘opportunity’ created by the lack of net neutrality – satellite broad band.  Especially Low Earth Orbit satellite networks like OneWeb and SpaceX that can match terrestrial broadband in terms of speed.  OneWeb backed by Richard Branson aims to bring internet to 31% of the world’s population. SpaceX by Elon Musk has a grander ambition of a truly global internet access with a network 4,425 LEO satellites.    

In our region, there are some restrictions placed on internet access due to social/political factors. But apart from that, there hasn’t been any reported news surrounding net neutrality.