What's Next for Net Neutrality? The Ball's in the FCC's Court.
BY Jeremy Quittner
The power broadband providers have to control content now is creepy, but the game's not over.
Net Neutrality was knocked down, but it's not out.
Tuesday's federal court ruling overturning the Federal Communications Commission's Open Internet Order, or "net-neutrality" as it's commonly known, isn't great for small business owners and entrepreneurs, but it's not necessarily the apocalypse either.
Without getting too deep into the weeds, this week's verdict in the case, Verizon v. FCC, gives broadband providers the power to function as a gatekeeper of sorts--offering "fast lanes" and "slow lanes" for content based on what the end-user is willing to pay.
While that could put you at the mercy of your biggest competitors, it could also force those competitors to pay more to operate. Additionally, the FCC isn't finished considering the issue, and it’s likely the agency will either appeal the decision or rewrite the rules that U.S. Court of Appeals for the District of Columbia Circuit found flawed.
"If large companies are using 20 times more capacity than the small business owner, then why should the small business owner pay the same amount," says Michael Alter, chief executive and president of SurePayroll, and a spokesman on small business issues. "In this case, the ruling only hurts small business owners if they are heavy users of broadband capacity."
In a testament to how powerful this ruling is, Netflix, the largest provider of streaming video, saw its stock sink more than 2 percent on Wednesday. At least one analyst reported Netflix could lose $75 to $100 million annually due to increased content delivery costs.
The ruling deals with a lot of complex legal minutiae, chief of which is the overturning of the Open Internet Order from 2010, where the FCC essentially formulated its stance toward broadband providers.
In the Open Internet Order, the FCC classified broadband companies as information services under Title 1 of the Telecommunications Act of 1934, which was a mistake that led to the current ruling, says Josh Levy Internet campaign director for Free Press, whose Save the Internet campaign lobbies to maintain net neutrality.
"The thing the FCC can do now is reclassify broadband under Title II," Levy says. That would put broadband services in the same category as telecommunications providers, which are not allowed to discriminate with their services based on the quality and quantity of information that flows over their lines.
FCC chairman Tom Wheeler seems to have left the door open for that possibility, should an appeal not succeed.
"We will consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans,” Wheeler said in a statement on Tuesday following the ruling.
A recipe for disaster
What disturbs Levy and other net neutrality advocates, is that overturning the Open Internet Order also gives broadband providers the ability to block content and devices that don't align with their own goals, whether those are political or financial.
That means they could block encoding devices or applications that mask the identity of information leakers, as well as peer-to-peer networks such as BitTorrent.
While there's not much that small business owners can do to change the current situation, Levy says entrepreneurs should write to local newspapers, Congressional representatives and the FCC to demand the rule change. Entrepreneurs could also engage in shareholder activism with the publicly traded broadband service companies to get guarantees of fair play.
"The silver lining is that this has opened up a space for the FCC to pass better rules," Levy says.
IMAGE: Nick White/Getty
Last updated: Jan 15, 2014
JEREMY QUITTNER is a staff writer for Inc. magazine and Inc.com. He previously covered technology for American Banker and entrepreneurship for BusinessWeek. @JeremyQuittner