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How Might a Repeal of Net Neutrality Affect Small Business Services?

May 11, 2017




With the idea of “net neutrality” being up for debate once again with the current presidential administration, content providers and small service providers are getting a bit nervous. Net neutrality (News - Alert), the concept that Internet service providers (ISPs) must treat all data equally regardless of its content or source, was enshrined in law with the FCC’s (News - Alert) Open Internet Order back in 2015. The agency’s new chairman, Ajit Pai, has stated that he is in favor of “deregulation” and wants to cave into ISP demands that the rules are hindering business growth. Under current regulations, ISPs can manipulate the flow of data traffic only to optimize network performance.


Net neutrality rules apply to “common carriers,” or providers of broadband Internet access, that mass market services to residential customers and small businesses. In February of 2015, the FCC reclassified broadband ISPs as “common carriers” under the Communications Act of 1934 (Title II) and Telecommunications Act of 1996 (Section 706). The most salient point of current net neutrality rules is that carriers may not create “fast lanes” for companies that pay more.

While enterprise service offerings such as VoIP gateways, content delivery networks (CDNs) and Internet peering are ostensibly not covered by net neutrality rules, small businesses are beginning to worry that if net neutrality is repealed, it will affect their ability to access business services. Large content creators such as Amazon, Netflix and Apple (News - Alert) may find their fortunes on the wane as ISPs offer more content of their own and prioritize that traffic. This situation becomes more likely with the recent integration in the broadband market, according to a recent blog post by Nick Kephart, Senior Director of Product Marketing for ThousandEyes.

“With recent vertical and horizontal integration in the broadband market (e.g. Comcast/NBC Universal (News - Alert), AT&T/Time Warner, Verizon/AOL/Yahoo, Charter/Time Warner Cable, CenturyLink/Level 3), net neutrality proponents believe that ISPs will be able to charge content providers for rights to preferred access on their networks,” he wrote. “They also fear that ISPs might favor their own content companies and ad networks or block access to content during contract disputes.”

There is no doubt that a repeal of net neutrality would put small startups, apps and public services at a disadvantage, as these companies would be unlikely to pay for preferential access without passing the cost directly onto customers. Today, many small businesses rely on startups for services and content, including for their core functions such as telephony, software and business services.

Whatever happens, it won’t happen overnight. Overturning the current net neutrality legislation will require coordinated Congressional action on a repeal that will not play well with voters who dislike their ISPs more than any other class of company. The Trump administration may attempt a shortcut by revoking the FCC’s ability to regulate ISPs as common carriers through judicial action, but this, too, would take years to wend its way through court.

Plans to fight the repeal of Net Neutrality are already in the works. Earlier this month, startup lobbying group Engine, which has the support of more than 800 startups from across the U.S., began mobilizing to oppose, began targeting FCC Chairman Pai directly with a statement.

“The success of America’s startup ecosystem depends on more than improved broadband speeds,” they wrote to the chairman. “We also depend on an open Internet — including enforceable net neutrality rules that ensure big cable companies can’t discriminate against people like us. We’re deeply concerned with your intention to undo the existing legal framework.”




Edited by Alicia Young
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