Fresh off a defeat in the appellate courts, the Federal Communications Commission decided to tweak its new rules by allowing Internet Service Providers to create fast lanes for web traffic. Essentially this means that your regular ISP’s will be able to charge companies like Google, Netflix, and Disney for faster service to provide web content. According to the New York Times, would likely raise prices for streaming video or any other higher volume websites. While these companies can easily foot the bill for faster speeds, it is unclear to what extent these companies will pass the costs along to the consumer.
Charging more for companies that seem to use more bandwidth makes sense on its face. But when we dig deeper down, we can see that these new rules will forever change the internet as it exists today and leave loopholes that are rife for abuse. The first problem is that ISP’s will be able to double bill for their services. As a middle man, the ISP’s will be able to bill customers and websites for their services. This might be fine if we had the internet infrastructure like the rest of the industrialized world, but unfortunately we still lag far behind on download/upload speeds and pricing. Further more, those services can be billed at varying degrees for websites. If the companies that own the sites are unable to pay for the faster web speed, their traffic (and thus ad revenue will suffer). While it may be gradual at first, faster internet speeds will be a must for companies that want to survive online. This will result in the second problem of these new rules: the stifling of innovation
A major part of the internet’s growth and the rise of tech and internet companies has been the ability for programmers, web designers, and entrepreneurs to innovate on the web. With all companies paying the same price, smaller startups have been able to grow. Facebook, Twitter, and other common institutes of the internet grew because of high traffic communities. As ISP’s are able to favor one company over another, smaller startups will be unable to grow. Their slow speeds will be a turnoff to consumers.
In a previous post, I talked about the conflict of interest of having a cable company also provide the necessary infrastructure for streaming video websites. With the FCC’s capitulation on Net Neutrality, it would be surprising to see those streaming sites suffer more. And if you don’t think that the ISP’s are not above playing shady business games and taking any steps to make a profit, ask them what they did with $200 billion of tax payer money.