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Tech companies brace for net neutrality impact

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Last week, a federal appeals court in Washington, D.C., struck down portions of the FCC Open Internet rules that require broadband companies or Internet service providers (ISPs) to treat all Internet traffic equally, known as the principle of “Net neutrality.” A key component leading to this ruling is that ISPs are classified under information — not telecommunications — services. Due to that classification, the Open Internet rules don’t apply to them.

The potential impact of this decision is significant. Those who decry the ruling claim that without Net neutrality, ISPs can manipulate web traffic to work in their favor. In theory, ISPs could give priority access to certain sites over others to disadvantage rivals. For example, an ISP may slow down streaming content from a company that competes with its own on-demand video service.

Another scenario is broadband companies could sell preferential treatment. Amazon or YouTube may be charged for its video services to be delivered with a higher speed. If there were a tiered services model to charge more for using high bandwidth, those increased costs would likely be passed down to the consumer. In this kind of pay-to-play landscape, smaller companies, start-ups and innovators would be stifled by the larger, wealthier organizations. Consumers could see deterioration in services and/or pay higher fees.

But all is not lost. The ruling still gives the FCC authority to regulate ISPs; they just aren’t subject to the Open Internet rules. This broad and discretionary power makes a lot of companies whose business relies on distribution of content uncomfortable.

There’s a lot of speculation on what might happen next, and the legal proceedings may not be over. There is a chance for an appeal, a reclassification of ISPs or an amendment of the rules. Yet technology companies -- which could stand to be the biggest losers or winners in this case -- should prepare for change.

What should you do now?
  • If you are a content provider, look at your contracts with carriers and broadband companies. Be mindful that your agreements may change in time based on potential surcharges for data volume. You may have to pay a higher price to continue to deliver your content in a satisfactory manner to your customers.
  • If you are a broadband company or ISP, you may be reassessing your policies regarding content management. Take a look at your related processes and supporting IT systems to affirm that there are no issues that might impact customer trust. Clearly communicate to your customers any forthcoming changes in policy or procedure that would change the way in which they use your service.
  • If you provide content or broadband services, consider offering a service organization control (SOC) report to verify that data and systems are working properly. SOC reports can help to reassure customers that they will receive the quality service that they expect.