Internet providers are dismayed by the FCC’s net neutrality decision, but the ruling opens up opportunities to several other types of businesses
The late-February decision by the Federal Communications Commission (FCC) to back so-called ‘full’ net neutrality stands to be a watershed moment for the internet.
While net neutrality has been framed by many supporters as a political issue of censorship and speech, the fact is that businesses of all sizes and industries cannot avoid being profoundly affected by internet policy.
Until recently, telecoms were the most vocal businesses in the net neutrality discussion. That quickly changed when a federal court ruled that the FCC overstepped its regulatory bounds. Media companies like Netflix and Pandora, along with other behemoths like Amazon and Microsoft, started loudly advocating for net neutrality once an internet without it became a reality.
If the old rule was a fingers-crossed attempt to establish net neutrality without heavy lifting of major regulatory overhaul, the new rule is robust and definite. It addresses the issues that the Supreme Court had with the old rule, and as such is more likely to hold up.
Congressional Republicans are already drafting bills to undo the rule, but President Obama and the Congressional Democrats stand firmly in the way of them becoming law.
Despite the protest from internet providers like Verizon and Comcast, the FCC’s new net neutrality rule represents an opportunity for a range of other businesses. Here are just a few.
Search Engines, Aggregators, and Social Networking Sites
Influencing where consumers go on the internet is a lucrative business. The internet is an information service, so whoever can steer consumers towards certain information sources has tremendous power.
By opposing net neutrality, internet providers were trying step in and become traffic shepherds instead of a neutral infrastructure – but now they will not be able to with the FCC ruling.
The existing shepherds of internet traffic will only stand to benefit now that the formidable competition from internet providers has subsided.
Websites and services like Google Search, Huffington Post, and Facebook will be able to give internet users quick access to content unencumbered. For their popularity in doing just that, they are rewarded handsomely with advertising revenue.
Mobile App Developers
The most surprising part of the FCC’s ruling is what it does for mobile internet connections. For the first time, the FCC will hold mobile internet access to the same standard as regular home and business internet connections. Even in the incarnation of net neutrality that was struck down in 2014 mobile internet was left out.
Mobile internet providers have been given an exemption on net neutrality until now because of the limitations of their service networks. After all, most US cell phone infrastructure is old and not designed to handle YouTube streaming in every American’s pocket.
The revolutionary move to ban mobile data throttling is enough to make free internet advocates giddy – and mobile app developers will feel the same. A main limitation on the complexity of smartphone apps just disappeared overnight.
Mobile gaming, fueled by viral sensations and having spawned more than one publicly traded company, benefits the most. The visually stunning and data-rich online games that used to require desktop computers can migrate to smartphones, where players are never separated from the game.
The trend of larger cell phones and phablets adds tailwinds to the trend since more intricate games can still look great on the screen. This type of game has already begun emerging with titles like God of War and Clash of Clans but stands to make leaps and bounds in quality and popularity now that data limitations have been removed.
Rural Business
The internet has provided an antidote to the long-term decline in population in the rural United States. Connectivity is more simple than ever for businesses in rural areas, but as most of the country has transitioned from dial-up to broadband the competitiveness the internet affords rural areas has slipped.
Broadband connectivity in the country has lagged significantly behind urban areas, in large part due to internet providers refusing to lay the vast infrastructure in exchange for only a few more subscribers.
The new rule could pave the way for more rural broadband in two ways. It classifies the internet as a Title II service, like telephones, which has certain non-discrimination rules for providing service. For telephone service, this included rural users.
It is unlikely, but still unclear, that guaranteed connection will extend to broadband but would benefit rural business if it did. Even if it does not, the rules are designed to create more competition for internet providers, in which case rural users could benefit.
Content Providers
No one will benefit from net neutrality as much as content providers. For them, the debate is not about censorship and freedom, but about avoiding the pay-to-play environment that emerges without net neutrality.
As much as half of all US internet bandwidth during evening hours is taken up by Netflix and YouTube, adding costs to internet providers without a corresponding increase in revenue. Internet providers would enjoy nothing more than to charge customers and websites for data-intense services like streaming video, but now will not be able to do so.
With the rule, a major drag on profitability is gone from companies like Netflix, Hulu, Pandora, Skype (owned by Microsoft), and YouTube (owned by Google). Netflix stock was up 1% on the day the FCC rule was announced.
What is unclear now is what will happen to Netflix’s agreement with Comcast to pay extra for fast connections for its site. The agreement was a sign of what was to be much more common if net neutrality was not reenacted, but the agreement is useless for Netflix now.
The benefit for content providers is not quite universal. NBC Universal is owned by Comcast, the nation’s largest internet provider, and would have likely been given the fast lane on Comcast connections if net neutrality had allowed for Comcast to have fast lanes and slow lanes for traffic.
For the vast majority of media companies, however, the FCC has significantly brightened the future.
