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How Will Proposed Net Neutrality Rules Affect Small Businesses?

How Will Proposed Net Neutrality Rules Affect Small Businesses?

A small-business owner's guide to net neutrality. Read more for how changes in the FCC regulations will affect the IT industry.

Wednesday, May 7, 2014/Categories: information-technology

This fall, when a court ruled that Verizon could charge more for priority bandwidth, the blogosphere was rife with experts declaring an end to "net neutrality." Well, be prepared for more debate about the net neutrality issue – the FCC chairman recently proposed new net neutrality guidelines.

What is net neutrality? For years, net neutrality had been the law of the land. These FCC guidelines mean that Internet service providers (ISPs) can't discriminate between requests for bandwidth. Two companies – regardless of what they do and their bandwidth needs – get the same access.

Proponents of net neutrality point out that this means that startups and small businesses get the same access to Internet bandwidth as their larger counterparts. Practically speaking, this means that a startup (think early days of Facebook) can grow extremely fast and handle massive amounts of web traffic without having their bandwidth restricted.

In other words, it's small businesses that have the most to lose or gain with any changes to the FCC's guidelines because these changes could affect how well you're able to compete with larger companies. That’s why, with mobile app developers and small tech companies in mind, FCC chairman Tom Wheeler has suggested a few changes to the net neutrality framework.

What New Net Neutrality Rules Could Mean for Small-Business Owners

The FCC's guidelines are not official yet – Wheeler has only hinted at these net neutrality fixes – and they still have to be finalized. The FCC has proposed three changes:

  1. Transparency. ISPs will be required to disclose any restrictions or preferential bandwidth they offer.
  2. A fix for the "no blocking" rule. ISPs are not allowed to block any content that is legally allowed to be viewed. However, the original “no blocking” rule was problematic. When the case went to court, the judge ruled that the FCC needed to fix its justification. The judge even outlined how the FCC needed to do this.
  3. Nondiscrimination rule. This is the controversial rule that forbade ISPs from preferring certain customers and offering slower or more limited service to others. While it was overturned in federal court, the FCC said it will do what it can to restore nondiscrimination while also keeping in mind the interests of ISPs.

The first two changes should be fairly simple. It's the third change, the fix to the nondiscrimination rule, that will cause a lot of headaches – and could affect IT contractors and tech professionals.

Did Netflix Break the Internet? How High-Demand Streaming Affects Net Neutrality

You've probably heard the statistic that Netflix and YouTube account for 50 percent of all web traffic. The issue of net neutrality came to a head because companies like Verizon and Comcast saw that so much of their bandwidth was going to a handful of companies. ISPs figured Netflix should pay more for its web usage.

In fact, since the federal court struck down net neutrality rules, Netflix has had to pony up and pay more for its bandwidth. As a small-business owner, you might think that it's no skin off your back that Netflix has to dish out for more Internet access, but it's not that simple.

When Netflix or another major company pays more, they'll expect to get preferred access. If they pay for first class, they'll want some extra legroom. Some tech experts worry that this will lead to better bandwidth for the big companies and slower access for small businesses.

In fact, the FCC chairman specifically mentions this problem in his statement. He expresses concerns that a startup company that specializes in web video won't be able to compete with a larger business.

Net Neutrality Takeaways for Small-Business Owners

How does a small-business owner make sense of the net neutrality debate? Keep these three things in mind:

  1. This issue is still developing. The FCC has announced that it will offer a new version of its regulations this summer. The FCC's statement suggests that it will try to make everyone happy (allowing ISPs to charge more, but also protecting small-business access). How it will do this is yet to be seen.
  2. There are many competing interests. This issue pits small-business owners, ISPs, and large businesses against each other. The status quo offered the most protection for small businesses, and they could lose some access to cheap, high-quality bandwidth.
  3. It's hard to predict the effect changes in net neutrality will have. Listening to pundits and bloggers, you'd think the sky was falling. The truth is probably less drastic. Changes to net neutrality are important and should be watched closely, but it's hard to know the exact impact this will have on small-business growth.

For IT professionals, it can be exhausting having to keep track of new technologies, cyber threats, and regulations. Follow our Small Business Tech Center blog for daily updates on IT liability, risk management, and other changes your industry sees.

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