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How Net Neutrality Impacts Business

on August 11, 2014

Net neutrality has been a hot topic of discussion over the past few years. The basic premise of net neutrality is that every individual and organization has equal access to the Internet, which gives all Internet users the same ability to communicate and share content with each other. If net neutrality is revoked, Internet Service Providers would have the ability to charge users varying amounts of money for different levels of content. Understanding net neutrality and why it matters for business is crucial for today’s business professionals.

The University of California at Berkeley says that striking down net neutrality could lead to a situation called “tiered Internet.” Put simply, without net neutrality in place ISPs would be free to divide the Internet into tiers; content providers that want to access higher tiers with faster delivery speeds would have to pay a premium for it. Providers on the lower tiers would be stuck delivering their content at much slower speeds. Some speculate that ISPs might even totally disallow users from accessing content unless providers can pay the fee.

Why Net Neutrality Is A Problem

Understanding net neutrality and why it matters for business is especially important for small businesses that do not have the capital of large corporations. If net neutrality is done away with, it could severely limit the ability of small businesses to provide content to current and prospective customers. This would hinder the ability of small startups to compete with major corporations. Business Insider summarized a John Oliver report about net neutrality that makes the case that the early version of Facebook was only able to compete with MySpace, the dominant social network in those days, because of net neutrality.

Even President Obama has weighed in on net neutrality, taking a stance against the idea. Speaking to reporters on August 5, Obama said that his administration has no desire to differentiate how accessible the Internet is for different kinds of users so that new startups are still able to succeed.

What Net Neutrality Could Mean For Business

Companies that are looking to stay competitive might have a much tougher time using the Web to build their business if net neutrality is eliminated. Even worse, the end of net neutrality could mean higher costs for consumers. This kind of impact on consumers is already beginning to appear; Yahoo! Finance reported back in April that Netflix could raise its monthly prices $1 or $2 per month in part because Comcast is charging them more money to access subscribers. If net neutrality is totally abolished, consumers may be forced to pay extra money directly to ISPs so that they can access high-tier content online.

Whatever the future of net neutrality holds, it is vital that companies do their best to understand developments in this field so that they are aware of how it will impact their business. A decision by the FCC on net neutrality could significantly change the way that companies are able to communicate with consumers, which is why understanding net neutrality and why it matters for business is so critical for organizations of various sizes today.