Why should digital subscribers care about net neutrality?

Internet giants such as Netflix, Facebook and Google, among others, have formed an unlikely coalition to go all out against the Federal Communications Commission’s proposed repeal of existing net neutrality provisions. Should subscribers to digital streaming services start to worry? Shashank Venkat finds out.

The debate on net neutrality has reared its ugly head again. The Federal Communications Commission (FCC) in the US, led by Chairman Ajit Pai, wants to repeal the existing rules regarding net neutrality, apparently in a bid to ‘foster competition and innovation’. To counter this, the internet’s biggest names – Facebook, Amazon, Google, Twitter and Netflix, among other net neutrality proponents – came together on July 12, 2017 to observe an internet-wide day of action to save net neutrality. These participating businesses published blog posts, added banners on their websites, displayed pop-ups and even tweaked their user interfaces to inform visitors about net neutrality and garner support for their cause. The big question – will this day of action stop the FCC from its course?

First, it’s worth exploring the basics of this issue. Net neutrality is the idea that the web should be open and accessible for all and on an equal basis. The current FCC rules, which were put in place by the Obama administration in 2015, ensure that the internet is not blocked, manipulated or throttled by Internet Service Providers (ISPs) such as Verizon, Comcast and the likes.

Without the net neutrality provisions in place, ISPs could manipulate their services to drive home big profits by charging their users extra money for visiting certain websites or providing dedicated fast lanes (fast internet access) to businesses that are willing to pay more. They could also use this to prioritise websites and apps owned by them and stifle competition. Net neutrality has been a long-festering debate in the US (and the rest of the world), and its currently in the news because the Donald Trump administration wants to roll back the rules set by the previous administration. And just like Trump’s last move, this latest proposition has not gone down too well with most people in the US.

Subscribers to digital streaming services may wonder whether they will be affected in any fashion if the FCC has its way. After all, they are consuming these services through recurring subscriptions billed every month. Moreover, even Netflix recently stated that although it supports the principles of net neutrality, the outcome of the current issue won’t pose a big risk for the company.

However, this confidence seems to be slightly misplaced. If net neutrality is done away with, ISPs would be able to charge both subscribers and streaming websites for access to services. This means that Netflix would have to pay money to ISPs to keep their services competitive, and that means they could potentially offload some of these costs to the consumers. And with Netflix’s consumers often seen as sensitive to price rise, this might not be in the best interest of the subscription giant. Moreover, ISPs could use this opportunity to push their own content offerings as more attractive, and make OTT services such as Netflix and Amazon Prime Video slower resulting in an unfair advantage to them. Potentially slower Netflix streaming also means that customers might explore faster content platforms, resulting in significant customer churn - certainly not what the Netflix investors and Wall Street want to see!

Furthermore, even regular online browsing may become more expensive, regardless of whether you have subscribed to a service. ISPs could definitely create roadblocks for free content platforms such as YouTube, Reddit and Wikipedia which rely on open access to the internet. This could also impact game streaming services and could make them more expensive or slower, depending on which provider you are tied up with. For subscribers currently enjoying the walled gardens of Netflix or Amazon, this would mean serious disruption to their user experience.

Of course, there is the other side of the coin as well. ISPs have long argued that the existing rules burden them and stifle innovation within their business. They also reckon that the current regulation stops them from exploring newer ways to generate profits. Some backers of a new regulation have also argued that the current structure has been monopolised by a few powerful internet companies and introducing newer provisions will democratise the system.

While Google and Facebook have been backing the pro net neutrality stance in the US, it is interesting that these very companies have launched principally anti net neutrality programs in some emerging economies. Through initiatives such as Google Free Zone and Facebook Zero, these companies have struck up deals with wireless carriers in countries such as Kenya and the Philippines. While some argue that this enables access to cheap internet for the disadvantaged sections in these countries, it is also true that this will increase their customer base, stifle local competition and ultimately help them serve more ads and generate profits. In fact, Facebook faced a big backlash in India for its Free Basics initiative.

Following the net neutrality day of action, 1.6 million comments have already been filed with the FCC asking it to retain the existing rules. July 17, 2017 happens to be the deadline for public comment on the FCC ruling. Even if this does not affect digital subscribers outside the US directly, the impact of this ruling will reverberate around the world. Which side of the debate are you on?