What is Net Neutrality

An article by: David Tan, Chief Technology Officer, CHIPS Technology Group

If you have seen the stories in the news or read about the important ruling on Net Neutrality last month, but don’t know what it is, I’m going to try and make it simple for you. Back in 2010, the Federal Communications Commission established a series of rules that said the internet is open. That means all traffic is created equal, and none can be prioritized over another. In other words, the movie streaming from Netflix, the email you send to your vendor, and the pictures your teenage children post on Instagram all share the same internet path, and all travel side-by-side.

Last year, in the midst of lawsuits from Internet Service Providers like Verizon, courts struck these rules down, claiming that ISPs had the right to establish internet “fast lanes” and of course charge a premium for those fast lanes. This was a victory for ISPs who feel they should be able to prioritize traffic from large bandwidth consumers, and get paid a premium for it. You, as a typical small business may not think this is a big deal because you aren’t a major internet user, but that isn’t really the case. This has an impact on everyone, and I’ll explain why in a minute.

Last month, the FCC pulled what could be argued as a legal end-around, and voted 3-2 to reclassify internet traffic as a Title II telecom service. This essentially gave the FCC complete domain over internet traffic, and much like telephone and television traffic, made it illegal for ISPs to charge a premium. This controversial ruling was hailed as both “the strongest open internet protections ever proposed” by FCC Chairman Tom Wheeler, and called “one of the most significant and most controversial decisions in the agency’s history” by the Chairman of the Senate Commerce Committee, John Thune. I’ll touch on why it’s controversial shortly as well.

First, why do you care about Net Neutrality in general? On the surface, the idea of an internet fast lane doesn’t seem bad, right. I’m in favor of it on the highway or in a super market so why not when I’m trying to stream the latest episode of Orange is the New Black. The problem on the internet is that there is still a fixed amount of bandwidth to go around. Giving huge web hogs like Netflix, Amazon, Google, etc. huge chunks of bandwidth has to come from somewhere. Giving it to them takes away from the 99.99% of other businesses who use a reasonable amount. The problem is, even a reasonable amount still means you need significant internet bandwidth to operate efficiently in 2015. Let’s take an extreme example. CHIPS has a pretty large data center presence we use to host all our internal operations and a large number of our clients as well. We’re one of the larger tenants in the space we occupy. The largest tenant however is Comcast. As a massive ISP, cable company, and internet media streamer, Comcast would be at the front of the line to pay extra and prioritize internet traffic for high-volume users. As I stated, this bandwidth would have to come from somewhere – if it came from our allocation, there would be a dramatic effect on CHIPS and many of our clients.

So why then is the FCC ruling so controversial? It would seem the only ones losing out are large ISPs who don’t get to charge a premium, and large bandwidth hogs who need to continue to do business as usual. I think the controversy stems from how the FCC accomplished this task and what it might mean for the future. You see Silicon Valley and the tech startup industry has long flourished outside of the radar of government regulation. The FCC ruling places them smack dab in the middle of control over the very backbone of this tech innovation – the internet. Many people worry this new regulation will hamper innovation, and increase political manipulation over one of the most important sectors of our economy going forward. I won’t say this isn’t a real risk. Adding a level of government bureaucracy and interference is a fear no matter which side of the aisle you sit on. 

It may be a case of damned if you do, damned if you don’t. I think it’s clear the internet needs to remain open. Granular control and rationing off of bandwidth to the highest bidder could potentially cripple the typical small to mid-sized business in this country. Those SMB are what drive innovation and move the economy forward, so frankly this isn’t an option. The fact that it comes at the risk of increased government regulation is a fear as well – more so for some people. For the time being that’s a risk we probably need to take, but this situation is far from resolved. Things will continue to change and evolve, so it’s critical to keep an eye on it, because whether you believe it or not, this will have a profound effect on every small business in America.