Why Net neutrality matters to your business

Partitioning the Internet into haves and have-nots will give big companies yet another advantage over smaller, more disruptive firms

Though Net neutrality has recently come to a head, many IT managers and leaders I talk to don't truly grasp the implications of this issue for the Internet and the marketplace as a whole. Let's spend some time breaking down the issue and pointing out that, while you may not have cared about Net neutrality before, you absolutely need to care now.

What is Net neutrality?

Essentially, Net neutrality at its core refers to the principle that a packet is a packet is a packet when it traverses the Internet. Internet service providers adhering to Net neutrality standards don't particularly care whether a packet streams video, an email, an upload to SharePoint or an FTP download. It's just traffic; to them, all traffic is the same. In addition to not caring about traffic, Net neutrality refers to data being accessible to all customers with Internet access regardless of their provider, without the provider discriminating access or service quality among sources of traffic.

[ Find out what topics and issues affect tech's biggest names and news makers in the IDGE Insider CEO interview series. | Read Bill Snyder's Tech's Bottom Line blog for what the key business trends mean to you. ]

[ Analysis: What's in the FCC's Net Neutrality Notice? ][ More: FCC Moves Forward on Net Neutrality Plan: What Now? ]

The idea of Net neutrality has been around for a while, but it has become increasingly mainstream as more and more services are delivered over the Internet and World Wide Web and not other types of networks and transmission systems. So much content is being delivered over the Internet that it's saturating the existing interconnect capacity between network providers, many of whom are reluctant to incur the expense of expanding that capacity to favor only a few sources of that congestion.

Combining Internet and entertainment is bad news

The proposed Comcast-Time Warner Cable merger represents a worrying Net neutrality development. Both rank among the most hated companies in America, and two Time Warner Cable billing snafus nearly wrecked my recent home purchase and mortgage application. (Both issues have been rectified).

Putting the two companies together has got to be the worst idea for consumers in a very, very long time. I'd be very skeptical the merger would even make it through government scrutiny -- were it not for the fact that the cable plants for each of the respective companies do not overlap at all, thanks to the nature of the local, municipality-sanctioned business monopolies each enjoy.

On top of all that, NBC Universal, a company created in 2004, merged with Comcast in 2009 through a complicated buyout scheme. The result: A huge entertainment company that also serves millions of broadband access customers with its Internet service provider business.

[ Commentary: How the Comcast, Time Warner Merger Will Endanger the Internet ][ More: Comcast's Time Warner Cable Purchase a Merger of Monopolies ]

Owning all the movies that Universal produces and owning the popular major broadcast network NBC and controlling the only home Internet access most of their customers have offers NBC Universal an unprecedented opportunity to control the distribution of information and entertainment to its customers.

It's not hard to envision a world where Comcast promotes and offers NBC content preferentially to its customers, perhaps even to the detriment of other entertainment sources that its customers might choose but that would need to be delivered over its network.

In fact, Comcast already puts this opportunity to work, striking deals with companies such as Netflix to offer service with less interruption and more availability to its own customers. Previously, Comcast customers had complained that streaming Netflix video was choppy and at times unusable. Indeed, a Wall Street Journal analysis found that Netflix's primetime performance over major ISPs dwindled over a period of three months from as around 2 megabits a second to as low as 1.5 mbps, mostly due to congestion because of the service's popularity.

Instead of being Comcast's problem - to actually provide the service it already takes money from its customers for -- Comcast refused to permanently fix the issue, announcing that it believed Netflix should bear the cost of delivering its content to Comcast customers. Netflix acquiesced, making a deal with Comcast that resolves this congestion. Reed Hastings, CEO of Netflix, recently said he felt his company was forced to make this arrangement for faster delivery of its service "because the deal was better than the prior state. We felt we had to."

Take even a minute to think this situation through and it becomes clear that it's patently absurd and illogical. Comcast's role as an ISP is to provide Internet service to its customers in exchange for a monthly payment. To then attempt to strike deals to be compensated for alleviating bottlenecks on its own network from companies on the other end of the pipe is nothing less than greedy double-dipping.

Comcast wants to be paid by customers for access to the Internet and then by Internet-facing companies for access to its network customers. As Hastings said, "They want the whole Internet to pay them for when their subscribers use the Internet."

Payola ruined radio; will it ruin the Internet?

How is this a good development for the Internet? How does this not result in a "fast lane" on the Internet, where big players with big pocketbooks continually provide payola to ISPs to make their content available faster (or even at all) while smaller companies with a potential to disrupt - you know, the startups that make the Internet an amazing marketplace - are edged out because they can't pay the toll?

[ News: Lawmakers Tell FCC to Stop Mulling Net Neutrality Reclassification ][ Also: Reclassifying Broadband Would Be a Long Road ]

This is a really big deal. If you're in any sort of communications, entertainment or service provider business, consider this risk. Assume for a moment that Comcast decides you have to pay a private peering fee in order for its customers - your customers, too, of course, but simply the set of your customers that use Comcast to access your services - to get unfettered access to your site or your service.

Or what if Comcast decides, with a broader stroke, to tier services so that your business resides in a "category" that, by default, doesn't receive an allocation of bandwidth sufficient to properly provide access to your service for your customers? What if Comcast competes directly with your business and decides that no way, no how will it let its customers even access your service?

This is the power that monopolies have. Yes, perhaps over time Comcast wouldn't get away with this sort of nonsense, as the regulators would eventually step in, but the U.S. government can be very slow to respond. Lawsuits aren't timely, and they are very expensive, requiring resources from many parties.

Startups and other disruptive companies by their very nature seek to cause change massively and quickly. Comcast or Time Warner Cable or AT&T could easily shut down the premise and promise of a startup - and even if that behavior were later considered illegal, the damage would already be done.

[ Related: In Net Neutrality Dispute, Investors Support of Small Companies ][ Commentary: Are Cable Companies Like Drug Cartels? John Oliver Thinks So ]

You might also argue that consumers have a power of choice if one ISP decided to act in this nefarious way. However, unlike other markets, most consumers have only one choice for home wired broadband connectivity. What's more, many wireless broadband solutions have data caps or are otherwise unsuitable for sustained regular use within the home.

Get involved in Net neutrality debate

You really need to make the time to be involved in this debate. The issue boils down to is whether the companies that offer service on pipes on the Internet, the last mile of service between a user and the greater Internet, should be able to exert control over the traffic that goes over those pipes.

Weigh in on this issue. Write your congressmen. Write to the Federal Communications Commission. Direct your business (where you can) to companies that favor the strongest exercise of Net neutrality principles. Otherwise, you might find yourself competing to reach customers not only within your own industry, but also with your customers' service providers.

Jonathan Hassell runs 82 Ventures, a consulting firm based out of Charlotte. He's also an editor with Apress Media LLC. Reach him via email and on Twitter. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.

Read more about government in CIO's Government Drilldown.

This story, "Why Net neutrality matters to your business" was originally published by CIO .

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