What the Repeal of Net Neutrality Means for Businesses

The repeal of net neutrality will impact many aspects of day to day life—from social media browsing to binge-watching favorite movies and shows, to communicating and conducting business online. Without net neutrality laws protecting consumers and content creators, websites can be throttled, blocked, or require additional costs for access.

Wondering what the vote means for you and your business? Here, we’ll examine the effects of net neutrality being repealed, including what it means for your business.

A 3-2 Vote

 Net neutrality was repealed by the vote of 3 people. On Dec. 14, the FCC’s Republican majority voted to repeal the Open Internet Order ending what many refer to as net neutrality.

Net neutrality was a regulatory policy that, among other things, had labeled the internet a Title II common carrier.

That means that until the Dec. 14 vote, the internet was regulated in similar ways to other utilities such as electricity, gas, water, sewage, telephone, and transportation. These utilities are regulated in a way to ensure the public has equal access to basic necessities.

The repeal of net neutrality shifts regulatory control of the internet from the FCC to the FTC. This reclassification allows Internet Service Providers (ISPs) to treat the internet as a service and not a utility, meaning equal access is no longer guaranteed under federal law.

Many people are confused by net neutrality including what changes its repeal will create and what it means for them. Before we explore the impact of the repeal of net neutrality, it will be helpful to examine the function of the Open Internet Order and the effects of net neutrality.

FCC Control

Net neutrality, legislated by the Open Internet Order, placed regulatory control of the internet under the jurisdiction of the FCC. During the 90s and early 2000s, the internet was a lightly regulated industry, and it experienced unprecedented growth.

However, as the internet grew and more and more people began relying on it for business, those light regulations were not effective in protecting consumers and promoting equal growth. After a series of consumer lawsuits against various ISPs for throttling speeds, blocking competition, and limiting internet access, the web was reclassified as a common carrier under Title II and placed under the purview of the FCC.

Net neutrality prohibited blocking, throttling, and paid prioritization. That means that ISPs could no longer discriminate against lawful content by blocking websites or apps, especially competitor sites or services. It also meant that ISPs could no longer slow or throttle legal transmission of data. Finally, it meant that ISPs could not create a “fast lane” privileging companies and consumers who pay higher premiums or a “slow lane” for those who wouldn’t or couldn’t pay higher prices.

The repeal of net neutrality eliminates these protections for consumers and businesses.

The full effects of net neutrality being repealed won’t be felt for some time. However, we can surmise some of the biggest changes facing businesses and consumers who rely on the open internet to conduct business and earn their living.

ISPs Will Control the Internet

 One of the biggest concerns regarding the repeal of net neutrality laws is the ability of ISPs to speed up or slow down bandwidth availability to websites or competitors. Before the repeal, ISPs were required to treat every website equally.

In other words, ISPs provided unbiased bandwidth and internet access. Now, they’ll be able to choose which websites to promote and which sites to suppress, block, or throttle.

As you can imagine, throttling will have a negative impact on many small and medium-sized eCommerce sites and other business sites. One of the biggest impacts on businesses will be slow load times. That’s because slow and unresponsive sites are quickly abandoned by searching customers. In fact, page load time can impact your conversion rate—40% of customers will abandon a website that takes more than 3 seconds to load.

Every Second Counts

For each second of delay, businesses can expect a 7% drop in conversions. A one second delay may not seem like a big deal, but an eCommerce site that makes $10,000 per day could expect to lose out on $250,000 in sales per year due to a one second delay in load time.

What’s more, site speed is one of many important factors used by search engines like Google when determining search rankings. So, if bandwidth availability is throttled as an effect of net neutrality’s absence for specific websites, it can negatively impact their ranking and lead to a reduction in site visits and conversions.

Fast Lanes and Slow Lanes

The repeal of net neutrality allows ISPs to create fast lanes and slow lanes for websites and content providers. This means that bandwidth intensive sites that feature video, music, or images may be required to pay premium tolls to compete. While large companies like YouTube or Netflix will be able to pay these new fees, they will pass them onto consumers in the form of higher memberships or more advertisements.

This also means that ISPs will be able to favor their content and partners through fast lanes while throttling competitive content and websites. For example, if you run a business that competes with a business partner of an ISP, your site and content could be throttled to eliminate the competition you represent. If you want equal bandwidth access you may be required to pay additional fees.

Increasing Costs

One of the biggest effects of net neutrality being repealed is the probability of increasing costs for businesses. Because high speeds are a necessity for any online business that wants to remain competitive, those companies will surely be expected to pay extra to compete with established, large companies who either have existing partnerships with ISPs or are able to absorb higher costs.

 The importance of online visibility and availability is obvious—in order to succeed in the crowded online marketplace, you need high search engine page rankings and fast load times.

ISPs understand the power they’ve just been given and they will use it to their benefit. Fast lanes will be offered for an additional fee and to remain competitive small firms will be required to make difficult decisions.

Some small businesses will be forced to make cuts elsewhere in order to pay higher fees associated with ensuring quick load times and customer accessibility.

Partitioned Internet

The repeal of net neutrality will have many effects. Perhaps the most alarming is the partitioning of the internet. Currently, you have access to any website that doesn’t have a paywall. You can access social media sites, entertainment sites, news sites, shopping sites, and much more. The repeal of net neutrality laws means that ISPs can partition the internet and sell access to categories and sites, much like cable companies sell packages for different channels.

For example, if you wish to access social media sites, your ISP can charge an extra fee to guarantee access to Instagram, Facebook, Snapchat, and even LinkedIn. Do you like streaming videos? Your ISP can now charge an extra fee for streaming services like YouTube, Netflix, Hulu, and more. This change will be especially burdensome on the millions of “cord cutting” customers who turn to the internet for entertainment.

Pay For Access

The splitting of the internet will most certainly impact eCommerce and other online shopping avenues. If your prospective customer doesn’t pay extra for open access to eCommerce sites they may only have access to online stores that have arrangements with your ISP.

 For example, if the ISP in your area partitions internet packages for consumers, your prospective client base may no longer have access to your website.

Large websites that create arrangements with ISPs may be featured, but access to your site will require an additional fee from customers. As you can imagine, this could add an incredible roadblock to reach your customers.

Worse, a partitioned internet will eliminate the cross-channel advertising many businesses rely on. Blogs and ads on social media channels like Facebook or Instagram drive traffic and business to your website. A partitioned internet won’t allow for easy linking between blogs, advertisements, and websites.

What’s Next

The repeal of net neutrality will impact every aspect of modern life. That’s because the internet is such an integral component of day to day living—from entertainment to communication, to business. So does the repeal of net neutrality mean everything will change right away? Probably not.

The ruling won’t take effect until some time in 2018 and right now 18 states are filing a lawsuit to challenge the repeal. All signs point to a showdown in the US Supreme Court. However, just because the effects of net neutrality being repealed won’t be felt until later, doesn’t mean you shouldn’t prepare today.

What Should You Do

If you’re concerned about the impact of net neutrality laws being repealed you should contact your ISP to solidify your contract and the terms of your service. Now may be a great time to sign a new contract that specifies what services and speeds your ISP will provide regardless of the repeal vote.

You can also contact your representative in Congress to let them know how this vote will impact your ability to conduct business. Battle for the net is a great resource on net neutrality and how to contact your representative.

Providing solutions to fit your
organization’s IT needs

IT Partner