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Who wins and who loses if net neutrality gets neutralized?

November 30, 2017 | By Mark Glaser, Founder and Publisher – MediaShift @mediatwit

It feels like déjà vu all over again, harking back to the not-so-distant past when we had “Internet Slowdown Day” (2014) and “Internet Blackout Day” (2012) in support of net neutrality. Those battles seemed to have been won with the FCC changing its rules to protect net neutrality so that ISPs don’t block or throttle traffic.

While net neutrality isn’t an easy concept to grasp, it means a whole lot to smaller players on the internet who don’t have the funds to compete with bigger players. It also has the potential to impact content companies of all sizes, as ISPs could prioritize traffic for their own content subsidiaries.

The new FCC chairman Ajit Pai, formerly an associate general counsel at Verizon, recently released a proposal that would undo the Obama-era regulations that enforced net neutrality. Undoing net neutrality would give telecoms and ISPs the power to charge more or slow down services at will. Though they would have to be “transparent” about it (maybe in fine print somewhere).

In fact, as social media has become a larger source of news, and streaming video services are replacing traditional television, dismantling net neutrality regulations will upend how users access content. It also stands to change who can deliver news, information, and entertainment in the first place.

This is not a strictly conservative agenda — even Donald Trump’s supporters are now debating the potential consequences of upending net neutrality. Here’s a roundup of some of the winners and losers if the FCC’s proposal comes into play, with an eye on publishers and online content.

Winners

Internet Service Providers: AT&T, Comcast, Verizon, et al

ISPs will have more leverage over what they can charge consumers, and be in a position where they can slow or throttle the delivery of content from their competitors. Telecom companies have resisted net neutrality regulations by insisting they can offer more or less to consumers at different price points. In other words, offer audiences a wider variety. But that also means they can favor their own offerings, including streaming services. Take this example Wired’s Klint Finley assembled:

“When AT&T customers access its DirecTV Now video-streaming service, the data doesn’t count against their plan’s data limits. Verizon, likewise, exempts its Go90 service from its customers’ data plans. T-Mobile allows multiple video and music streaming services to bypass its data limits, essentially allowing it to pick winners and losers in those categories.”

The end of net neutrality signals that more packages like this one may become the norm.

Publishers Owned by ISPs

The publishers under the umbrella of large telecom companies could also get a leg up when it comes to favored distribution. Verizon owns AOL, Yahoo, HuffPost and TechCrunch content, among others. Comcast owns NBCUniversal Media, which includes all NBC channels, USA Network, Telemundo and a stake in Hulu. If AT&T closes its deal to purchase Time Warner, that means it owns HBO, CNN and TBS. Bundling packages that favor these subsidiaries could very well be a part of new subscription plans. The downside is that while one telecom might favor owned content, the others might throttle it.

Ajit Pai

The chairman of the FCC wanted to undo net neutrality rules for a long time, and with the odds of voting stacked in his favor, this would be a clear victory for his deregulatory point of view.

Trump administration

Deregulating the internet by abolishing net neutrality is in line with Donald Trump’s conservative government agenda. It’s a huge boost to an administration looking to favor business at all costs (and undermine Obama-era accomplishments).

Losers

Streaming video players: Netflix, Amazon Video, YouTube, et al

If AT&T’s acquisition of Time Warner, which the Department of Justice is currently trying to block, comes through, that means that a telecom company owns HBO. Imagine what that could mean for HBO’s competitors? That’s exactly the situation that streaming video players find themselves in. The intuitive understanding is that the price of internet streaming will go up — for the streaming services that want to deliver video, and subsequently, the consumers who want to access those videos. Netflix has already announced that it will increase its monthly subscription rate, and loyal users seem intent to pay without fail. Yet this is with net neutrality still intact.

Ironically, streaming video players have succeeded where complicated and expensive cable subscription packages have not. However, as the internet looks to replicate cable subscriptions, it seems just as likely that not every Netflix consumer will be able to afford the cost of streaming their favorite content online.

Publishers not owned by ISPs

As the publishers who are part of large telecom conglomerates stand to receive the benefits of dismantling net neutrality, independent publishers could have the opposite experience. And that means everyone from the New York Times and Washington Post, which rely heavily on subscriptions; non-profits such as ProPublica; and local newspapers, which already struggle to compete with larger publishers of any kind online.

Small online local news startups have been trying to bridge the gap in coverage as newspapers have declined. This could hit them hard, according to Dylan Smith, chairman of the Local Independent Online News publishers.

“Giving a clear go-ahead for a tilted playing field would be the result if the FCC tosses out net neutrality,” Smith said.

Small businesses

Not having as many resources as larger competitors — but being able to access the same-speed connections — has enabled small companies to stay competitive and innovate when the odds were stacked against them. That’s how once-small startups like Etsy and Pinterest found their success. The chance that telecom companies would charge more for faster connections clearly puts such businesses at a disadvantage and could impact who will even be able to do business in the first place.

Technology giants: Google, Facebook, Amazon, et al

Tech titans have been some of the staunchest advocates for net neutrality. However, with telecom companies amassing more power if the regulations are upended, they too face potentially exorbitant rates. Sure, it’s hard to feel sorry for them, as they have plenty of money to pay more for a faster connection. But YouTube, Amazon Video, and now, Facebook Watch, have also made heavy investments into original video programming. An already competitive landscape stands to become much more volatile if the benefits of these video investments don’t outweigh the costs. And consumers will feel the trickle-down effects with the likelihood of more tiered-access and less access to programming they will want to watch.

Consumers

If the internet becomes more expensive for different kinds of websites, services and content, this will likely lead to consumers paying more. Online education startups like CodeAcademy have made their mark offering courses online, for example. The internet, which helped equalize access to such opportunities, will now make them more stratified.

In the end, it might come down to the courts to stop the FCC’s move to roll back net neutrality protections. As Tim Wu wrote in the New York Times, Pai will have to prove that the FCC is justified in repealing net neutrality, and it will fall short in proving that telecoms haven’t been investing in infrastructure or that there has been harm done. For publishers and tech companies – and consumers – that’s the last best hope that the rollback can be stopped. Otherwise, cue Internet Slowdown Day 2.0.

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