Net neutrality as it currently stands offers SMBs the opportunity to compete on the same broadband playing field...
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as larger organizations. But the pay-to-play concept proposed by the Federal Communications Commission (FCC) creates a usage-based pricing structure that could make it more difficult for small and medium-sized businesses (SMBs) to keep pace.
The proposed regulations would affect Internet service providers (ISPs) and niche businesses that offer streaming content. Netflix recently submitted a plea requesting that the FCC intervene in the company's dealings with ISPs, such as Comcast and Verizon. Netflix claimed these ISPs were intentionally letting connections deteriorate in order to force Netflix to pay for better service. If a large business such as Netflix is already having issues, how would the small fries compete?
In the latest SearchCompliance #GRCchat, we asked participants to share their net neutrality predictions:
— SearchCompliance.com (@ITCompliance) June 19, 2014
One major concern is that ending net neutrality will ice innovation and force startups and entrepreneurs to rethink Internet service use. SearchCompliance Site Editor Ben Cole, tweet jam participant Brian Katz and SearchCIO Managing Editor Rachel Lebeaux expressed their concerns:
A2 Yes – small sites currently on a level field with huge ones – making the independent startups pay premiums will hurt innovation #GRCChat
— Ben Cole (@BenjaminCole11) June 19, 2014
A2. Yes, because it will be harder for them to become big companies #GRCchat
— Brian Katz (@bmkatz) June 19, 2014
A2 Depends on how payments are structured but yeah, it'll inordinately affect SMBs if fees eat a larger slice of their spending pie #GRCchat
— RachelTT (@RachelatTT) June 19, 2014
Lebeaux brought up an important point about pricing structures: Much is still unknown.
"Netflix accuses the last-mile carriers of 'double dipping,' or trying to get paid twice for delivering Netflix videos, "explained Wall Street Journal columnist Holman W. Jenkins, Jr. in a recent piece. The streaming media company said ISPs are profiting from high-speed broadband sales to Netflix users, and from Netflix itself. Whether or not Netflix is correct, there are certainly many questions regarding potential pricing models under new Internet regulations.
According to Jenkins, there would be a number of potential pricing models for broadband use if net neutrality were dissolved:
- Flat-rate/linear pricing: This pricing structure charges a single fixed fee for a service, regardless of usage. In a flat-rate pricing structure, heavy Internet users are subsidized by light users.
- Congestion pricing: This structured system bills broadband customers according to how much data they use and when they use it. Jenkins said: "It would produce lower average costs for users for the same reason that business travelers benefit when airlines fill up planes with backpackers and grannies on cheap tickets."
- Metered/consumption-based pricing: This usage-based pricing structure charges broadband customers for what they use (bits), much like home electric or gas billing structures. Customers using larger amounts of broadband at home will pay more.
In this New York Times Business Day Live video, reporter Brian Stelter explained that usage-based billing is "concerning to startups and other companies that want to host really interesting new services on the Internet." Tweet jam participant Michael Elling shared other potential downsides to consumption-based models:
— Michael Elling (@Infostack) June 19, 2014
— Michael Elling (@Infostack) June 19, 2014
If high-volume users decide to limit their broadband usage, others could suffer, especially content delivery networks (CDNs). What other ways could ISPs, small businesses and customers suffer if a metered model were enforced post-net neutrality? Please sound off in the comments section below.
Join our next SearchCompliance #GRCchat Thursday, July 24, at 12 p.m. EDT. Until then, browse this month's conversation and add your two cents.
Emily McLaughlin asks:
What aspects of net neutrality concern you the most if the FCC's proposed regulations go through?
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