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Will new net neutrality regulations spur investment and innovation?

The FCC gave new net neutrality regulations the go-ahead, but the battle for an open Internet is hardly over. In this #GRCChat recap, find out whether the new regulations mean good news for innovation and consumer privacy.

Francesca Sales
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Published: 17 Mar 2015

Last month, in a landmark decision, the Federal Communications Commission passed new net neutrality regulations that would reclassify broadband as a public utility, under Title II of the Telecommunications Act of 1996. The decision, which prohibits paid prioritization and encourages an open Internet, has garnered praise from a broad range of parties, from Google to online marketplace Etsy to President Obama himself. Even some carriers, such as Sprint, are on board with the ruling.

There are also many detractors, however, including rival carriers AT&T and Verizon, which argue that the regulations are outdated and will negatively impact consumers, innovators and investors. The two FCC Commissioners who voted against the ruling, Ajit Pai and Michael O'Reilly, are also among net neutrality's critics. They argue that by regulating the Internet as a public utility, the FCC is essentially replacing the freedom of the Internet with "government control."

The decision is clearly a controversial one and is likely to face legal obstacles. In this #GRCChat, SearchCompliance editors and followers examined the two sides of the net neutrality debate, including how the new regulations could either spur or hinder innovation, and how they could impact consumer privacy.

Will the net neutrality regulations deter broadband company investment and innovation?

Site editor Ben Cole brought up one of the major objections to reclassifying the Internet as a telecommunications service and enabling the FCC to place more regulations over it:

The FCC's Ajit Pai, who is among those opposed to the net neutrality proposal for this reason, said it "saddles small, independent businesses and entrepreneurs with heavy-handed regulations that will push them out of the market." Many small businesses themselves, however, appear to embrace it. A letter to the FCC that was signed by more than 100 small companies, including Yelp, Kickstarter and GitHub, said that such claims about the burden of a Title II ruling "is simply not true."

Cole and follower FinServGRC agreed, saying that banning the paid prioritization of Internet traffic will spell good news for consumers and competitors:

One alternative to commercial Internet service providers (ISPs) like Comcast and Verizon, as FinServGRC cited above, is municipal broadband, or municipalities building their own infrastructure to expand Internet access to a greater number of users. With an open Internet, ventures such as the high-speed fiber project in Cedar Falls, Iowa, could potentially prosper.

As participant Mike Chapple argues, without net neutrality, innovative startups that don't have the extra money to pay for Internet fast lanes will have a harder time reaching their audiences. Ravi Ravishankar, CIO of Wellesley College in Massachusetts, puts it this way: "The beauty of the Internet is that anyone can create a stir about their ideas and products by simply putting up a website and creating a buzz in social media. If ISPs cater to those paying big bucks, then customers are unlikely to see some of these sites."

Of course, opponents such as former White House speechwriter Mark W. Davis believe regulating the Internet under Title II will do the opposite: stifle innovative startups through what he calls "regulatory manipulation."

How will the bill's consumer privacy rules affect ISPs' business and GRC processes?

By reclassifying the Internet as a public utility, the new net neutrality rules transfer the authority of enforcing privacy restrictions on ISPs from the Federal Trade Commission (FTC) to the FCC, which could mean stronger privacy protections for consumers. This is a step in the right direction for ISPs, tweeted Cole:

One reason the new regulations could benefit consumers from a privacy perspective is because of the difference between the enforcement structures of the FTC and the FTC, according to Laura Moy, senior policy counsel for the New America Foundation's Open Technology Institute. While the FTC's enforcement is reactive, meaning they have to wait for companies to do something they consider misleading or unfair before they can take action, the FCC can set standards companies have to adhere to before those malpractices can take place. "Usually companies are in the clear under the FTC's authority if they just have a clear privacy policy and they abide by it," she said. "The FCC can actually set baseline standards for what practices are OK and what practices are not."

Your turn: Do you think the new net neutrality regulations will help or hurt consumers and innovation? Let us know in the comments section below.

Next Steps

Learn the ins and outs of the net neutrality debate in our IT Compliance FAQ. Then, head over to sister site SearchCIO to find out why redefining broadband could spell good tidings for CIOs.

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