One of the most contentious issues in telecom this year has been net neutrality, and with no definitive resolution in sight, the debate looks set to continue into 2015. Key stakeholders and interested parties on both sides have voiced strong opinions, and the most recent argument centers on how much preserving net neutrality would actually cost.
Reclassifying internet providers as public utilities would require new regulations from the FCC, but the US regulator has the power to excuse companies
Consumers, start-ups, and over-the-top (OTT) service providers all have a clear interest in maintaining an open internet: without net neutrality, internet service providers (ISPs) could prioritize some traffic over others and create faster and slower lanes. ISPs, however, contend that companies generating the highest volumes of traffic should contribute more to network costs so carriers can upgrade infrastructure and manage demand.
In recent months, President Barack Obama urged the Federal Communications Commission (FCC) to classify broadband internet service as a public utility to prevent the introduction of preferential “fast” lanes. But Republican FCC Commissioner Ajit Pai warned industry observers in Washington that such a move could impose significant new fees — he claimed the shift “will cost $17 billion in new fees.”
That figure is disputed. It reportedly originates from a study by the Progressive Policy Institute, a think tank that has received funding from some major telecom companies. The study argues that reclassifying broadband as a public utility would subject ISPs to a range of legacy levies and obligations — including contributions to the Universal Service Fund — costs that could ultimately be passed on to consumers.
Importantly, that represents a perceived “worst-case” scenario and frames the discussion around taxation and regulatory obligations rather than the core principles of net neutrality itself. While reclassification would indeed trigger new FCC rules, the regulator has tools, such as the forbearance process, that could exempt certain carriers from specific obligations if deemed appropriate.
ISPs will be quick to tell you companies which put the heaviest demand on their networks should cough-up cash
Another complicating factor is the Internet Tax Freedom Act, a federal law that currently prohibits states and localities from imposing taxes on internet access and many online services. That law is scheduled to expire on December 11 unless Congress votes to renew it. If it lapses, consumers could face additional charges irrespective of how the FCC rules on net neutrality and ISP classification.
Net neutrality is not only a U.S. issue; the debate is global. For broader coverage, see our Net Neutrality category. In Germany, for instance, the concept enjoyed widespread support until recent comments from political leaders suggested greater flexibility. At a recent industry event, Chancellor Angela Merkel indicated that telecom operators might be permitted to offer “special services” at higher speeds, signaling potential shifts in policy discussions.
Do you think net neutrality will be expensive? Let us know in the comments.