Next Investors logo grey

The Net Neutrality threat: why the internet may never be the same again

Published 27-DEC-2017 11:56 A.M.

|

4 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.


Click Here to View Latest Articles

In case you missed it, net neutrality is in trouble.

Led by Chairman Ajit Pai, the US Federal Communications Commission voted in favour of removing the Open Internet Order on December 14.

Even though the vote has dominated recent headlines, you’d be forgiven for wondering what ‘net neutrality’ actually means.

In short, net neutrality is the principle that internet providers must enable equal, impartial access to all websites and applications regardless of the source.

Under the Open Internet Order bill passed by the Obama government in 2015, providers were prohibited from:

  • Blocking – Internet service providers could not discriminate against any lawful content by blocking websites or apps.
  • Throttling – Service providers could not slow the transmission of data based on the nature of the content, as long as it is deemed legal.
  • Paid Prioritisation – Service providers could not create an internet fast lane for companies and consumers who pay premiums, and a slow lane for those who don’t.

In short if the FCC’s vote is passed, ISPs will be able to control users’ internet experience.

With time, your internet service options could look like this.

net neutrality cable tv

At which point consumers will look like this.

net neutrality

And a phone chat with your internet provider may sound something like this:

You: Please help me, my internet is cooked. It’s taking me five minutes to load a single youtube video. I’ve had technicians out to look at my router, but no luck. Is there anything you can do?

ISP: Why sure! Just to confirm, you are having trouble watching videos online?

You: Yes, I have no idea what’s going on. I used to be able to stream or watch anytime, anywhere.

ISP: No problem loyal valued customer, we can fix this for you. For $10 per month you will be able to watch your favourite videos in 1080p with no hitches.

You: Only $10 a month? You guys are the best!

ISP: No problem. That will be an extra $10 a month on top of your ‘base’ package.

You: What? Well at least I’ll be able to watch youtube and play my games now too. The download client on Steam crawls at the moment.

ISP: Did you say Steam? Ah, that will be an extra $5 per month. Video streaming and our ‘gamer’ package are two different expansion packs. You’ll need both to get the optimal speed.

You: But I’m already paying you guys $29.95 a month?

ISP: That’s right. Could we also interest you in a $5 Amazon shopping booster pack?

Can the decision be reversed?

Under the Congressional Review Act, Congress can issue a resolution of disapproval and overrule the FCC’s decision. However, the CRA specifies that Congress has just 60 days to do so.

Furthermore, the resolution requires Presidential support or backing from two thirds of the House and Senate. Fight for the Future, which is one of several pro-neutrality groups, has urged Congress to knock back the FCC’s recommendation.

“Net neutrality has more public support now than it has ever before,” a statement from the group said.

“Internet users are educated, outraged, and strategic, and they know that Congress has the power to overturn the FCC vote. Lawmakers cannot hide from their constituents on this issue.”

US Senate Minority Leader Chuck Schumer has already indicated his intentions to call for a vote to reinstate net neutrality. He stated earlier this week: “We can bring it to the floor and force a vote. So, there will be a vote to repeal the rule that the FCC passed.”

New York Attorney General Eric Schneiderman is leading a multi-state lawsuit, which will sue the FCC for overturning neutrality.

“This rollback will give ISPs new ways to control what we see, what we do, and what we say online,” Scheiderman said.

“That’s a threat to the free exchange of ideas that’s made the internet a valuable asset in our democratic process. The FCC just gave the Big Telecom an early Christmas present, by giving internet service providers yet another way to put corporate profits over consumers.”

The million-dollar question: will Australian ISPs follow?

While Australians will not be impacted directly if the FCC has their way, Australia has no laws ensuring net neutrality.

Tim Singleton-Norton of Digital Rights Watch believes that net neutrality laws in the US set the benchmark for Australian providers. With those protections now under threat, local ISPs could follow a similar path.

“With that now [potentially] gone, we’re worried about what Australian operators will see as an opportunity to change that,” Singleton-Norton said.

“In fact, we’ve already seen some comments, such as from the CEO of Vodafone Australia, that he is willing to look into this as to how he could change processes here in Australia.”

Matthew Kusi-Appauh, who is a corporate strategy manager at Aussie Broadband, shares similar concerns.

“The danger, I suppose, is it could be foreseeable in the future to have a scenario where Fairfax Media or another large media corporation will then start to buy into the telco ISP space and therefore be able to regulate information that users are able to basically consume by the internet.”

It’s no overstatement to say that if you take away net neutrality, the internet as we know it will be gone.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.