Net neutrality could be expensive - or not

One of the biggest debates in telecoms this year has been around net neutrality, and with still no clear decisions made, it looks set to go on well into 2015. Influential figures and biased parties on either side have given their take on the issue, but the most-recent debate is in regards to how much maintaining net neutrality is going to cost...

Reclassifying internet providers as public utilities would require new regulations from the FCC, but the US regulator has the power to excuse companies

It is in consumers', start-ups’, and OTT players' best interest to ensure net neutrality is maintained - or risk having various level of service from internet providers. Of course there are two sides to every argument, and ISPs will be quick to tell you that the companies which put the heaviest demand on their networks should cough-up cash in order to help deal with the traffic and invest in infrastructure.

Last month, President Barack Obama called on the FCC to declare broadband internet service a public utility to prevent "fast" and "slow" lanes from being implemented. But Republican FCC Commissioner, Ajit Pai, told telecom layers in Washington on Friday that the plan "will cost $17 billion in new fees".

It is a disputed number which was reportedly taken from a study (PDF) by the Progressive Policy institute, a think tank which is said to have received funding from AT&T. The study believes that declaring internet service a public utility will impose a bevy of new internet taxes - including the Universal Services Fund levy - which is a cost that will end up being placed on customers.

This of course is a "worst case" scenario, and highlights an issue over what taxes should be placed on the internet rather than net neutrality. Reclassifying internet providers as public utilities would require new regulations from the FCC, but the US regulator has the power to excuse companies from such obligations in a process called "forbearance".

ISPs will be quick to tell you companies which put the heaviest demand on their networks should cough-up cash

A law exists called the "Internet Tax Freedom Act" which prevents states and governments from taxing the internet, but it is set to expire on December 11th unless Congress decides to renew it. If allowed to expire, many consumers could face charges regardless of what the FCC decides regarding ISPs and net neutrality.

The debate is continuing around the world, as you can see by sifting through our handy 'Net Neutrality' category. In Germany, for example, net neutrality has seemed to have almost complete support up until recently when figures such as German chancellor Angela Merkel said at a Vodafone event last week that telecoms companies should be allowed to offer "special services" at a higher speed.

Do you think net neutrality will be expensive? Let us know in the comments.

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13 Dec 2014, 7:34 a.m.

It is always the consumer who pays.
I think that a big problem is that telecom goes flatrate, that is customers with a small usage pay for customers with an excessive usage. When selling 20Mbit, then the ISP probably calculates an average use less that 1 Mbit.

So non Netflix users are then paying for Netflix users. Would that then be fair to charge Netflix then. Actually that would then mean that Netflix customers with efficient networks then would have to pay for Netflix customers with inefficient networks. And Netflix would have to make an agreement with every ISP in the whole world, meaning that Netflix customers using ISP with no agreement with Netflix then would pay for customers on ISP's with an agreement. Neither good.

Now Netflix is big and may be able to handle this this bureaucracy, but it sure has a cost, on the non net neutrality side. This cost is going to be bigger because every new service provider would have to face the same cost. In the end that means less competition and thus higher costs for all.

What ISP's would have to do is to sell guaranteed bandwidth. I'm not really aware of any ISP specifying a guaranteed bandwidth in their standard products, and that can only be sold towards specific destinations.

Net neutrality or not, guaranteed bandwidth needs to be offered and specified. What use is it that a customer buys 100 Mbit, and then the Voip call which requires 100 Kbit scratches. Especially if the big players gets the right to reserve bandwidth, then customers need to know how much bandwith they have for other services. Otherwise they will be paying for Netflix users, who have bribes the ISP to give them all the bandwidth.