What Is Net Neutrality, and How Can It Affect Your Business?
This story appears in the June 2014 issue of Entrepreneur. Subscribe »
Q: What is net neutrality, and how can it affect my business?
A: We enjoy an open network in which internet service providers (ISPs) distribute the information we send and receive on a neutral basis--meaning without preferential treatment. In this best-case-scenario environment, all internet traffic is treated equally.
But this setup isn't guaranteed, and it's an issue that needs to be watched carefully, according to Alexis Ohanian, co-founder of reddit, the social news website powered by user-submitted content. We asked him about the importance of net neutrality in creating parity for all businesses.
What would a non-neutral internet environment look like?
An ISP could freely insist that social networks such as Facebook or a cloud service provider such as Amazon pay an additional fee in exchange for the ISP delivering their data faster. Facebook and Amazon could buy this preferential treatment, which would give them a huge advantage over their smaller and now slower-moving competition.
But if they refused to meet the ISP's financial "suggestion," the service provider could--and I stress could--slow down access to those services, which to even the casual observer raises the specter of blackmail.
How would that affect my small business?
With net neutrality as we have now, you, the entrepreneur, have the opportunity to compete with anyone--and you have a chance to succeed--because anyone can access your website as easily as they can find the incumbents. If we lose net neutrality, a small-business owner will face a much smaller market. Worst-case scenario: Instead of being able to sell to anyone with an internet connection, fledgling entrepreneurs would find their customers limited to those who paid for the "internet package" that covers access to their particular website. It would be like your cable TV plan: The more you pay, the more channels you receive.
The reason innovation thrives online today is that everyone has access to every channel equally.
Don't current laws guarantee net neutrality?
No. Earlier this year, a lawsuit between the Federal Communications Commission and Verizon began when the broadband giant came up with a plan to sell metered internet packages to its customers. The FCC tried to block it based on net neutrality but lost that battle because it had imposed "common carrier" utilities regulations on broadband service providers. But those providers were never officially classified as utilities, so the court rejected it. The FCC said it plans to regroup and push net neutrality on the regulatory side.
Who's opposing net neutrality?
Internet service providers who want to turn the internet into a tiered service. I liken it to having to pay more for the electricity going to your TV because you bought a Sony instead of a Samsung.