Net Neutrality: What Lies Ahead?
December 18, 2017
By Michael List
Every parent knows the feeling, when your child asks you a question and you do not have an answer. My family was watching DinoTrux this last week on Netflix, when my four-year-old son asked, “Dad, how will the Federal Communications Commission vote to repeal net neutrality affect us?” I calmly responded, “Go to your room.” Kids these days. There has been a lot of confusion and frustration over net neutrality rules and the repeal. I want to provide some clarity about what the repeal means. So, how does the repeal affect us as consumers and investors? We do not know, nor does anyone else. Thank you for reading.
As with most debates today, net neutrality has two sides and not much common ground. The side backing net neutrality, advocate treating and regulating internet providers as public utilities; while repeal supporters want to give internet providers more control on content and pricing. The net neutrality regulations primarily required internet service providers to treat all Internet the same, not discriminating or charging differently based on user or content. Providers were prohibited from charging for higher-quality service or content or blocking websites.
Now that net neutrality is repealed, in theory, AT&T could provide faster speeds for streaming its DirectTV content while slowing down or blocking Netflix content, giving itself an advantage over Netflix. Another scenario is Netflix could pay AT&T large fees to have Netflix content stream faster than Hulu content. The FCC chairman hopes the repeal will benefit internet users as providers have more incentive to expand/improve networks and could offer a wider variety of internet service options.
Large providers like AT&T and Comcast promise consumers their online experience will not change. For sure, the repeal provides internet service (broadband) providers with more flexibility. Stocks of internet service providers rallied on the news of the repeal. Investors believe the repeal could lead to higher revenue and earnings for providers. From an analyst’s perspective (regulated or not), we know that good companies, the ones that win in the end, appreciate their customers and provide them with valuable products or services.
In the end, net neutrality in inextricably intertwined with politics. Since the topic touches all of us directly, it receives perhaps an undue amount of attention. Part of what we are charged to do is separate the rhetoric from reality.
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