The Internet isn’t broken, so Donald Trump has decided to fix it!

And so starts the discussion around Net Neutrality.

Let me start by giving a simple explanation of Net Neutrality. I have a water mains that brings water into my house from the Council water mains in my street. Our street is fed by larger water mains that feeds several streets and so on until the water is back at the main water storage facility. When I turn my tap on to have a shower or wash my hands or to flush the toilet, the pressure in that total system will allow water to flow into my house. This will be dependent upon how much pressure is in the system and the amount of water that is being used by all the other people connected to the same water storage facility.

The system I have just described is effectively Net Neutrality. There is no preference given to water that I need for different uses in my house but the water flow will be determined by a range of factors outside my house. The only way I might be able to change the equation slightly is to pay for a larger water mains to enter my house and that will allow more water to flow for all usage in my house.

Currently the Internet works in a similar way. Users pay for a connection to the Internet and some people pay for faster speeds into their home or business. When they open a Web browser or watch a streamed TV show, the data that is available in the system and the amount currently being used will determine how fast I receive my data.

On 14 December that may all change.

In the United States the Federal Communications Commission (FCC) will vote to potentially repeal the current Net Neutrality laws. If that is successful, what I have just described will not be how content is delivered. With the current laws in the US, it is illegal for a provider to prefer certain content over other content. That means that an Internet Service Provider (ISP) has to give equivalent bandwidth to every user providing content on the Internet. Once Net Neutrality is a thing of the past, a company like Verizon could charge a company like Netflix more money to give preferential treatment to data from that company. You can imagine companies like Netflix having no choice but to pay more to ensure their streaming content had enough available bandwidth to deliver a good end-user experience for their subscribers.

This creates the first problem. Additional cost to the providers can only mean one thing. Additional cost to the subscribers. You and me. Without Net Neutrality I can see that the providers of the pipes will see huge opportunities to market different packages to the various providers of content.

The second problem I see is that the larger companies will pay the price of preferred access as they have the budgets and business models to pay for this access. For a small start-up, this is a more difficult proposition. Some of America’s largest tech companies – Google; Facebook; Amazon and Netflix – are opposing the loss of Net Neutrality citing the same logic in relation to start-ups. How is a small company going to try and compete with Netflix knowing the users will have a poor end-user experience? On the flip side, an Internet provider could decide they simply won’t offer a package to a company like Netflix but instead throttle all Netflix traffic back to a crawl – and introduce their own rival service for their subscribers that will have preferred traffic. It could effectively lock a rival out of an entire group of clients from a provider. You could call it an anti-competitive move.

In my mind it goes against the very intention of the Internet. A bunch of computers with content connected together that allows you to look at and share information. It created innovation and unbridled access to, well, just about everything.

All of this is in the US. What does it mean for us in Australia? Nothing at this stage but potentially a lot. If content providers in the US are forced to pay more in the US we may see prices increase for users across the world. For Australian companies competing online in the US they will be forced to consider how they will ensure their US customers receive a good user experience. On a bigger picture, we often follow the US lead. We have no specific Net Neutrality laws but the ACCC monitors NBN broadband speeds and we have strong consumer laws and competition policy – but these have never been tested. There is no doubt that providers in Australia will watch with intense interest what happens in the US and may well change their business models in Australia.

Keep an eye on the news on 14 December and then watch this space.

Mathew Dickerson

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