Business Development: Net Neutrality
What is Net Neutrality?
Net neutrality is the principle that broadband service providers must treat all content equally, meaning that Internet Service Providers (ISPs) cannot charge higher prices for certain online content nor intentionally slow down the delivery of content from competitors. ISPs are the companies that provide connections between the end user and the internet. At the federal level, net neutrality policies are enforced by the Federal Communications Commission (FCC). Without net neutrality policies, ISPs are able to treat online content differently.
History of Net Neutrality Policies
The FCC first adopted net neutrality policies as voluntary guidelines in 2005. In 2015, under the Obama administration, the internet was classified as a common carrier under Title II of the 1934 Telecommunications Act. As a result, the FCC could regulate ISPs. On December 14, 2017, under the Trump administration, an FCC vote overturned the decision and reclassified the internet as an information service, significantly reducing the FCC’s ability to regulate ISPs. Being classified as an information service means it falls under the light regulatory framework of Title I regulations, compared to the comprehensive public utility regulatory measures of Title II.
In February 2021, the Biden administration indicated support for net neutrality and withdrew a lawsuit issued against California for its state net neutrality regulations—further reinforcing California’s strong net neutrality laws. These laws gained attention following an incident in which ISP throttling during a wildfire crisis may have hindered emergency support. On October 19, 2023, the FCC voted to reinstate net neutrality rules, which officially went into effect on April 25, 2024.
Many proponents of net neutrality celebrated this decision. The Electronic Frontier Foundation wrote, “The order’s bright-line rule against throttling, [means any] decision to speed up ‘on the basis of Internet content, applications, or services’ would ‘impair or degrade’ other content, applications, or services which are not given the same treatment.” However, this angered many critics who argued that the decision would harm innovation.
Finally, on January 2, 2025, the U.S. Court of Appeals for the Sixth Circuit struck down the FCC’s net neutrality rules. All of these ups and downs make it hard for businesses to know exactly how much net neutrality impacts them. However, it seems that for now, net neutrality will not be in effect for a while.
Effects of Net Neutrality on Business
A business's digital profile is very important to its success and market reach. Changes in net neutrality policies impact all American businesses, including major corporations such as Netflix, Google, and smaller businesses. A growing concern about ISPs is throttling—when ISPs intentionally slow down service on specific sites in favor of others. Some businesses argue that ISPs could favor their own services over competitors, making it harder for others to reach customers. Advocates of net neutrality are concerned that the removal of net neutrality regulations would mean the end of internet equality for businesses.
“Broadband access is the great equalizer, leveling the playing field so that every willing and able person… has access to the information and tools necessary to achieve the American Dream,” said a former chairman of the FCC, as referenced by Michelle Lawrie (Executive Director of Door County Economic Development Corporation). Internet Association President Michael Beckerman stated that “without net neutrality protections, startups would face discrimination from ISP-owned or preferred content that’s granted a speed advantage through paid prioritization.” Beckerman argues that net neutrality protections are crucial to prevent ISPs from prioritizing larger companies that can pay for faster speeds, as connection speed has a strong correlation with customer retention.
Critics, however, argue that net neutrality is evidence of federal overreach and creates burdensome regulations. ISPs claim that net neutrality rules create extra paperwork for them, which costs money. They also argue that these policies are harmful to businesses because they reduce investment in internet services. As former FCC Commissioner Michael O’Rielly stated, “Periods without net neutrality rules were times of innovation and investment.”
Ultimately, although the impact on businesses remains contentious, it is undeniable that net neutrality policies have a significant influence on the digital economy.
Future of Net Neutrality
Net neutrality regulations are no longer in effect at the federal level as of January 3, 2025, but they have historically fluctuated with different administrations. Furthermore, some states like California and Washington have developed their own net neutrality regulations to preserve an open internet. Only three months after the federal rules were struck down, one company found evidence of throttling across different platforms. Net neutrality continues to play an important role in the development and operation of online businesses, and it remains to be seen whether the absence of federal regulations will prove harmful or beneficial.
