The first in a Three Part Series…
Last month, the Federal Communications Commissions (FCC) voted to repeal the net neutrality laws that were enacted by the previous US presidential administration. The net neutrality regulations that were repealed prevented broadband providers from blocking certain websites or charging for content. It prevented players like Verizon, Comcast and AT&T from showing favoritism to any one website or publisher. In fact, prior to the vote Tim Berners-Lee, founder of the Internet, along with many other World Wide Web pioneers urged the FCC to cancel the vote since they stated that Internet was created to be open and free and “that the FCC’s proposed Order is based on a flawed and factually inaccurate understanding of Internet technology.” What they understood is that repealing net neutrality could put more power in the hands of ISPs that could negatively impact advertisers, publishers, and ultimately users who would not be able to freely search for content on the web and get the same free access they once had.
However, the FCC Chairman Ajit Pai called the net neutrality regulations “heavy-handed regulations,” and criticized the previous administration for “micromanaging the internet.” The outcome of the vote reflects the Trump administration’s view point that less federal oversight will yield more innovation and a stronger economy.
The impact of this change is going to be truly monumental and could potentially negatively impact advertisers. Since ISPs will now be able to throttle speeds, they can also unbalance the ad tech ecosystem by inflating prices for the publishers that pay more and depreciating the ones that can’t afford to pay, driving ad spend to specific inventories and strangling the revenue models of smaller publishers or even advertisers with smaller budgets. Publishers could potentially be forced to pay for premium paid packages just so content can be accessed. The consequences of this is that the Internet can become available to those that can afford it. It can become an exchange where content providers that drive high traffic that can afford to pay for premium services and readers that pay for content. This type of model moves away for the core values of the Internet –of free and open access for all.
Pai’s argument is that companies, like Google and Twitter, favor publishers by ranking content according to their liking via technology like Google AMP. “Many thrive on the business model of charging to place content in front of eyeballs – what else is Accelerated Mobile Pages or Promoted Tweets but prioritization?” Pai said. “What is worse is there is no transparency into how decisions that appear inconsistent with an open internet are made.” However, technologist are arguing the other side that AMP is an open source code and anyone with the expertise can implement it.
Additionally, this rollback of net neutrality is lending tremendous power to telecom operators that already control the pipes and could now control the content as well, which could tremendously impact the publishing industry. Examples of vertical mergers—like the controversial AT&T-Time Warner merger—could create an anticompetitive environment that could be would be hugely detrimental to the quality, transparency, and impartiality of published content. Ultimately, if ISPs also control content, they could quite clearly decide to allow preferential treatment for their own channels and content.
“With telcos and ISPs controlling both the content and the method of distribution, there is little incentive or desire for new publishers, because their content could be harder to access compared to established publishers,” said Jeff Finch, Chief Product Officer at Choozle.
The unbalance will also shift to the ad industry since previously the internet offered advertisers a complex system of tracking that was leveraged to track audiences as they move across a vast network of websites. If broadband providers do indeed decide to throttle speeds and upset this ecosystem—whether by affecting the speeds of certain websites or limiting access via “packages”—the negative impact for advertisers could be immense. Their ads would become less effective in terms of relevance, and web giants such as Facebook could increase their ad prices since they could guarantee more targeted ads on their individual platforms.
With both sides strongly arguing their point, the fact remains that last week net neutrality was voted to be repealed leaving many to wonder how this will play out for the future of the Internet. Supporters of net neutrality are still wondering if this vote can be reversed to eventually “save the Internet.”
Stay tuned for part II in the series – Is a reversal of the FCC decision possible?