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Understanding Net Neutrality

The concept of ‘net neutrality’ led to a significant debate in the United States and Europe (and even in other parts of the world). Net neutrality implies that internet service providers (ISPs) must not discriminate between third party applications or services when they provide internet services to users – they are merely channels to access various resources on the internet, but not gatekeepers which will govern or block users from accessing information.

Across the world, internet services are primarily provided by telecom companies. With the advent of broadband, many internet services (say for example, Skype, Google Chat, YouTube) had the potential to replace or reduce the market for the voice or video-call facilities provided by telecom companies. Therefore, there was incentive for telecom companies to charge such websites to compensate for the loss of revenue. 

Should internet service providers charge websites and applications to provide access to users to them? Users pay internet companies for internet access anyway. Websites which provide services that are of use to the end-customer will become popular and thrive. However, charging websites (websites could include social media networks, e-commerce sites, video sharing sites or any other web resource or application) will have the following disadvantages:
  • It will make it expensive for smaller players to operate,
  • Smaller players will find it difficult to compete with established giants
  • Accessibility of services will depend on the relationship that the website has with various internet and telecom companies and not on the merit or benefits of the service to consumers. Consumer choices will no longer guide success of an online venture.
In the US, the Federal Communications Commission (FCC) regulates internet service providers. Net neutrality has had a difficult journey in US – the FCC had attempted to sanction Comcast but its actions were invalidated by a US court in 2010. It published new rules for net neutrality later. Primarily, the rules state that broadband service providers cannot discriminate between lawful applications and websites, and should not block such applications and websites even if they compete with their voice or video telephony services (see rules on the Open Internet). These rules have been challenged by Verizon (the court’s decision is pending) (see this article on Wired and this article on the Wall Street Journal Blog). 

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