Net Neutrality and Impact on Cloud Computing

Net Neutrality and Impact on Cloud Computing

The FCC’s repeal of net neutrality rules, which went live June 11, effectively turns Internet Service Providers (ISPs) into an oligarchy beyond what they already were, now capable of charging both customers and service providers for access. Conceptually, Internet in the US may look very different than the rest of the world in the coming years. While the actual cost of connecting to the Internet is unlikely to change for the average customer, those who are connected for long, heavy sessions, such as gamers and streamers, might find themselves in a tiered subscription model where they are charged for the highest speeds and the largest amounts of downloaded data.

Two-Sided Coin for Content Superpowers

The repeal could have a double-edged sword effect on the likes of YouTube, Facebook, and Google, which all thrive off delivering content in a multitude of forms at a high rate of speed. Like cable companies, the ISPs may be charging these mega-powers a carriage fee or a service charge for connectivity above a certain speed to their customers. This could see the likes of the aforementioned trio giving up a share of their advertising revenue to the ISPs to stay online with their customers. The idea of giving up a chunk of their revenue for the exact same service most likely won’t sit well with the superpowers, but there will be a benefit as well. The steep charge put in place by the ISPs will make it difficult for new, smaller players to try to push into the marketplace, giving the big fish a significant advantage over any would-be competition. This sort of pay structure could easily expand to the likes of Amazon, Netflix, and real-time service apps like Uber as well.

Small Businesses Suffering?

Cloud computing has given small businesses the chance to compete with the big boys on a relatively even playing field. Space is relatively cheap on the cloud, and if you use the right provider, you’re getting top-flight IT service and security around the clock. But if your business isn’t a big revenue generator that can afford to pay ISPs for the best connection speeds, it might be time to start worrying.

Currently, most ISPs have said they won’t be looking to throttle traffic for smaller customers or force them into a pay-for-access model, but that’s only today’s prognosis. If consumers aren’t willing to pay for a tiered plan going forward (see below), small businesses are the next logical target for increasing ISP revenue streams.

Consumer Concerns

Creating or increasing consumer rates for Internet usage is a field of rotten ice that even powerful ISPs will tread extremely lightly on. While corporations can engage in a dust-up and agree at the end that “it’s just business,” consumers are a lot more mercurial and infinitely tougher to re-engage once they’ve got a bad taste in their mouth.

Consumers have proven they are firmly against switching to a plan where they pay for usage rather than a flat monthly fee. In a 2016 Incognito survey on Broadband QoE, only 15% of consumers favored a usage-based billing plan. A majority of 58% said no, but perhaps the most telling statistic was the 27% who admitted to not understanding how such a plan would work.

It’s theoretically possible for ISPs to perform deep-packet inspections to see what services you are using and charge you for the ones that fit their tiered model. But that sort of “Big Brother” behavior would induce public backlash that might be irreparable. The smarter play will be for ISPs to begin offering new services that charge customers for top-flight connection speeds for specific functions (streaming, online gaming, etc.)

This would allow ISPs to gradually convert the Internet into a tiered platform of premium services, while your basic browsing – checking email, reading the news, etc. – will remain free of charge, although perhaps at slower connection speeds.

Conclusion

The bottom line is that the repeal of net neutrality puts ISPs in a position of power the likes of which have never been seen before, and gives them the opportunity to increase revenue like never before. Internet giants, small businesses, and consumers alike will all be holding their breath to see who ISPs target first.

About the Author

Marty Puranik is the founder, president, and CEO of Atlantic.Net, a profitable and growing hosting solutions provider in Orlando. Marty’s strengths as a leader and visionary have helped him lead a successful business for over two decades. Atlantic.Net thrives thanks to Marty’s strategic acumen, technical prowess, and his valuable, old-fashioned habits of thrift, modesty, and discipline.

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