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Net neutrality: What it is and what its repeal means to consumers

Jan 19, 2018 Philip Burgess

Net neutrality: What it is and what its repeal means to consumers

With roughly 80 percent of adults in America having broadband access, according to recent polling data from the Pew Research Center, the internet has become almost as ubiquitous in the typical home as the television. The online world reaches more people today than ever before in its history, a trend that's only expected to continue in the coming years.

"Most monthly internet bills cost consumers less than $50 per month."

Wide availability has helped keep subscription costs affordable for internet users. Prices vary, but on a monthly basis, the typical bill runs between $35 and $42, based on estimates from the Open Technology Institute, assuming connection speeds averaging 11.4 megabytes per second. But with net neutrality no longer the law of the land due to its tabling by the Federal Communications Commission, some consumers are worried that their internet bills will cost more, a potential point of concern for the unbanked and underbanked, whose creditworthiness is - in part - determined by their timeliness of paying off these kinds of bills. Will internet rates rise with the rule's repeal? To determine this, it's instructive to examine what net neutrality is all about and what its removal could mean for consumers. What is net neutrality?
The thrust of net neutrality is found in its title: Namely, that companies providing online access - internet service providers (ISPs) - be prevented from charging subscribers more money for the content and speed they seek. Net neutrality was a ruling that went in place under the administration of former President Barack Obama, establishing more stringent oversight regulations for ISPs. But with the FCC under new management, given changes in the White House, members of the board struck down net neutrality by a narrow 3-to-2 margin in favor of the overhaul. Those in favor of repeal contend that since ISP providers and internet companies vary in size - and use more bandwidth - smaller companies shouldn't be required to pay the same amounts as large corporations. Ajit Pai, FCC chairperson who was among the majority supporting the regulation's ouster, noted he believes consumers will be the benefactors at the end of the day. "We are helping consumers and promoting competition," Pai explained, according to The New York Times. "Broadband providers will have more incentive to build networks, especially to underserved areas." Who supports ending net neutrality?
Communications services company Sprint - similar to its competitors like AT&T and Verizon - championed the FCC's final decision. "Sprint applauds the FCC's efforts to simplify a complex and challenging issue, while balancing multiple stakeholder interests in this important proceeding," the company said in a press release. " Our position has been and continues to be that competition is the best way to promote an open internet. Complex and vague regulations previously created uncertainties around net neutrality compliance. Who opposes nixing net neutrality?
Meanwhile, some of the web's more popular content providers are staunchly against scrapping net neutrality and decried the FCC's decision. Netflix was among the torrent of companies stating its opposition. "We're disappointed in the FCC's decision to gut the net neutrality protections that ushered in an unprecedented era of innovation, creativity and civic engagement," the streaming entertainment media conglomerate said in a statement obtained by Variety. "Today's decision is the beginning of a longer legal battle. Netflix will stand with innovators, large and small, to oppose this misguided FCC order." Michael Beckerman, president and CEO of the Internet Association, also slammed the FCC's 3-to-2 vote, stating the ruling is in stark contrast to what's been the consensus sentiment since 2015 - that net neutrality evens the playing field. With net neutrality rules no longer, ISPs have free rein to charge higher amounts based on usage and demand, or what might be referred to as premium services. This is the main reason why companies like Netflix, Google, Amazon, and other major content providers were against ending net neutrality. Their support of this issue is largely in line with where Americans stand on it. In a poll conducted by University of Maryland's School of Public Policy, nearly 85 percent of respondents were against repeal in a survey done late last year. "A decision to repeal net neutrality would be tacking against strong headwinds of public opinion blowing in the opposite direction," PPC director Steven Kull said, prior to the ruling.

Net neutrality was voted down by the FCC in December. Net neutrality was voted down by the FCC in December.

Will costs go up for consumers?
The ultimate question is whether subscription prices will rise as a result. Susan Bidel, an analyst at Forrester Research, told USA Today that the hike is possible, but it's in ISPs' interest to keep rates in ranges that would be considered affordable territory, as consumers can change providers if costs are too high. Angelino Zino, an analyst for CFRA Research, came to similar conclusions. "Could it happen? Theoretically, sure," Zino explained to USA Today. "Is it going to happen? Probably not." Whatever comes of net neutrality's repeal - perhaps the ruling being reversed, as some lawmakers are appealing the FCC's decision - Microbilt has the alternative credit tools that can enable businesses to make better lending decisions, based on customers' history of paying for household bills, such as internet access, in a prompt fashion.