With the public furor dampened for now, and the House unlikely to hold a vote on a measure from the Senate that would make President Obama's 2015 FCC cable broadband regulations the law, it's worth taking a look at the actual impact of those regulations. The regulations were supposed to address net neutrality – this is the idea that all internet traffic should be treated equally no matter what the data is, instead of ISPs being able to charge higher rates for delivering more in-demand data. So what's likely to happen going forward now that the 2015 regulations have been rescinded by current FCC Chairman Ajit Pai?

The 451 Take

The fight over consumer internet regulation and net neutrality is not really about freedom or equality of service; it's essentially a proxy fight between carriers and online content providers that is already (and always has been) largely defined by the action behind the scenes. While there's something to be said for treating all packets equally and viewing broadband as a utility that should serve the public interest, the fact remains that the US private/public telecom and internet system has been put in place over decades as a matter of policy, and while it's expensive and constrained and messy, it works, and carriers have absolutely no incentive to make it harder for customers to get what they want. If anything the real impact of the whole net neutrality fight has been (aside from a bonanza for the legal sector) to sharpen ISPs' interest in finding yet more ways to monetize infrastructure assets, as opposed to letting them fade into irrelevance like previous generations of carrier investment.

The answer to the question of what happens now is, essentially, nothing. Nothing will change, and current trends in broadband and internet consumption will continue to evolve just as they have for about a decade or more. The reason for this is primarily that the Obama-era (Title II classification for broadband) regulations never went into effect in the first place. So Ajit Pai undid a rule that had never reached its working state.

Enforceable regulations around broadband and internet access haven't changed substantially since 2007, when the FCC officially classified internet service as an 'information service' and not a carrier utility. This is what kicked off the many rounds of lawsuits, debate, policy fights and eventual public hysteria. We are now back to the status quo for broadband internet – so nothing has changed, nor will it. There is a potential for congressional action to formalize Title II status for broadband into law, but the chance of success here is small. Realistically, any substantial change to regulation on cable broadband is now at minimum five years away.

The reason this has been such a prolonged fight is twofold. First, there is a substantial cadre of people involved with the underpinnings of the internet that (correctly) believe its best aspects are brought out when network traffic is not artificially constrained. Placing artificial limits on capacity and throughput at arbitrary points in the network causes hiccups in the way the internet was designed. This position is bolstered by online content creators, who have designed their systems around these principles and also fear that they will be held hostage by carriers for access to customers. Carriers, on the other hand, understandably believe that if they make a capital investment in infrastructure, they ought to be able to do what they like to maximize returns.

Second, net neutrality has become a political football because consumers want the internet to work just like telephone wires and toll roads, and be protected from price gouging. The internet has become so foundational to our economy and society that the idea of tinkering with it is galvanizing to the general public.

Yet the reality is that consumers have little to fear. Broadband internet access is a near-monopolistic competition in the vast majority of the US today, with users generally having between one and three options that all cost roughly the same (no surprise) and perform roughly the same. But carriers don't want to have fewer customers – they walk a line between what the market will bear and maintaining growth. In the meantime, since the net neutrality fight really blew up in 2015, carriers have been busily experimenting with ways to monetize broadband assets that don't involve traffic throttling, such as over-the-top (OTC) services, premium equipment and partnerships, and acquisitions/mergers with content providers to directly sell content.

The threat around net neutrality drove a wave of experimentation in productizing eyeballs that continues today. On the flip side, ISPs and online businesses constantly negotiate on capacity, speed and access to internet destinations – and like most other business deals, the content providers (e.g., Netflix, Hulu) get what they pay for. Thus, net neutrality is essentially meaningless when it comes to purchasing bandwidth as a business.

In any case, the complete absence of wireless broadband in the entire conversation makes the ongoing net neutrality argument moot. Wireless internet is growing far faster than wired internet at this point, and with 5G on the way, it will soon be the dominant way most consumers and businesses get access. Yet these services are untouched and unmentioned in regulations with regard to net neutrality. In fact, many wireless providers already offer the throttling and premium high bandwidth services so feared by the pro-net neutrality crowd, with HD video and special streaming services offered over the air for extra fees. That fight, where it would have mattered most in preserving a future for 'neutral' internet access, is already over without a single shot fired.
Carl Brooks
Analyst, Service Providers

Carl Brooks is an Analyst for 451 Research's Service Providers Channel, covering cloud computing and the next generation of IT infrastructure. He specialized in server and desktop operations, Linux and Microsoft products, and security, and has thorough knowledge of hardware platforms and networking technologies, as well as significant experience working with the channel market.

Rory Duncan
Research Director, Managed Services & Hosting

Rory Duncan is the Research Director for 451 Research's Managed Services & Hosting channel. His research focuses on the global managed services and hosting market, where he tracks IT managed service providers, web and applications hosting firms and content delivery network providers.

Dan Thompson
Senior Analyst

As a Senior Analyst for 451 Research, Dan Thompson provides insight into the Multi-Tenant Datacenter (MTDC) market space. Dan is particularly focused on MTDCs that are trying to move up the stack to offer additional services beyond colocation and connectivity.

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