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Will New Net Neutrality Rules Have any Effect on Hosted VoIP?

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New net neutrality rules were passed into law by the Federal Communications Commission on February 26, 2015, creating legal provisions that require U.S. based Internet Service Providers (ISPs) to provide equal access to content and applications for anyone who uses their services. The new regulations treat the Internet’s infrastructure or networks in the same manner as public utilities, allowing the federal government to place restrictions on how service providers operate.

Most importantly, the recent FCC ruling prohibits ISPs from charging content providers a premium for speedier delivery of their content to end users, while deliberately slowing down or blocking the content of other providers who are not paying a premium. Prior to the new net neutrality rules becoming effective, ISPs could legally engage in this practice, known as paid prioritization, placing content from providers willing to pay a premium into “fast lanes”, which guaranteed a speedier delivery of their content, over any of their competitors who were unwilling or unable to pay the same fees.

Under the current net neutrality laws, ISPs are expected to adhere to the following rules:

  • No blocking: It is now illegal for ISPs to block access to any content.
  • No throttling: It is now illegal for ISPs to deliberately slow down Internet traffic.
  • No Paid Prioritization: It is now illegal for ISPs to provide preferential treatment to content providers who pay a fee.
  • Open Internet Standard of Conduct: ISPs are no longer allowed to manage network traffic in any manner that will “harm consumers or edge providers.”
  • Transparency: ISPs must now be more open and provide more details about their network traffic management practices.
  • Reasonable Network Management: ISPs must treat all network traffic equally.

The Net Neutrality Battle: Free Enterprise Under Fire?

I think that most people would probably agree that the FCC’s new net neutrality rules probably only represent a temporary win for the U.S. Government, as the issue of an open Internet has been an ongoing battle for many years. Many of you may recall when Verizon Wireless successfully challenged a 2010 FCC rule that also prohibited ISPs from engaging in the practice of paid prioritization, which ended with the court ruling in their favor in January of 2014, reversing the FCC’s existing rule.

As the battle over net neutrality wages on, no one should be surprised to hear that other major ISPs may be positioning themselves to fight the FCC’s current rules as well. According to an article published last month on USA Today’s website, broadband provider AT &T previously expressed their discontent with the proposition of net neutrality regulations becoming law once again, indicating a potential legal challenge to the new rules, should they be passed into law.

It’s probably a sure bet that AT & T isn’t the only large broadband provider that’s contemplating a lawsuit over the current net neutrality rules. You don’t have to be a rocket scientist to figure out that the big guys can’t be happy with any laws on the books designed to thwart their revenue potential. I can only imagine the disgusted looks on the faces of the big wigs in the executive suites of America’s top broadband companies when they heard about the latest ruling by the FCC on the net neutrality issue. “There are more important battles that this nation faces than this!” is what they must have all been saying

As things currently stand, it would actually be extremely difficult to enforce the current net neutrality rules, without the U.S. Government creating yet another law enforcement agency like the FBI or NSA to sniff out violators. I certainly wouldn’t hold my breath waiting for that to happen though, and I don’t think you should either. The reality of the situation is that an essentially bankrupt government is engaging in an Internet turf war that they really can’t afford to see through to the end.

As leaders within the ISP arena begin to recognize our government’s inability to enforce the current net neutrality rules, they may think twice about engaging in costly lawsuits against the government. There’s also a potential that ISPs will simply disregard the current net neutrality rules, conducting “business as usual”.

New Net Neutrality Rules May Represent a Win for Many Content Providers

While the major ISPs, as well as their investors, are clearly disgruntled over the current FCC rules, as you can probably figure, many content providers are celebrating right now, as they have won, at least in theory, the advantage of a more level playing field in their industry. With the current net neutrality rules in place, it makes it easier, as an example, for an entrepreneur to open up a new online service that delivers content like streaming video, competing with content providers like Netflix and YouTube. Under the current FCC rules, they should no longer face the potential encumbrance of slower delivery of their content, due to the competition using their financial resources to place their content in a provider’s “fast lane” for speedier delivery to consumers. As you probably realize, this best case scenario obviously depends on the big broadband providers playing by the rules.

As the battle over net neutrality is still ongoing, smaller or regional content providers must wrestle with a certain level of uncertainty over the future regulatory environment for ISPs which could impact their ability to compete with larger content providers in the future. In addition, the current controversy over the open Internet also creates a situation where would-be content providers may be increasingly hesitant about entering the market at all, given the fact that the tide could suddenly turn against them, should the larger ISP’s ultimately win the net neutrality battle, returning to their previous practice of paid prioritization. In the end, the final outcome for smaller content providers in the net neutrality battle ultimately weighs heavily on the big ISPs’ willingness to comply with the law and the government’s ability to enforce the law.

Hosted VoIP Providers & Users May Benefit from Net Neutrality Rules Too 

While the major providers in the broadband services arena like Verizon Wireless, Cox Communications, Comcast, CenturyLink, Time Warner Cable and others may be disenchanted with the recent changes in the regulatory landscape of their industry, many Hosted VoIP providers may benefit from the current FCC net neutrality rules, at least for now.

This is true, because smaller Hosted VoIP providers typically rely on the public Internet to transport calls and provide calling services to their customers, instead of dedicated circuits, which puts them in danger of having their bandwidth deliberately restricted by big ISPs.

In theory, the new rules should help these smaller Hosted VoIP providers compete with larger and more established Hosted VoIP companies, who in the past may have been able to legally degrade their competitor’s services, by seizing opportunities for prioritization offered by major broadband providers.

Moreover, since the largest ISPs are also in the business of providing Hosted VoIP services themselves, net neutrality rules should also prohibit these companies from prioritizing their customers’ voice data streams, while putting their competitors’ voice data on a slower track of transmission over their infrastructure.

The new net neutrality regulations that were passed into law last month should also benefit Hosted VoIP users, helping to create a more competitive market for consumers, with a wider range of companies to choose from for Hosted VoIP services.

Nevertheless, as I previously pointed out, the long term benefit of the new net neutrality rules remain to be seen, since there are at least 3 wild cards in the game, which are: 1.) The actual level of compliance with the current laws by broadband providers 2.) The enforcement of the current laws by the government and 3.) Whether or not the current laws actually “stick” in the long run.

It should be clear as day that all content providers and content users are in the same boat, facing the same risks of ISPs not willing to comply with the current laws, a current lack of the government’s ability to really do anything about it and a potential overturning of the current laws, which will return us to a true “wild west” operating environment where it’s clearly every man for himself.

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