Net neutrality, or challenges to it, hit the news again last week when a US federal appeals court took the side of Verizon and ruled against parts of the Federal Communications Commission’s (FCC’s) net neutrality rules.
I thought I’d take the opportunity to detail what net neutrality is, what the arguments for and against are, how it has been flouted in the past and what this latest ruling could mean for the internet and marketers in particular.
Firstly, let’s look at last week’s ruling. You can read the court transcript here, it makes for good reading on the issue.
Verizon successfully argued that the FCC’s anti-blocking and anti-discrimination rules (see further down this article for a full description of the FCC rules) amounted to treating broadband providers as ‘common carriers’ of information rather than as ‘enhanced service’ providers (given their provision involves processing of information and not simply transmission).
Simply put, Verizon argues that the complexity of providing a good broadband service dictates modification or prioritisation of speed, content and applications. Or very simply put, Verizon argues it has to be able to mess about with stuff in order to provide broadband.
This means that not all discrimination or blocking is objectively bad. One could almost conjure with the idea of pure intention. If the intention (and ultimate consequence) is good, i.e. to improve service levels, then broadband providers should be able to take actions whose immediate consequences may seem discriminatory against certain content.
Let’s move on to something a little less dry.
What exactly is net neutrality?
Net neutrality or the open internet is the often fiercely supported idea that ‘all data is created equal’. There should be no discrimination, most often brought through broadband pricing or performance differential, against particular users, types of content, websites, forms of communication etc.
Tim Berners-Lee and other big cheeses of the early internet are in favour of net neutrality, creating the web, as they did, with free, publicly available standards.
Opponents, particularly when it comes to the hot topic of whether broadband service providers can alter network performance, argue net neutrality could affect the ability to afford quality of service.
The FCC, which ‘regulates interstate and international communications by radio, television, wire, satellite and cable in all 50 states’ of America, published the rules of net neutrality in 2010.
1. Transparency: Broadband providers must disclose information regarding their network management practices, performance, and the commercial terms of their broadband services;
2. No blocking: Fixed broadband providers (such as DSL, cable modem or fixed wireless providers) may not block lawful content, applications, services or non-harmful devices.
Mobile broadband providers may not block lawful websites, or applications that compete with their voice or video telephony services;
3. No unreasonable discrimination: Fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service.
The no blocking and no unreasonable discrimination rules are subject to limited exceptions for ‘reasonable network management’.
How has net neutrality been flouted in the past?
Net neutrality has been discussed a lot in the media precisely because there have been high profile instances of perceived flouting of the FCC rules.
Apple iPhone and AT&T
Perhaps the most famous example was the partnership between AT&T and Apple on the first iPhone. Buyers of the iPhone had to use Apple’s walled garden (app ecosystem), meaning AT&T was effectively blocking other content.
At the time, this was controversial though many use this case as an argument for relaxing net neutrality rules. The AT&T and Apple partnership arguably increased innovation, which is what the net neutrality rules are in place to encourage.
In 2007, Comcast cracked down on peer-to-peer file sharing in what many believed was an attack on net neutrality.
AT&T Sponsored Data
Apps, services and content that won’t impact a user’s monthly data allowance. AT&T will work with Sponsored Data providers, potentially making a huge difference to a customer’s ability to stream video on the move, for example.
Pay attention to the reference to advertising, too, in the explainer video below. Sponsored Data means lots of different sponsored content, from straight ads up.
Data fast lanes
Akamai and Verizon are planning fast lanes, allowing apps to ride over poor connections and provide good service to users. This could mean countering choppy videos or just prioritising an app on a network if things are processing slowly e.g. ecommerce apps.
This would cost the app developer extra and presumably the customer is unaffected as the application in question will function as expected.
What will consumers think?
Sponsored data is a brilliant idea, but one that has perhaps emerged from a situation that many feel is already unjust.
If broadband providers are already charging too much for data, particularly mobile data, in a market that many feel isn’t transparent, then this environment has simply allowed providers to make even more money.
By exploiting their users’ hunger for cheap or free data, broadband providers can take more money from advertisers who want to reach consumers worried about data use.
This could have a sting in the tail though. If consumers get used to free data from sponsors, will they become more reluctant to pay for data allowance from the providers? Although one would expect providers to be on top of this, consumers might be very happy with the idea of sponsored data.
What could this latest setback to net neutrality mean for marketers?
Any brand invested in content delivery to customers, at home on fixed broadband but more relevantly on smartphones, should sit up and take notice.
It’s not going to matter too much what content a brand wants delivered. I can see a sponsored app solution that becomes a content aggregator, featuring text, pictures, video, music, and a decent amount of straight advertising.
If these sponsored streams become commonplace, it’ll be because the content is good and allows for a good variety, with different content targeted at different markets, or users being able to easily filter content.
With so many users concerned about data usage, this style of sponsored content could quickly become widespread, severely impacting other news and content aggregation services out there.
Of course, the service could grow to be even smarter. If location based services are built-in, marketers may be able to target consumers with push notifications, without the user being worried about the service eating data. As AT&T’s video suggests, at the cinema, a user could be served data-free trailers and vouchers before deciding what movie to watch.
In short, if this concept has legs, expect the mobile advertising market to get more complicated for advertisers, less so for consumers and perhaps even more profitable for service providers.