The D.C. Circuit Court of Appeals struck down most of the FCC's 2010 Open Internet Order on Tuesday, rejecting the FCC's power to impose and enforce network neutrality rules on Internet service providers (ISPs).
Network neutrality is a principle that requires ISPs to treat all (legal) Internet traffic the same way. It requires that ISPs do not block the delivery of data packets for any reason, and that they do not give certain data packets priority delivery status over others. This ensures that consumers have unfettered access to all sites.
Unless you own stock in AT&T or Comcast, the D.C. court's decision is sobering news. The abandonment of these core net neutrality principles could radically change the Internet. Here's how and why.
The decision could bring about a less innovative Internet.
The Internet can be seen as a big marketplace, where companies big and small can come and sell their services. No one is barred from exhibiting, and Internet companies big and small are charged the same amount to set up their kiosk.
Because it's been an even playing field, the Internet has been a hotbed of innovation. Young startup companies could develop an innovative new product and take it directly to potential customers for no more money than it cost their huge competitors to do so. That's how household names like Google, Yahoo, and Ebay were born.
That even playing field changes with Tuesday's court decision. The decision clears the way for a small set of big telecommunications companies to become the landlords of this marketplace, controlling who can set up shop there and the amount of rent each tenant pays. Inevitably, the little guy gets squeezed out.
Big ISPs may now be able to sell Internet express lanes.
Big Internet service providers like AT&T and Comcast have long wanted to set up a tiered system for carriage costs. Large companies that could afford it would pay ISPs for express delivery of their data packets to end users. Tuesday's court decision makes that scenario much more likely.
In this new system, big ISPs will be able to charge the end user for access, and to charge big Web companies like Google, Facebook, and Netflix for premium carriage.
While larger companies might have to pay more, they'll have a profound advantage over smaller would-be rivals: They can absorb premium carriage costs that smaller companies very likely cannot. That's a barrier to entry that makes it very hard for smaller firms to stay in business.
Pay-per-view sites and services could become the norm.
The end result may be an Internet where only a handful of large Web companies deliver the services we've come to depend on. And young, innovative companies with entirely new and better ways of delivering that service may never make it out of the garage.
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