Do you like watching Netflix? Well, you probably didn’t if you had Comcast a few months ago. Comcast users were complaining that service wasn’t strong enough to provide adequate streaming for Netflix viewers. As a result, instead of improving their service, Comcast decided to charge Netflix more so their customers could have a better viewing experience (source).
How Can They do That?
They shouldn’t be allowed to make such deals. We as Americans define the Internet so that it can be adequately regulated. We either need to start treating it as a true utility or as a true free market.
1. Treat it as a Utility: If we treated the Internet as a utility, Internet Service Providers (ISPs) would be allowed to keep the current monopolies they have (Charter has a monopoly on the Reno market) but the federal government would force them to maintain a certain level of quality. This method would also lock in returns or profit margins. This is similar to the way we treat setting up water, power and gas to a home.
2. Treat it as a Free Market: If we treated the Internet as a true free market, then the federal government would have a strict ban on certain states giving an ISP a monopoly. This would allow for other ISPs to compete with each other and drive down prices. A great example of this in action is Google Fiber. Once Google Fiber moves into an area, the resident ISP that has a monopoly on the area boosts their speeds and lowers their prices to compete.
Because we can’t seem to decide how to treat the Internet, we were using the principles of “net neutrality” to help govern. Unfortunately, the U.S. Court of Appeals for the District of Columbia recently ruled that the FCC can no longer enforce those principles (source). Alas, this ruling made the agreement between Netflix and Comcast possible.
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What is Net Neutrality?
Net Neutrality means all parts of the web are created equal. It means that ISPs like Verizon and Comcast should provide the same access to all web content, regardless of the source.
These principles are incredibly important to maintaining a level of sanity when it comes to how we interact with the Internet. Keeping the Internet at an even playing field is important because having Internet access has become such an integral part of our everyday lives. Most people wouldn’t be able to do their jobs without it. If this ruling continues, and is not overturned, it could mean big changes for the advertising world.
What does this mean for advertising?
If we continue on the path that Netflix and Comcast recently forged, it’s possible that the larger websites, like YouTube, who have larger budgets, will be able to pay the ISPs more in order to have better quality streaming for their viewers. If this happens, it will start to drive up the cost for people wanting to advertise on YouTube.
And if YouTube is the only video site provider that can afford to pay the ISPs, Vimeo could see a huge decline in their traffic. Without net neutrality, ISPs could even be paid to block certain competitor sites, meaning YouTube could pay to block Vimeo.
Imagine that without net neutrality, we may even have to start legal action in order to make sure our content is being displayed on a competitor’s website that’s been blocked. The mess created by eliminating net neutrality is enormous.
Even as I’m wrapping up this article, another story just came out about Comcast not allowing PS3 users to access HBO Go via the app (source). We as advertisers need to be aware of this, and take a stance against it.