December 14, 2017
Net Neutrality: An Important Freedom for Marketers
Most important votes in Washington, D.C. these days seem to take place on party lines. From tax reform to healthcare, the ruling Republican party has been unable to convince any Democrats that their initiatives have merit. The FCCs vote on net neutrality yesterday was, in its own way, a very important vote. And the Commission, avowedly an independent agency overseen by Congress, split on party lines.
President Trump-appointed Chairman Ajit Pai was joined in the repeal vote by another Trump appointee, Brendan Carr, and Michael O’Rielly — initially appointed by President Obama, but a long-time Republican policy adviser. Two other Obama appointees, Mignon Cyburn and Jessica Rosenworcel, voted against.
It’s perhaps fitting, in the current political climate, that net neutrality succumbed to a party-line vote, among reports of lobbying by Russian bots, and a last-minute clearance of the hearing room in response to a security alert. These are the dying days of 2017.
Net neutrality — which, in essence, mandates ISPs to treat Internet traffic indiscriminately, as a utility — is indeed a relatively new value. The history is complicated, but 2014 was the watershed year in which President Obama called for the Internet to be treated as a utility, a proposal which the FCC voted to implement in early 2015 (indeed, along party lines).
It’s true then, in a simple sense, that net neutrality represents “Obama era” regulations, and also true that it’s repeal restores the preceding — albeit much contested — status quo. But that doesn’t mean it’s to be cast lightly aside. Apart from anything else, just in the last five years, the Internet accounted for 21% of GDP growth in mature economies, and is powering economic growth in the developing world. The Internet of today is not the Internet of five or ten years ago: It plays a central role in the economic life of the nation, and the world, and is part of the fabric of our daily lives as workers and citizens.
The repeal of net neutrality has the potential, to say the least, to stifle innovation and entrepreneurship by allowing ISP to levy revenues which will deter start-ups in favor of established enterprises. A curious position for Republicans to support, one might think; but the conservative analysis proceeds from the assumption, of course, that consumers — the market — are in a better position than regulators to determine what Internet services should cost. As Pai said before today’s vote, “It is time for the Internet, once again, to be driven by engineers and entrepreneurs and consumers rather than lawyers, accountants and bureaucrats.” And many conservatives would say the same, of course, of the environment.
It’s an old debate we won’t resolve here. But it is incumbent on us to raise the question: What does this mean for marketers?
I spoke with Andy Vogel, global head of digital products at programmatic provider /media consultancy NewBase, who also sits on a number of industry advisory bodies including the Mobile Marketing Association’s Global Board, and Google’s Publisher Advisory Board. “It’s bad for brand marketers,” he said, “because someone is going to have to pay, and brands aren’t going to want to pass on the cost to the consumer” — although the outcome, he said, is that “consumers will ultimately have less choice.”
With rich media and video eating up bandwidth, that’s the obvious place for providers to raise costs. The result, Vogel says, is that brands are going to “squeeze the middle.” It won’t affect the Nestlés or P&Gs so much, he explained, but below the enterprise and above the “mom ‘n’ pop shop,” the squeeze will be felt. “Not in the next few months, perhaps, but by the end of 2018.” This is bad news for brand marketers trying to control budgets, but also bad news for agencies, content creators, and technology providers, where brands are likely to look for savings in preference to raising prices.
As for this being a mere reversion to the pre-net neutrality norm: “That’s a lot of hogwash. The reality is that it takes us back to the 1990s, when there were more players.” A much more consolidated provider space is better positioned to exploit “tollbooth” powers.
I should add that we were also contacted by a group supporting supporting the repeal of net neutrality as a good outcome for consumers — just one — and it came from an organization called the Consumer Choice Center. The CCC may have consumer interests at heart, but it’s headed by representatives of an overtly libertarian group (the SFL). You can read more discussion of its possible sources of funding here.