Earlier this week, President Donald Trump appointed Ajit Pai as chairman of the Federal Communications Commission. Pai is an outspoken critic of the 2015 Open Internet Order which was drafted to protect the open internet and ensure net neutrality. It basically classifies the internet as a public utility, like electricity or water, and prohibits internet service providers from blocking or throttling any (legal) content or prioritizing content from one source over another. In a speech given in December 2016, the new FCC chairman spoke out against the regulation, saying it was “a solution that wouldn’t work for a problem that didn’t exist”.
Considering recent developments involving some of America’s largest broadband providers however, one would be hard-pressed not to see problems arising should net neutrality regulation be overthrown. In fact, the regulation may be more relevant than ever. As our chart illustrates, major ISPs such as Comcast, AT&T and Verizon have recently made (or are planning to make) large investments in content companies. Now consider this example: Assuming that AT&T’s acquisition of Time Warner is approved, wouldn’t Comcast have an incentive to throttle your internet connection when watching HBO Now, which belongs to its biggest competitor AT&T and stands in direct competition to some of its own content providers?
It remains to be seen if and how quickly Pai will be able to overthrow net neutrality. When he does however, a new era dawns on the internet economy.
This chart illustrates the content/media brands held (or about to be held) by internet service providers in the United States.