RGK Mobile: Net neutrality decision has created a Land of the Giants

Roman Taranov, CEO of RGK Mobile, considers what the loss of net neutrality means to mobile advertisers and content providers.

The United States Federal Communications Commission (FCC) has rejected the spirit of the internet being built on a foundation of fairness and equality for all. The scales of fairness have been tipped out of balance from the small entrepreneurs to corporate giants.

The vote to return to pre-2015 internet “oversight” and strike down the controversial net neutrality regulations enacted by the previous US administration appears to return old obstacles for smaller, rising advertisers and content providers. And, of course, the reverse supposition is that the loss of net neutrality ensures that the rich and powerful will only become richer and more powerful.

Expected outcome
The vote was the happy and expected outcome mobile operators and cable companies were hoping for. They pushed for it because it now frees them to completely control the flow of content running over their networks to the end user.

But mobile content providers, publishers, and advertisers were loud in their objections, hoping to evade what they feel is a punch to the gut. Without the assurance of net neutrality, the fear is a bleak future with stunted business growth, high entry barriers to new markets, and higher advertising rates. So, in keeping with the seasonal spirit of speculation and predictions, here’s one view of what the demise of net neutrality might mean for mobile content providers and advertisers.

It does recreate the possibility of a bias towards operators content partners, which means that it would be mostly the bigger TV networks and streaming services reveling in the operator exposure and “airtime.” European Union (EU) regulators are stricter when it comes to net neutrality. Unlike the United States, each country has its own regulatory body enforcing these rules, and thus we still see member countries where net neutrality rules are held to different levels.

But now in the states, some industry experts have predicted that to ensure quality service for their mobile subscribers, mobile content providers will have to compete harder to get their content delivered. Businesses may have to find new ways to develop mobile apps, perhaps making them less data-intensive and altering hosting practices to get more local. And now that optimizing traffic is theoretically no longer equally possible for all, content delivery network (CDN) providers will need to factor in additional costs as never before.

Calling the shots
Eliminating net neutrality gives cable companies and mobile operators the option to again call the shots and decide which websites, content, or applications could actually grow, penetrate and make it big in new markets.

Specifically, it would significantly reduce the availability of ad space, with only the big networks, favored by the mobile carriers, able to sell advertisingg, via their own content, as a simple ‘side-effect’ of gaining more airtime. With the rise of “fast lanes,” advertisers will have to pay for the privilege of using those lanes. The largest providers also have the resources to pay for the advantage of zero-cap lanes, so their services can be delivered without increasing the mobile user’s monthly download cap—putting smaller companies with more limited resources at a painful disadvantage.

It is understandable to see where this all ends up. The price of ads increase, severely preventing smaller advertisers from purchasing, which prevents smaller businesses from growing or distributing their content – creating an environment that defies the basis of a fair online game, the very basic foundation on which the internet was built.

Abuse of power
Net neutrality was in place to prevent dominant telcos from such mechanizations that boosted their own profits while slowing down or blocking competing sites and apps. All web traffic would be treated equally, and the big operators, like AT&T, Comcast and Verizon, would not be allowed to abuse their power as gateways to the internet.

There has been a longstanding tradition of equal internet access for all, and the major tech companies like Facebook, Google, and Netflix were all on board. But with a new administration comes a new attitude towards regulation. The newly-reconfigured FCC saw no need for governing the internet in the same “heavy handed” way as a public utility. Can you really blame the tech giants for taking advantage of all of this?

So, the policing of the internet thus returns to the Federal Trade Commission (FTC). The FTC will be under enormous pressure to protect internet users from unfair, deceptive and anticompetitive practices and uphold the core principles of net neutrality; unfettered access and transparency.

The question is, under this new political reality, will it be able to hold internet providers and mobile carriers to public promises to keep the internet open and to not block, throttle or unfairly discriminate smaller players. It will be something to keep a close eye on. As would the expressed interest now by the US Congress to pass practical net neutrality legislation, something that really should have happened in the first place. And most importantly for advertising: will this situation see the first slow-down in US mobile advertising investment in years?