Early into the New Year, investors are once again making predictions regarding how the year will unfold. These speculations are mainly based on historical data and key issues that are expected to leave a mark on public and personal life.
Standing at the cusp of a likely Internet revolution that could well determine its future as a utility service provider, we try to replicate this tendency to gauge the decisive factors that are likely to influence Internet usage in the U.S. in 2015.
That these much-talked-about Internet issues have the potential to cause some serious ramifications on the 2016 presidential elections as well as the ergonomics of several established players and start-up firms make them all the more intriguing. Let us delve into the various interplaying factors that are billed to be the king-makers in the Internet sector as the year gradually progresses.
Critical Internet Issues in Focus
Net Neutrality: Net neutrality refers to the concept where Internet Service Providers (ISPs) offer level playing field for different contents like video and music and do not discriminate web traffic or charge differently. The Open Internet mandate of the Federal Communications Commission (FCC) adopted in 2010 aimed to propagate neutrality among ISPs by ensuring that all similar content on their networks are treated equally, without any blocking of lawful content and unreasonable discrimination.
However, in Jan 2014, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit delivered a blow to the FCC, when it struck down the rules regarding net neutrality in response to a lawsuit filed by Verizon Communications Inc (NYSE:VZ). The court observed that FCC does not have the legal right to regulate pricing arrangements by ISPs, as it had explicitly decided not to classify broadband as traditional "common carrier" telecommunications services.
The ruling left the door ajar for the FCC to put forth a set of new guidelines that would enable ISPs to charge a premium to ensure faster delivery of some web traffic by allowing “commercially reasonable” deals with content providers. The Internet Association, which represents 35 leading Internet companies in the U.S. including Google (GOOGL); Netflix (NASDAQ:NFLX); Amazon.com. (AMZN); Yahoo! Inc. (YHOO) and eBay Inc. (EBAY), has strongly opposed the refurbished rules tooth and nail. These companies argue that paid prioritization would relegate relatively less deep-pocketed content providers to “slow lanes” on the Web.
The FCC is seeking public comments to modify rules regarding net neutrality. So far, the FCC has witnessed over four million comments in its public forum, including that of President Barack Obama, voicing support for net neutrality protection. The year-long saga could well end with an FCC decision in February
Online Privacy & Cyber Security Threat: With former National Security Agency (NSA) Edward Snowden spilling the beans on mass spying programs, online privacy is currently at stake. Although 2014 showed promise to curtail some of the snooping done by the government with The US Freedom Act, the bill was finally stalled by the Senate. However, with the Patriot Act set to expire in June, new legislation could finally be on the anvil.
A series of data breaches in the U.S. in home improvement chain The Home Depot, Inc. (NYSE:HD), discount store retailer Target (TGT), JPMorgan Chase (JPM), and freight forwarding company United Parcel Service (NYSE:UPS) have brought the issue of Internet data protection to the forefront. It does not come as a surprise that global spending by corporations to combat cyber-attacks is projected to rise to about $700 billion by 2024. A bulk of this is likely to be spent in the U.S., which is billed as the biggest cyber security spending nation by Gartner and Forester Research.
Industry Consolidation: One of the primary threats to the Internet today is industry-wide consolidation. This poses the risk of market monopoly, hampering the free, competitive and decentralized network that the Internet is known for. Three glaring examples prove this point – a $48.5 billion agreement inked by AT&T (NYSE:T) in May 2014 to buy leading satellite TV operator DIRECTV; a purported takeover of leading Internet and web-services provider AOL (NYSE:AOL) by Verizon; and a proposed merger of Comcast Corporation (CMCSA) with Time Warner Cable Inc. (TWC).
The transactions await the approval of the FCC and the U.S. Department of Justice. If the deals are finally sealed, it would lead to intense monopolization of the open level-playing field of the Internet. Consequently, 2015 can prove to a vital turnaround for the industry as a whole.
Community Networks: Big ISPs have historically neglected relatively low-income or rural communities by not developing optimum infrastructure facilities, fearing low ROI. As a result, various municipalities across different cities have developed community networks to bring broadband service to the masses.
Although industry lobbyists tried to pre-empt this by introducing state-level legislation, the FCC stepped in last June by providing the requisite support to negate such laws. The continuing duel is likely to take a bigger proportion in 2015 as more cities join against the handiwork of powerful lobbyists and ISPs.
The Road Ahead: A Bed of Roses or Thorns?
The current year could redefine the sector dynamics and shape the Internet for the future generation. Rightly so, in his endnote attributed to his White House statement, the President pointed out: “….The Internet has been one of the greatest gifts our economy — and our society — has ever known. The FCC was chartered to promote competition, innovation, and investment in our networks. In service of that mission, there is no higher calling than protecting an open, accessible, and free Internet.” Let us all sincerely hope that the Internet remains so for years to come and 2015 is remembered in the echelons of history for being constructive for the sector.