What is net neutrality (and how does it affect Australians)?

Tara Donnelly

Last updated 15 December 2017

You may have heard a lot of fuss coming from the US about 'the death of net neutrality' - i.e. that the Federal Communications Commission, or FCC, has now voted to scrap the Open Internet rules that dictate how service providers deliver and price customer access to the net.

It's something our US site has discussed frequently over the past few years, but if you're an Aussie reader, you may be wondering just what it's all about (and how it might affect Australia). Here's a quick primer on what's changing, why you should care, and the possible future repercussions for Australians.

What is net neutrality?

Net neutrality is the idea that on the internet, all data is treated equally. This means that your broadband provider (such as Telstra or Optus) cannot restrict the openness of the internet: companies can't charge customers for 'priority' or faster access to specific services or websites, or block or slow down access to services that may compete with these sites.

As an example, if your telco has a deal with Yahoo!, it cannot block or slow access to competitors such as Google, or require you to pay extra to have Google included in your internet plan. Net neutrality means that everybody has equal access to every legal website, regardless of your choice of broadband provider or plan tier.

Without net neutrality, it's possible that, instead of broadband providers simply charging for monthly data amounts and speeds, they'll move to a model similar to pay TV - meaning subscribers will pay for how many websites they are able to access. The higher the tier of broadband service, the more of the internet you get to connect to - and the more you pay each month.

What has changed?

Back in 2015, the Obama-era FCC voted to protect net neutrality by re-classifying broadband, which prevented internet providers from prioritising services, or blocking customers from accessing legal content. But as of today, these protections have been overturned by the new, Republican-led FCC, spearheaded by Chairman Ajit Pai (a former legal executive at big-deal American telco Verizon).

This means that the power is back in the hands of America's big telecommunications companies - and consumer watchdogs are understandably concerned. Basically, it's like our Australian government voting to hand control of the internet over to Telstra, Optus and Vodafone, and allowing each telco to decide what their customers can and cannot access online.

How will it affect Australians?

Initially, the new FCC rules will only directly impact internet access for Americans. One area, however, where the FCC's vote may affect Aussies sooner than expected is in online business. If you're an Australian retailer selling to American customers - and relying on American service providers to reach your US buyers - you may be impacted, especially in a narrowing carrier market where smaller service providers are unable to stay competitive.

Alternatively, if US providers are subsequently forced to pay extra to American ISPs to have their services or products included in broadband plans, they're likely to pass those costs on to customers - and for internationally-popular brands such as Netflix or Spotify, this means prices could go up in Australia. In a worst-case scenario, costs for any US-based product purchased online by Aussies may increase.

Overall? We feel that the changes are bad for America, and bad for internet users worldwide. While defenders of the FCC's decision claim that the move will lead to more choice for US consumers (by eliminating the push for unlimited-data-only plans), it's more likely that internet costs will go up, and competition between providers will decrease.

Could it happen in Australia?

Right now, the FCC's decision will only immediately impact American telecommunications companies - but with Australia consistently looking to the US as an example, there's a real possibility that the changes will empower local corporations to make their own anti-neutrality pushes.

Back in 2015, Optus proposed a premium service for streaming companies such as Netflix, arguing that enforcing additional fees for access to popular, bandwidth-heavy content would help 'ensure quality of service' for customers.

More recently, Vodafone CEO Inaki Berroeta has discussed the potential benefits of requiring content providers - such as Google, Facebook or Netflix - to share spectrum costs in order to enable telcos to continue to fund network innovation. In an earlier 2014 interview with IT Wire, Berroeta also responded to questions of net neutrality by stating that he would 'love' to charge some users more to access content.

If the idea of having to pay extra to add access to social media, streaming movies, or Wikipedia to your existing broadband plan sounds like a rip-off, you'll understand why preserving net neutrality is so important.

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