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Movement to Defend FCC Net Neutrality Rules Gains Momentum
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As per a report by LightReading, several advocacy groups in the U.S. are organizing protests to defend Net Neutrality rules adopted by the Federal Communications Commission (FCC) in Feb 2015. Then-FCC Chairman Tom Wheeler classified high-speed broadband (Internet) as a public utility under Title II of the 1934 Communications Act instead of section 706 of the 1996 Telecom Act.
However, the new FCC chairman Ajit Pai, appointed by President Trump, is a staunch net neutrality opponent. He has issued a notice of proposed rulemaking (NPRM) asking for comments on a plan to dismantle the net neutrality rules. Initial comments on that NPRM are due on Jul 12.
What Is Net Neutrality?
Net neutrality implies an open-Internet atmosphere that will prohibit Internet Service Providers (ISPs), especially the telecom and cable TV operators, from discriminating against applications. In order to control the flow of bandwidth-consuming applications such as video streaming, the ISPs have been discriminating against several web-based contents and applications. Content developers have to pay heavy sums to ISPs for accelerated data transfer.
In a historic decision, the FCC had approved net neutrality rules, on Feb 26, 2015, after a majority vote. The five-member regulatory body voted in favor of net neutrality with a 3-2 margin. However, the voting pattern was clearly divided along party lines, as three Democratic party representatives voted in favor of net neutrality while the two Republican representatives opposed it.
The new laws reclassified high-speed broadband (Internet) as a public utility under Title II of the 1934 Communications Act instead of section 706 of the 1996 Telecom Act. Importantly, these regulations were applicable to both mobile and fixed broadband networks. The reclassification of the Internet called for a radical change in the way the government treats high-speed broadband service. This gives the FCC a stronger control over the ISPs now.
The implementation of the new law banned common ISP practices such as data traffic blocking, slowing any data traffic and paid prioritization. Notably, paid prioritization is a method through which content developers strike deals with ISPs for quick and smooth transmission of their data traffic. But with the implementation of the law, the FCC could now closely monitor and put a check on all such deals. Moreover, the FCC could also supervise interconnection deals, in which content developers pay ISPs to connect with their networks.
Gainers
Content developers and consumer groups are poised to benefit from the net neutrality law implementation. Netflix Inc. (NFLX - Free Report) , Alphabet Inc. (GOOGL - Free Report) , Amazon.com Inc. (AMZN - Free Report) , Facebook Inc. and Twitter Inc. are some of the companies poised to take advantage from the change. While Alphabet currently holds a Zacks Rank #2 (Buy), the rest of the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
At present, these companies pay special charge to ISPs for speedy transmission of their contents. The new rule will significantly alter online access charges of contents including video, music, email, photos, social networks and maps for consumers.
Who Would Benefit If FCC Abandons Net Neutrality?
President Trump himself is a strong critic of net neutrality. There is little doubt that if the new FCC scraps net neutrality laws either fully or partially, the ISP industry will be the most benefitted. Leading ISPs including AT&T, Verizon Communications and Comcast have decided to challenge the net neutrality laws in Supreme Court.
Bottom Line
Telecommunications is a necessary utility. The need for telecom in both rural and urban areas as well as its role in the infrastructural development of an economy is of vital importance. Net neutrality may discourage large investments in the telecom sector, but will cut down the cost of online access for end-users since content providers will no longer need to pay extra fees. However, it remains to be seen how the government manages a trade-off between the two.
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Movement to Defend FCC Net Neutrality Rules Gains Momentum
As per a report by LightReading, several advocacy groups in the U.S. are organizing protests to defend Net Neutrality rules adopted by the Federal Communications Commission (FCC) in Feb 2015. Then-FCC Chairman Tom Wheeler classified high-speed broadband (Internet) as a public utility under Title II of the 1934 Communications Act instead of section 706 of the 1996 Telecom Act.
However, the new FCC chairman Ajit Pai, appointed by President Trump, is a staunch net neutrality opponent. He has issued a notice of proposed rulemaking (NPRM) asking for comments on a plan to dismantle the net neutrality rules. Initial comments on that NPRM are due on Jul 12.
What Is Net Neutrality?
Net neutrality implies an open-Internet atmosphere that will prohibit Internet Service Providers (ISPs), especially the telecom and cable TV operators, from discriminating against applications. In order to control the flow of bandwidth-consuming applications such as video streaming, the ISPs have been discriminating against several web-based contents and applications. Content developers have to pay heavy sums to ISPs for accelerated data transfer.
In a historic decision, the FCC had approved net neutrality rules, on Feb 26, 2015, after a majority vote. The five-member regulatory body voted in favor of net neutrality with a 3-2 margin. However, the voting pattern was clearly divided along party lines, as three Democratic party representatives voted in favor of net neutrality while the two Republican representatives opposed it.
The new laws reclassified high-speed broadband (Internet) as a public utility under Title II of the 1934 Communications Act instead of section 706 of the 1996 Telecom Act. Importantly, these regulations were applicable to both mobile and fixed broadband networks. The reclassification of the Internet called for a radical change in the way the government treats high-speed broadband service. This gives the FCC a stronger control over the ISPs now.
The implementation of the new law banned common ISP practices such as data traffic blocking, slowing any data traffic and paid prioritization. Notably, paid prioritization is a method through which content developers strike deals with ISPs for quick and smooth transmission of their data traffic. But with the implementation of the law, the FCC could now closely monitor and put a check on all such deals. Moreover, the FCC could also supervise interconnection deals, in which content developers pay ISPs to connect with their networks.
Gainers
Content developers and consumer groups are poised to benefit from the net neutrality law implementation. Netflix Inc. (NFLX - Free Report) , Alphabet Inc. (GOOGL - Free Report) , Amazon.com Inc. (AMZN - Free Report) , Facebook Inc. and Twitter Inc. are some of the companies poised to take advantage from the change. While Alphabet currently holds a Zacks Rank #2 (Buy), the rest of the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
At present, these companies pay special charge to ISPs for speedy transmission of their contents. The new rule will significantly alter online access charges of contents including video, music, email, photos, social networks and maps for consumers.
Who Would Benefit If FCC Abandons Net Neutrality?
President Trump himself is a strong critic of net neutrality. There is little doubt that if the new FCC scraps net neutrality laws either fully or partially, the ISP industry will be the most benefitted. Leading ISPs including AT&T, Verizon Communications and Comcast have decided to challenge the net neutrality laws in Supreme Court.
Bottom Line
Telecommunications is a necessary utility. The need for telecom in both rural and urban areas as well as its role in the infrastructural development of an economy is of vital importance. Net neutrality may discourage large investments in the telecom sector, but will cut down the cost of online access for end-users since content providers will no longer need to pay extra fees. However, it remains to be seen how the government manages a trade-off between the two.
3 Stocks to Ride a 588% Revenue Explosion
At Zacks, we're mostly focused on short-term profit cycles, but the hottest of all technology mega-trends is starting to take hold...
By last year, it was already generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. See Zacks' Top 3 Stocks to Ride This Space >>