Net Neutrality Act and its Effect on the Digital Smart Home


With the FCC going ahead with their new set of rules supporting the concept of Net Neutrality, many of you are probably wondering if it will end up affecting your investment in High Speed Internet Service, a Home Automation system, and Digital TV. In addition to reinforcing the principle that all Internet traffic is created equal — as it always has been — this fledgling Net Neutrality act also makes Broadband Internet service a regulated utility, based on Title II of the Communications Act of 1934. Making Internet service a regulated utility allows the FCC to better defend the act against the legal challenges already percolating from a variety of industry giants, like Verizon, AT&T, and Comcast.

What follows is a closer look at industry reaction to the FCC’s new act, while considering what moves, if any, today’s homeowner needs to make to ensure their expenditures for a Digital Smart Home aren’t for naught.

Initial Reaction to Net Neutrality Act calls it “New” Regulation of the Internet

One way to confuse a technology-related issue is to have politicians — on both sides of the aisle — offer their own opinions on the subject. The FCC’s recent Net Neutrality ruling is no different. Many in Washington have called the act a strike against free market rights, a position disputed by FCC head, Tom Wheeler. “This is no more a plan to regulate the Internet than the First Amendment is a plan to regulate free speech. They both stand for the same concept,” said Wheeler.

The fact that all Internet traffic is treated equal is an important principle since the World Wide Web revolutionized society in the 1990s. In fact, Comcast earned press for blocking peer-to-peer traffic on its network in 2007. AT&T two years earlier announced its desire to charge Web content providers a higher fee for preferential treatment for their data traffic, essentially creating a tiered Internet and first sparking the Net Neutrality debate. The telecommunications giant canceled its tiered data plan to gain regulatory approval for its acquisition of BellSouth.

Verizon won a legal challenge against Net Neutrality rules in 2011, setting the stage for the new FCC Net Neutrality act and the reclassification of High Speed Internet Service as a regulated utility. The fact that new legal challenges are brewing over this latest act is a major reason why you needn’t start worrying that your ISP prices are going up. This is a good time to remain patient and allow the potentially long legal process to complete.

Expect the Net Neutrality Legal Battle to Take Years to Decide

Those companies against the new Net Neutrality act regulations — primarily giant ISPs and telecommunications companies — are currently in a two-month waiting period where they are able to offer legal challenges to the act. A pundit for Forbes feels that it will take at least one to three years for this legal wrangling to reach a final conclusion. In fact, the Supreme Court may end up with the final say on the matter.

This Forbes contributor offers a few reasons why the new act may be overturned in court; most related to the FCC overstepping its bounds in reclassifying the Internet as a public utility. Like many others, he doesn’t predict how things will end up, only that it will take a few years for a hopefully final resolution.

Will Reclassifying Broadband Internet as a Utility Raise your ISP Bill?

Some pundits feel that reclassifying High Speed Internet service as a regulated utility will cause an unintended consequence that could make your monthly Internet service bill rise. Every month your phone bill includes a nominal charge — averaging around $3 — used for something called the Universal Service Fund, which makes acquiring telecommunications services easier for rural regions, inner cities, and schools. Since Broadband Internet service would be a regulated telecommunications product, it could be subject to that same charge.

Tom Wheeler commented that the entire size of the fund isn’t changing, and if those contributions are spread across more users, the actual per bill surcharge would be smaller for everyone. In short, instead of paying $3 per month on your phone bill, you would pay $1.50 each month on your phone bill and Internet service bill.

Ultimately, if you are worried about the effects of the Net Neutrality act on the Internet-based services at your home, don’t bother with the stress. If anything, it may delay further rollout of “One Gig” service levels as the large ISPs also wait for a final legal decision. Just be patient.

Photo Credit: Backbone Campaign