FCC Net Neutrality Vote Indirect Harm1 min read

Any business plan that a technology company that requires transit over the Internet will have is changed by this vote. You have to assume that customer ISPs and transit ISPs may hold you ransom in order to deliver their traffic.

This is a change from earlier today where you pay a business pays its ISP (or ISPs) to deliver its traffic. That ISP then pays the ISPs they connect to, and so on. You, with your home Internet, pay the ISP you connect to for the traffic you request. Everyone gets paid.

The reason we had net neutrality implemented was because the providers in between were charging companies to transit their traffic.

In this scenario, we’ll explain how it might work with Netflix.

Netflix pays Layer 3 for a connection to the Internet. Layer 3 then connects to AT&T. AT&T then connects to Cogent. Cogent then connects to Verizon. Verizon then connects to your ISP. Everyone along this path agrees to these connections.

The primary reason for net neutrality legislation was because Cogent, AT&T, and Verizon had started slowing down the traffic along the way.

Netflix and other large companies have worked around this by paying everyone for direct access to their networks and minimizing hops.

Anyone who wants to compete with Netflix now has to do the same or pay potentially billions of dollars for those intermediary networks to not mess with their traffic. Those intermediary networks, who are already paid by their customers, stand to gain a lot from this.

Google, Facebook, and Netflix benefit from this today. It will be much harder for competition to startup, now that investors will be aware of this potential expense along the way.

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