Will Open Internet changes affect the enterprise market?

The government's Open Internet policy known as "net neutrality" was struck down by a federal appeals court in a Jan. 14 ruling. The decision in Verizon v. Federal Communications Commission potentially opens the door for broadband providers to differentiate the treatment of different kinds of content.

The implications seem clear for consumers – the worry is that broadband providers might start making deals that privilege one application over another, or degrading the performance of applications that compete with their own native services. In the case of on-demand video library services, an ISP could create a fast lane for the delivery of Netflix that doesn't support competitors such as Hulu or Amazon Prime. Another worry is that charging online apps a kind of access fee could raise a barrier for new entrants who want to compete in established markets.

The fallout for enterprise users, including government, is less clear. Cloud computing, video conferencing, and other bandwidth-hungry applications could potentially fall into the same bucket as Netflix. But the cloud computing industry isn't raising any flags about potential access fees. This is in part because the commercial broadband market is usually regulated under a different set of rules. Individual consumers typically get their "last mile" of broadband through a DSL or cable connection. Enterprise customers contract on a building-by-building basis for last-mile connections that often merge data traffic with voice traffic, and are provided by large, incumbent telecommunications companies or competitors who lease access on their networks.

"If you're talking about big government buildings, they almost certainly have dedicated lines that would fall under 'special access,'" said Doug Brake, a telecom policy analyst at the Information Technology & Innovation Foundation. "The FCC's Open Internet rules didn't touch special access in the first place, so the D.C. Circuit's opinion doesn't change anything for these users."

In general, Brake feels that broadband providers are going to be cautious about making changes to their business practices that go against the spirit of neutrality. "To be honest, I don't expect very radical changes with regard to the residential consumer," he said.

Netflix agrees with this sentiment. The company raised the possibility of a "draconian scenario" in which ISPs look to extract fees from the video services in a Jan. 22 report to investors, but concluded that, "The most likely case, however, is that ISPs will avoid this consumer-unfriendly path of discrimination. ISPs are generally aware of the broad public support for net neutrality and don’t want to galvanize government action."

Still, the decision to eliminate the Open Internet rules has the potential to change the relationship between online applications and the networks that carry them. "Anyone moving data has to be concerned about having to pay more to move that data," said Chris Lewis, vice president for government affairs at the consumer watchdog group Public Knowledge, which supports net neutrality rules.