When people use the internet, they expect a free open network without restriction. You want to be able to dictate your own internet experience. This right is protected by a principle called Net Neutrality. Net Neutrality is the principle that the internet provides an open network that allows for free communication and free speech. To put it more simply, Net Neutrality allows for an open network to use as you desire.
But how does Net Neutrality affect the broader marketplace? Let’s dive deeper as we move closer to achieving financial fluency.
Why does Net Neutrality matter?
After the Federal Communications Commission (FCC) adopted Net Neutrality based off of Title II of the FFC Act of 1934, internet users are protected under the right of an open internet network. Because Net Neutrality exists, phone and cable companies are not allowed to alter the speed or services that certain users receive over others. Say that this principle didn’t exist, internet service providers could give preferred treatment to the more established, content companies that could afford to pay for a higher service.
This essentially would destroy the open internet allowing phone and cable companies to control who receives different levels of service. In addition, powerhouse providers such as Verizon (VZ), AT&T (T), and Comcast (CMCSA) would be able to block services or applications that compete with their own, and as a result, gaining an unfair edge in an open network. Net Neutrality is also important to small business owners and entrepreneurs who rely on the open internet to market products, create markets, and spark innovation. Without Net Neutrality, competition and innovation would not exist.
But how exactly does Net Neutrality affect our investments? Let’s use our financial fluency tools to look closer.
Why does Net Neutrality matter for investors?
As an intelligent investor, you must weigh the risks associated with a stock. If Net Neutrality were to be repealed, there would be nothing stopping from a company like AT&T who has a streaming service with DirecTV from offering very slow connection when using a competitor service such as Netflix (NFLX). Since Netflix has no internet provider department in the company, they could essentially become unusable if none of the internet companies decide to support them.
Likewise, this would make internet providers worth much more since they would be able to charge variable pricing based on the amount of money each one of their clients has. Ultimately, Net Neutrality prevents the internet providers from controlling what you can and can’t access. By surrounding yourself with a greater understanding of the world news and their impact on the market, you can continue to step closer to financial fluency.