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The FCC Adopted Revised Rules For Network Neutrality That Will Spur Innovation On The Internet-Many New Products Should Emerge

ArmchairTechInvestorRegulationCommunications, December 16, 2017, by Brad Peery,

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*The latest version of “net neutrality” was adopted by the FCC, during the *Obama administration, in 2015. Internet service providers were classified as common carriers. The concept was that carriers treat all traffic on their network equally. That is, that small users should be charged the same rates as large users, despite their amount of their traffic. The unfounded assumption is that carriers costs are equal for small and large customers. This ignores the fact that Internet customer handling costs are larger for small customers, and assumes that there are no economies of scale in network traffic costs for small and large customers.

**The Federal Communications Commission (FCC) repealed the net neutrality rules. The new rules require broadband communications carriers to disclose when they limit or control speeds, such as speeding up live sports programming. This will allow the carriers’ customers to choose packages and pricing that meets their needs. It is also claimed that the changed rules will increase the carriers’ investment in broadband wireless and fiber infrastructure, and support the growth of content. Apple plans to spend $1 billion on content to compete with Amazon, Netflix and YouTube. Streaming services will be customized to compete with the cable companies by providing smaller customized bundles that will be less expensive than bundled cable services. Disney is buying 21st Century Fox to compete with Netflix.
*FCC Vote Promises to Reprice The Net, Wall Street Journal, by John D. McKinnon and Ruan Knutson, December 12, 1017
**FCC Reverses Rules on Net Access, Wall Street Journal, by John D. McKinnon, December 14, 2017

ArmchairTech Investor Opinion
In delivering content for customers, it is important the carriers not favor their own content, or block their competitors. With those caveats, it is better to have less regulation than more. On that principal, eliminating the net neutrality rules will allow more innovative services to be operated. The typical cable systems that bundle programming packages in a way that includes many programs not wanted by a typical consumer, the net neutrality rule elimination will allow streaming services to be customized in ways that will promote choice. We also believe it will promote network innovations in fiber and broadband wireless that will benefit more rural areas.

The requirement that the carriers provide the details of their services and alliances should make the activities of the carriers transparent, and subject to anti-trust or anti-competitive scrutiny.

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