IMD Professor Reacts
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Does the fate of the Internet rest with the US?

Debating net neutrality

Michael R. Wade

By Professor Michael R. WadeMichael R. Wade
with Heidi Gautschi

The debate about net neutrality currently raging in the US and on social media is essentially one about whether all users should have equal access to all internet content. The debate is as old as the internet itself.

Net neutrality, as understood in this context, has to do with Internet Service Providers (ISPs) being required to treat all data on the internet in the same way, regardless of how it is accessed. There should be no preferential treatment of data owned by certain companies, or accessed on certain devices, or platforms, for example.

The issue boils down to whether the internet is a business platform, or more of a space where individuals can express themselves, create, innovate and share. But how do these two competing visions co-exist and how should they?

The United States Federal Communications Commission has declared that it will dismantle the net neutrality rules that went into effect in 2015 during the Obama administration.

The intention to repeal net neutrality rules goes along with many Trump administration policies. It could end up digitally isolating the US from the rest of the world if worst case scenarios do occur, which is not likely. This would probably cause damage to many companies, both US and non-US based, that do business online. Companies may end up passing on increased fees to their customers. In the long term though, it will be most damaging to the US, perhaps not financially, but certainly in terms of the richness of internet content American residents would be able to easily access.  

If and when the net neutrality rules are dismantled, what happens next? Given the uproar, it is unlikely that internet service providers will change their subscription models overnight.  In fact, it’s probably not to their advantage to do so. Most likely, the first changes will be in mobile access to data.

If and when changes do take place, US based SMEs will be most affected, as will foreign companies that do not have the ability to negotiate directly with US telecoms. This could mean American residents would have less/slower access to non-US based news services, cultural industries (museums, music, cinema…), education (online courses), online shopping, for example. 

Changes that occur in the US could also influence other countries’ policies. However, there are open internet regulations in the EU. Furthermore, most European countries have a long history of state intervention in telecommunications, even post 1980s privatization. 

One thing’s for sure, the internet is global and Switzerland would not escape any major changes to its structure and governance unscathed.

Michael Wade is director of the Global Center for Digital Business Transformation at IMD, and co-author of Digital Vortex: How Today's Market Leaders Can Beat Disruptive Competitors at Their Own Game.  

Heidi Gautschi is Research Associate at the Global Center for Digital Business Transformation.

Debating net neutrality

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