Net Neutrality

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DEFINITION of 'Net Neutrality'

The concept that all Internet traffic should be treated equally. Network neutrality requires all Internet service providers (ISPs) to provide the same level of data access and speed to all traffic, and that traffic to one service or website cannot be blocked or degraded. ISPs are also not to create special arrangements with services or websites, in which companies providing them are given improved network access or speed.

INVESTOPEDIA EXPLAINS 'Net Neutrality'

The term “network neutrality” was introduced in 2002. The concept was floated in response to efforts by the Federal Communications Commission (FCC), a United States regulator body, to require broadband providers to share their infrastructure with competing firms. The Supreme Court struck down the FCC regulation in 2005. Since then the sticking point for regulation has been whether broadband service providers were considered information services, which allows users to publish and store information on the Internet, or telecommunication services.

Advocates for network neutrality suggest that by not allowing ISPs to determine the speed at which consumers can access specific websites or services, smaller companies will be more likely to enter the market and create new services. This is because smaller companies may not be able to afford to pay for “fast lane” access, while larger, more established companies can. For example, several well-established social network websites were created without much seed capital. Had they been forced to pay extra in order to be accessed at the same speed as competitors, they may never have become successful.

Critics of network neutrality suggest that by forcing ISPs to treat all traffic equally the government will ultimately discourage the investment in new infrastructure, and will also create a disincentive for ISPs to innovate. The up-front costs associated with laying down fiber optic wire, for example, can be very expensive, and critics argue that not being to charge more for that level of access will make the investment more difficult to pay off. 

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