Net Neutrality

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. 



comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option is purchased and the lower premium option is sold - both at the same time. The higher the debit spread, the greater the initial cash outflow the investor will incur on the transaction.
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated.
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by additional investment would not warrant the expense. A harvest strategy is employed when a line of business is considered to be a cash cow, meaning that the brand is mature and is unlikely to grow if more investment is added.
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better.
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
Trading Center