A:

The extent to which government regulation impacts the Internet sector depends on the country and the degree of regulation. Governments around the world regulate various aspects of Internet content, such as child pornography, defamation and information sensitive to national security. As of February 2014, the countries whose governments censored the most Internet content were North Korea, Burma, Cuba, Saudi Arabia, Iran, China, Syria, Tunisia, Vietnam and Turkmenistan. The debate continues as to what could happen if the U.S. government begins to regulate the Internet more heavily by implementing the principle of net neutrality, or open Internet.

Economic studies have shown that in several countries, open-access regulations have tended to depress investments. Those who support this view claim that where open-access rules exist, there is less incentive for telecommunications and cable companies to invest. Other studies have shown that broadband regulation and investment sometimes have a positive relationship and that broadband regulation can negatively affect an overall investment climate. In other cases, researchers have reported inconclusive results.

In November 2014, Barack Obama asked the Federal Communications Commission (FCC) to implement telephone regulations in the Internet sector. One purpose of these regulations would be to stop broadband companies from favoring some providers of Internet services or online media sources over others. At stake here is the ability of companies, individuals and nonprofits to reach consumers directly without additional interference from Internet service providers and broadband providers such as Verizon and Comcast, which can, as of 2015, choose favorites. Opponents of Obama's proposal advocate keeping the broadband market a free market.

At the center of this debate lies the concept of net neutrality. This term refers to the idea that all data on the Internet deserves equal treatment by enterprises, including Internet service providers, and by governments. Those in support of net neutrality point out that small companies would be more likely to enter the market and offer new services if Internet service providers could not control the speed at which customers can access websites, because only larger companies can afford to pay higher rates for faster access. Supporters also maintain that net neutrality would prevent data discrimination by providers of Internet services. Opponents of net neutrality claim that treating all Internet data equally would discourage investments in new infrastructure and would give providers less incentive for innovation. Major telecommunications providers fear that if they were unable to charge different prices for different access, they would not be able to remain competitive and recuperate the funds they have invested in broadband networks.

As of November 2014, Rasmussen Reports noted that 56% of Americans would prefer more free-market competition over increased government regulation to protect Internet users. One-fourth of Americans were undecided on the question.

RELATED FAQS
  1. How do Internet companies profit if they give away their services for free?

    Learn how companies in the Internet sector make a profit when service, content and user applications are offered at no cost ... Read Answer >>
  2. What is the average price-to-earnings ratio in the internet sector?

    Learn what the average price-to-earnings (P/E) ratio is for companies in the internet sector and how the sector is broken ... Read Answer >>
  3. What lessons did the tech bubble crash give to investors in the Internet sector?

    Learn how investors contributed to the dot-com bust and how Internet services and investing has changed since the market ... Read Answer >>
  4. How is venture capital regulated by the government?

    Learn about some of the ways in which the U.S. government and the Securities and Exchange Commission regulate venture capital. Read Answer >>
  5. What types of regulations are in place regarding fringe benefits?

    Read about the types of regulations that impact employee fringe benefits in the United States, including benefits mandated ... Read Answer >>
  6. How are asset management firms regulated?

    Find out how the asset management industry is regulated and how those regulations fit within the broader scope of financial ... Read Answer >>
Related Articles
  1. Small Business

    What You Should Know About Net Neutrality

    Here's what the end of Net Neutrality means for us.
  2. Investing

    Congress Revokes Broadband Privacy Rules

    The overturning of strict privacy laws offers broadband providers the possibility to regain digital advertising market share from Facebook and Google.
  3. Investing

    Net Neutrality Could Wither Under Trump (DISH, CMCSA)

    Now that Donald Trump has won the election concerns are rising that he could do away with net neutrality.
  4. Investing

    Google to Bring Data Centers to Cuba for Faster Internet

    Cuba ranks ranks near bottom in Internet penetration.
  5. Personal Finance

    E-Marketing Specialist: Career Path & Qualifications

    Learn more about the duties and responsibilities performed by eMarketing specialists and common career paths this profession takes.
  6. Investing

    Net Neutrality Was a Mistake: FCC Chairman

    Ajit Pai said consumers like free stuff on the internet and that the FCC will introduce a light touch on regulations.
  7. Investing

    The One ETF To Own The Top Internet Company Stocks

    Grab a pie of booming online businesses in one shot! Here is the one ETF that lets you own stock in the top Internet companies.
  8. Insights

    The Cost of Free Markets

    Some argue that when the free market fails to protect consumers, government regulation is required.
  9. Personal Finance

    Online Banks: Lower Costs And Little Sacrifice

    For many, online banking has become a day-to-day routine. Still, there are some holdouts who refuse to accept the method.
RELATED TERMS
  1. Net Neutrality

    The idea that all data on the internet should be treated equally ...
  2. Consumer Internet Barometer

    The Consumer Internet Barometer is a quarterly survey report ...
  3. Internet of Things (IoT)

    The Internet of Things (IoT) is a network comprised of physical ...
  4. ISP (Internet Service Provider)

    An ISP, or internet service provider, is a company that provides ...
  5. Rate Of Return Regulation

    Rate of return regulation is a form of price setting regulation ...
  6. Revenue Cap Regulation

    Revenue cap regulation seeks to limit the amount of total revenue ...
Trading Center