What Net Neutrality Means For Your Wallet

By Brittany Lyte on 1 April 2015 0 comments

Just like water and electricity, Internet service is now essentially considered a public utility following the passage of new net neutrality rules by the Federal Communications Commission (FCC). Depending on which camp your views are aligned with, this is either a positive step toward ensuring equal Internet access for everyone, or a bad move that could bring about over-regulation by the government.

But, love it or hate it, net neutrality has arrived. And while a drawn-out court battle over the FCC decision will likely delay any real changes to your nightly Netflix consumption, we figure it's worth exploring how net neutrality could eventually impact your wallet.

American Consumers Could Face a Tax Increase of $11 Billion — Or Zero

According to a Progressive Policy Institute study, net neutrality rules could generate $11 billion in new taxes if regulators apply the existing fees on your telephone bill to your Internet bill.

"If these fees are already on the books and Internet service gets reclassified as a public utility, it makes it easier for these state and local authorities to argue [Internet service] should be subject to the same fees," said Hal Singer, one of the PPI study authors.

Some experts, however, say it's unlikely that your Internet bill would reflect your telephone bill fees. Your phone bill, for example, most likely includes a charge for the local emergency 911 service, something that's totally inapplicable to your Internet usage. Following this school of thought, many pro-net neutrality scholars claim the new rules won't lead to any tax increase, while others say it will probably lead to a relatively small tax hike somewhere in the ballpark of $4 billion. PPI's number is already scaled back from its original $15 billion estimate, an indication of just how unstable these early projections are.

Potential Job Cuts in Telecom Industries

A New York University study found that net neutrality could cost the U.S. economy $62 billion and eliminate half a million jobs over the next five years. This is based on the notion that the new regulations would reduce broadband providers' incentive to invest in high-speed network infrastructure by shrinking their opportunity to bring in revenue.

"There will be follow-on effects in the whole ecosystem," said Bret Swanson, who co-authored the NYU study. "A diminution of investment by the big infrastructure companies will reduce network capacity, new services, and investment by all the ecosystem companies."

But not everyone agrees. For example, the chief technology officer for Sprint, the third-largest U.S. wireless carrier and a proponent of stricter net neutrality rules, has publically said that neither Sprint nor its competitors would reduce investment in light of increased regulation. "Our competitors are going to continue to invest so they are representing a situation that won't play out," Stephen Bye told Reuters.

Clearly, the jury's still out on exactly how much net neutrality will cost consumers like you. Keep your eye on this important new policy and its developments.

Do you expect the new rules to help your budget — or hurt it?

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