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Marketers face end of net neutrality

News, 14 February 2017
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NEW YORK: The issue of net neutrality is set to become a battleground between marketers and internet companies on the one hand and telecoms firms on the other as the Trump administration prepares to review the rules surrounding the issue.

Ajit Pai, the new chairman of the US Federal Communications Commission, has previously said that net neutrality's "days are numbered" and has announced the closure of investigations into "sponsored data" or "zero rating" programs operated by mobile phone companies.

These give customers free data for using certain video services. "My position is the government should not be in the position of prohibiting companies in a competitive marketplace from offering free data," Pai said.

Consumers are likely to welcome any moves to end net neutrality – initially at least – as the option to stream video free or for a flat fee, for example, is clearly preferable to paying for expensive data transfers.

Marketers, however, could face additional costs. "If net neutrality is curtailed, marketers will be increasingly subject to ISPs in terms of restricting bandwidth for their sites," explained Andrew Lustigman, a specialist in the legal aspects of advertising with New York law firm Olshan Frome Wolosky.

"As a result, the power to have full access to internet traffic will be eliminated in favor of an ISP's discretion," he told Mobile Marketer.

"For example, a marketer may not be able to obtain the level of traffic it has generated because of a bandwidth restriction that slows site load time if the ISP is not in favor of that marketer, or if the marketer has not paid for additional access."

The Wall Street Journal noted that photo sharing app Snap, in its IPO filing, had listed the end of net neutrality as a potential threat to its long term prospects.

"If a company potentially valued at $25bn is worried about having to pay carriers to be competitive with other zero-rated peers, imagine what these changes might mean to a startup at the seed stage, with only a few million in investment," it said.

Data sourced from Reuters, Mobile Marketer, Wall Street Journal; additional content by Warc staff

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