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Why Snap Is Worried About Net Neutrality

A repeal of the FCC’s “open Internet” rules could hurt business for upstart video services like Snapchat.
February 7, 2017

When the maker of Snapchat filed last week to go public, it also stepped directly into the contentious political debate surrounding net neutrality, warning that if the government removes the Federal Communications Commission’s “open Internet” rules it could seriously harm its business.

Ajit Pai, the new chair of the Federal Communications Commission, has said the “days are numbered” for the commission’s net neutrality rules, which were enshrined in the Open Internet Order in 2015. The order bans blocking and throttling of legal content and prohibits business arrangements in which a content provider pays an ISP a premium to have its data prioritized. It also gives the FCC authority to police other business practices it deems unfair or harmful to consumers on a case-by-case basis. Pai’s FCC has already shelved an investigation into a controversial practice called zero rating, in which a wireless ISP lets users stream certain content without it counting against their data caps.

Smaller wireless streaming video providers like Snap are among those with the most to lose if the Open Internet rules are rolled back. In its filing for the Securities and Exchange Commission, Snap warned that if they are modified or removed, “mobile providers may be able to limit our users’ ability to access Snapchat or make Snapchat a less attractive alternative to our competitors’ applications.”

Snapchat is worried FCC Chairman Ajit Pai's plans to overturn net neutrality rules will hurt business.

If the government kills the rules and does not replace them, a wireless ISP would be more free to make a deal with one of Snap’s competitors that gives it an advantage. For example, it could zero-rate Instagram videos for a price that Snapchat can’t match, or even offer an exclusive deal to Instagram.

It’s unlikely we’ll end up with no net neutrality protections at all, though, says Hal Singer, senior fellow at the George Washington University Institute of Public Policy. Politicians on both sides of the aisle generally agree that there should be some form of protection for upstart content providers and consumers against unfair or discriminatory business practices by ISPs. Pai and Republican leaders in Congress claim their priority is not to eliminate net neutrality, but to remove the FCC’s authority to impose what they see as overly strict regulations on the ISPs. They have not revealed any specific plans to replace the order, however.

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