The battle over Net Neutrality has been fought for many years already. Over time, the winning side keeps bouncing back and forth. Recently, the FCC said it would end Net Neutrality, which will let the Internet providers like AT&T (T), Verizon (VZ), Comcast (CMCSA), Charter (CHTR), CenturyLink (CTL), Windstream (WIN), Earthlink and others be profitable. This however made other companies that use the Internet like Google, Facebook, Netflix and many others angry. They liked the free ride. So, what’s coming next?
The problem is simple. There are two sides to this debate and the average consumer does not understand Net Neutrality and that makes matters more confusing. Consumers want everything free. Understood. However, they pay a fortune for iPhones and Androids. So, it’s really a matter of creating the correct understanding of this Net Neutrality debate. Let me try and unwind this for you.
Both sides make sense from their own perspective, however there is really only one answer. Companies must be profitable in order to stay in business. It’s that simple. We want them to continue to invest and bring the future to reality. If not, we will be stuck in the past. So, companies must be profitable.
AT&T Internet Bill of Rights Explains Net Neutrality Problem
That’s why AT&T introduced their Internet Bill of Rights. Their intention is to clear things up. To make all aspects of this topic crystal clear, so everyone understands. They say the US Congress should end the Net Neutrality debate by writing new laws that will both govern the growth of the Internet and protect business customers and consumers going forward.
One result of Net Neutrality is that companies have been reluctant to invest in an area where they cannot be profitable. That makes sense since a company is not a government and first must be profitable in order to survive and grow. Other companies like Facebook (FB), Google (GOOGL) and Netflix (NFLX) should understand that. However, they would rather not have to pay for the increasing bandwidth they use. But they should understand the need for every company and every service to be profitable.
Google Health was shut down years ago because it was not profitable. In fact, many other services from many companies are shut down because they are not profitable. Customers loved it. They needed it. Yet Google shut it down.
The Google Health issue is the same as with Net Neutrality for service providers.
AT&T says they want to clear this confusing mess to ensure continued investment in Internet technology to empower growth in the future for every player and for every user, business and consumer.
I am an industry analyst, but I am also a consumer. Like every consumer, I would love nothing more than to get something for nothing. However, like you I pay for things I use. I understand companies need to be profitable in order to continue. The Government does not have to be profitable, but business must be.
So, looking at this debate from this perspective makes perfect sense.
Net Neutrality Debate Should Recognize Companies Must Be Profitable
AT&T points to the changing future full of self-driving cars, augmented reality, remote surgery and much more. How the future will demand a much higher level of Internet performance than what we use today. This takes massive and continual investment for every Internet service provider.
If we expect Internet providers to continue to invest for the future, they must be profitable. It’s really that simple. In order to invest and bring that increased level of performance, Internet providers must be profitable.
Regulators can monitor the industry and make sure no Internet providers play unfair. That should take the worry away from anyone with this concern. This fear is not a reason to force service providers to bear investment cost without profitability, while other companies get a free pass.
AT&T Internet Bill of Rights Makes Sense
Hopefully, as we all better understand this issue, we will realize this Internet Bill of Rights makes sense. Nothing great happens at companies without them also being profitable. That’s the price we must pay in today’s society. However, that’s the price we have always paid. That’s what makes our society grow.
Do you think the computer and operating systems like Microsoft (MSFT) and Apple (AAPL) would have ever started without the promise of profitability? Do you think Apple would be happy not being profitable selling their iPhone and iPad? After all, they could just charge us what it costs them if they weren’t going to be profitable, right? And Google should never have stopped Google Health if they were not interested in profitability.
However, if we took the profit motive away, we would never have a computer, smartphone, wireless data services, apps or anything else. In fact, we would not have any other innovative business product or service which we all use and love every day.
Profit is not evil. However, profit is the bottom line for business. Business is not government. It must be profitable in order to continue. The promise of profit is what brings innovation that makes us better and stronger, generation after generation. It’s what makes companies healthy, keeps them in business, and provides a constant stream of innovation.
That’s why we must understand, while we want things for free, Net Neutrality is something that would never work long-term. It would take away control and profitability and companies would no longer invest. If that was the case, the future we are all anxiously waiting for, may never arrive. Imagine if you went car shopping in 2018 and the only choice you had was still, the same old Ford Model T. That’s the point!
Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan.
