The Net Neutrality Dilemma

The repeal on internet service rules will raise a key question for a range of firms: to charge or not to charge.

The new world of the world wide web is now here, with the US Federal Communications Commission repealing the government’s “net neutrality” rules.  And with that comes a unique challenge for a lot more than just internet service providers: how to balance a new opportunity to grow business without alienating customers.

Net neutrality rules had prohibited web service providers from blocking web traffic or demanding payment for faster passage on web networks. With those rules overturned, those companies will likely start charging websites and end users for different service speeds. But a wide range of companies—including hotels and e-commerce firms—may well face a potential customer backlash if they just pass the cost along. “Typically, when organizations do something that is perceived to be unfair, it kills motivation (among consumers and employees),” says Vinay Menon, a principal with Korn Ferry’s global technology practice. 

Net neutrality, of course, has been one of the most hotly debated issues in technology over the past few years. Critics believe that repealing the creates an unfair playing field for deep-pocketed organizations and internet service providers and has the potential to raise prices for consumers, stifle competition for business, and restrict information for citizens. Supporters contend that net neutrality hurts innovation and personalization of consumer experiences and that repealing the rules and will create more open internet. 

For leaders, regardless of which side of the net neutrality debate they fall, Menon says “it is very important to communicate very clearly with internal and external stakeholders any changes to the business model to make sure they aren’t perceived as unfair.” Put another way, leaders must weigh the impact of what is essentially access arbitrage on both their bottom line and their brand perception. 

According to Bob Concannon, a Korn Ferry senior client partner focused on technology, it comes down to focusing on what’s best for the customer, regardless of whether it is a global brand, a local mom-and-pop shop, or a family of four. “There are opportunities for leaders in all areas to create opportunities that didn’t exist before from this,” Concannon said. Indeed, while small businesses may not be able to write a huge check for faster download speeds, they are often more creative and innovative in creating bespoke experiences. “Leaders talk about getting closer to the consumer, knowing them better, reducing noise that distracts from what they are about. Creating that kind of positive relationship won’t change.”

On the business side, Menon advises leaders use a simple litmus test: before making any business model changes ask first if it will benefit or harm entrepreneurship. The repeal of net neutrality creates the potential for big check blindness, meaning the more money organizations offer for faster speeds, the more tempting it is to take it and pass the costs on to consumers or throttle competitors whose payments aren’t so large. “Leaders should think about how the impact of restricting or shaping access to data will impact entrepreneurship. If it harms it or is not clear, they should go back and think about it more.”