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Blog/January 23, 2018

What the Recent FCC Changes to Net Neutrality May Mean to the E&C Industry

On December 14, 2017, the Federal Communications Commission (FCC) voted to reverse the 2015 directive that required Internet Service Providers (ISPs) to treat all types of digital traffic equally. Previously, no internet traffic—regardless of the user or the content—took priority over another. This directive, commonly known as network neutrality, has spawned a heated debate among consumers and providers. It is also a hot topic within government, at the state and federal levels. The Wall Street Journal recently reported that 20 state attorneys general and the District of Columbia filed legal challenges to the FCC’s rollback of many of the past administrations’ internet regulations. WSJ quoted New York Attorney General Eric Schneiderman as saying, “The repeal of net neutrality would turn internet service providers into gatekeepers, allowing them to put profits over consumers while controlling what we see, what we do, and what we say online.”

Proponents of the FCC’s actions believe the repeal of net neutrality will benefit the market; opponents fear it will stifle innovation and harm consumers. We interviewed several leaders in construction technology and the architecture and engineering (A/E) space, and received widely varying opinions on the impact of the repeal of net neutrality on the construction and engineering space.

A Little History
Prior to the 2015 directive, internet traffic experienced very little government regulation and oversight. Then, in the mid-‘90s, the U.S. presidential administration and Congress developed a policy in support of “the vibrant and competitive free market that presently exists for the Internet… unfettered by federal or state regulation.”

Varying Industry Perspective
As James Benham, CEO of JB Knowledge, Inc., explains, “the content distribution networks have [already] solved the major issue of bulk content providers consuming long-haul pipelines by storing replicated copies of regularly accessed copies of content on an edge server closest to consumer,” allowing customers to enjoy data-heavy streams without clogging the pipelines for other customers. Benham goes on to say that, “it feels like the government is trying to solve a problem that content providers and bandwidth providers already sorted out. In the end, the internet is best served by little to no regulation. The market has the capacity to respond to changes in customer behavior faster than the government can pass new regulations.”

There are varying points of view on this issue, of course, and some are less optimistic than others. Although JB Knowledge believes markets can adjust or already have successfully adjusted changes in consumer needs, Matthew Phillips, CEO of tech startup TAP Solutions, is concerned about the possibility of restricting entrepreneurship.

Phillips worries that “A new variable has been introduced with the potential to suppress the growth and prospects of new startup internet-based business and social media channels.” Under the new rules, ISPs could potentially block or intentionally slow down sites that they do not like, including company landing pages, news channels, TV shows and social media sites.

The potential for increased operating expenses is another concern that Jacob D’Albora, director of BIM-FM Services at McVeigh & Mangum Engineering, Inc., shared with us. Crews in the field rely on real-time updates on their tablets and phones for construction, and their software programs require large amounts of data streaming through the pipeline, potentially causing the company’s internet provider to charge more for each job site using heavy data. This possible rise in expenses could shrink already tight profit margins, D’Albora argues.

Recommendations
Internet providers have publicly promised that their treatment of broadband data will not change under the FCC’s new guidance, and there are several litigations hurdles the FCC and Federal Trade Commission must pass through before the new directive is enforced. However, it’s time to start thinking about its possible impacts for your company, including:

  • Understanding the type and quantity of internet connectivity your enterprise demands, and an assessment of which systems and platforms require connectivity (particularly ERP and construction technology).
  • Assessing how effectively the enterprise is leveraging the construction technology, both in the office and in the field.
  • Determining whether there are gaps or redundancies within your construction technology suite of systems.

Fortunately, if your area is served by multiple ISPs (and most populated areas are), the switching costs between ISPs are relatively minimal, and any disruption to service can usually be mitigated. Additionally, since internet connectivity may be viewed as a commodity good, customer service and system reliability are critical to providers. All of this means that internet service providers aren’t likely to make extreme changes to their level of service or pricing model nor are they likely to affect your access to content. Keep these points in mind as you develop your technology strategy in 2018 and beyond.

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