Last week's decision by the FCC to end net neutrality protections could have potentially severe implications for manufacturers into the future.
On December 14, the US Federal Communications Commission (FCC) scrapped regulations protecting net neutrality in the country in a three – two vote.
The protections themselves, known as the ‘Open Internet Order’, were passed by the Obama Administration two years ago in 2015.
Net Neutrality – the ability for consumers and businesses to access all parts of the internet at the same speed and price – had generally been seen as one of the key features which made the internet revolution possible.
Internet service providers (ISPs), however, have long sought to overcome net neutrality to generate greater profits and also to allow their them to help promote their own media content and services over that of their competitors.
In recent years this same internet-connectivity revolution that has reshaped business and society at large, has also begun to change the manufacturing sector.
Known as the Fourth Industrial Revolution (4IR) or Industry 4.0, this change has enabled faster and more efficient production using smart, internet-connected factories and pervasive automation.
As almost all of these changes in manufacturing rely, at least to some degree, on fast internet access, the repeal of net neutrality could have a significant impact.
Primarily, ISPs could use their new powers to charge manufacturers exorbitant rates to access parts of the internet which are required for the use of internet connected devices in factories.
This price-gouging would be enabled by the monopolistic tendencies of ISPs in the US and the limited competition available for consumers (or manufacturing companies).
As well, ISPs could make it also significantly more difficult (or more expensive) for companies to access the kind of cloud-based computing/AI systems which enable the efficient functioning of smart factories.
With manufacturing entering an age where it will depend on connectivity, as much as it does on electrical power, ISPs will be in an advantageous position to charge high rates for critical services.
Should net neutrality fail to be re-instated through legal or political channels, such price-gouging could increase the costs of industrial production and make US goods less competitive globally.