San Diego Business Journal

The federal government’s decision to treat the Internet like a utility is akin to a blockbuster movie that people love or hate.

Poway businessman Greg Fadul gives the decision a thumbs down.

“The government is fixing a problem that doesn’t exist,” the CEO of Grace Digital said in an email. The net neutrality decision, he said, “has the potential to negatively affect the user’s experience.”

The Federal Communications Commission voted 3-2 Feb. 26 to regulate broadband like a utility. The commission said the move would preserve the Internet as a platform for innovation, free expression and economic growth. The decision reflects views expressed by President Obama.

The move means that there will not be a “fast lane” for selected Internet traffic and slower passage for everything else. That might start to matter as bandwidth-heavy services, such as streaming video, grow in popularity.

Micah Maland, who runs the San Diego office of Foundation Technologies LLC, said he likes the FCC decision because it favors the little guy and the startup business, giving them an equal footing with larger players. Foundation is a Minneapolis-based IT services provider.

Playing What-if

If there had not been a level playing field over the last few years, new businesses such as Netflix Inc. (Nasdaq: NFLX) may never have flourished, Maland said. In that alternate world, MySpace LLC might have still been the dominant social media platform in 2015, with Facebook Inc. (Nasdaq: FB) never getting a chance to overtake it.

In short, the Washington, D.C., commission ruled that broadband falls under Title II of the Telecommunications Act and, as such, should be regulated.

Cox Communications, one of the region’s dominant cable providers, panned the decision on the day it was released.

“Cox is disappointed in today’s FCC’s decision to reclassify broadband as a Title II utility-style service using 80-year-old telephone regulations,” said a statement from Dave Bialis, senior vice president and region manager for California.

Atlanta-based Cox said the move was “sure to be challenged in court,” and called for congressional action.

Grace Digital is not as big as Cox. The Poway company, which makes consumer electronics such as Internet radios and Bluetooth speakers, had revenue of $28 million in 2014, up from $19 million in 2013. It also provides Internet radio service to businesses.

Fadul, the CEO, said he believes “there is (a) different type of traffic that should at times have precedence over other traffic. For example, when listening to a Grace Digital Internet radio, you want your audio traffic to have priority over your general Web surfing. The same goes for video, gaming, etc.”

Internet’s Far Corners

Net neutrality reaches into areas that the casual observer might not expect. Take health care, for example.

The issue “matters to health care and everyone involved in it,” said Tom Watlington, CEO of Sotera Wireless, which produces a device for monitoring a hospital patient’s vital signs.

“An enormous amount of patient data is routed through the Internet,” Watlington said in an email, noting that there are “consumers who are collecting their own data in the home and sending it to the cloud; websites where medical professionals and patients store and review data; and hospitals where more and more data is moving through the Internet.

“The issue with net neutrality is speed — data rate — not the amount of information, but there are many occasions where speed of delivery is critical, such as an alarm from a patient monitor.”

So how does he rate the FCC ruling?

“Overregulation is never a good solution, but if Title II is the only way to prevent ISPs from charging more to content companies for faster speeds, then I am in favor,” said the CEO.