The Federal Communication Commission's move to nullify "net neutrality" rules that prevented Internet service providers from limiting access to certain websites in favor of others — often referred to as "throttling" — opens the door for ISPs to charge banks higher prices for fast online service.
Such a change could burden community lenders that lack the deep pockets of their megabank brethren. Critics say it could create a substantial competitive advantage for large companies that provide financial services at a time when Americans increasingly are managing more of their banking transactions online.
"Any small business that is in an industry where there are relatively few big, dominant players — and that is certainly the case with banking — could quickly be disadvantaged," said Timothy Karr, senior director of strategy for net neutrality-advocacy group Free Press.
"It creates an avenue for the biggest players to dominate the Internet," he added in an interview, referring to the likes of JPMorgan Chase & Co. and Bank of America Corp.
The FCC change, approved last week and slated to take effect early next year, reverses a 2015 rule established under then-President Barack Obama's watch. The Obama-era net neutrality rule required ISPs — mostly large telecommunications companies — to keep the Internet realm neutral. The goal was to ensure equal Internet access for all users, regardless of whether a user is a large company or an individual consumer, much like the electric grid does not discriminate between a complex computing system and a basic lamp. The rule prevented ISPs from slowing the delivery of one online service in order to speed up another.
|FCC Chairman Ajit Pai|
By doing away with the rule — a move supported by President Donald Trump's administration as part of a broader deregulation push — critics say the FCC creates potential for an uneven playing field because ISPs could charge customers higher prices for high-speed access. Those who can afford the heftier bill could see pristine service on what would essentially be an Internet fast lane. But those who cannot afford the additional toll could get pushed into a crowded slow lane.
What is more, big telecoms have in recent years diversified their businesses, and critics say that if they delved into financial services, ISPs could block access to competitors' websites, limiting some banks' ability to reach their customers.
Chris Nichols, chief strategy officer at CenterState Bank Corp., said in an interview that the FCC change "makes us nervous."
"We are afraid of throttling and how it might hurt our customers from a cost and access standpoint," he said.
In rural areas with little competition, he said the cost to access Internet fast lanes could rise and customers may back away from online offerings and return to branches. That could throw a wrench into banks' ongoing efforts to trim their physical infrastructures in favor of investments in digital offerings.
"I am not saying this tops our immediate list of things to worry about, but it is a realistic concern," Nichols said.
In voting to adopt the change championed by FCC Chairman Ajit Pai, the commission signaled that the net neutrality rule was essentially a solution in search of a problem. Pai had noted that, prior to the 2015 rule, ISPs had not steered away from the basic tenants of a neutral Internet. As such, he suggested that by easing regulations now, ISPs will be freed from needless rules that had slowed their efforts to upgrade networks as rapidly as they otherwise would have done.
Notably, trade groups and major ISPs, including AT&T and Comcast, also have vowed that user experiences will not change following the repeal of the net neutrality rule.
"Comcast customers will continue to enjoy all of the benefits of an open Internet today, tomorrow, and in the future. Period," David Cohen, a Comcast senior executive vice president, wrote in a blog post.
Nichols, for one, said he has no reason to doubt the near-term intentions of Comcast or other ISPs. But he is "skeptical" that such companies would over the long haul avoid divvying up the Internet freeway into multiple lanes if doing so meant driving up profits.
The FCC change does not take effect until it is published in the Federal Register — likely several weeks into 2018. Between now and then, multiple state attorneys general and public interest groups, including Free Press, say they intend to file lawsuits to prevent the change.
"We are not throwing in the towel," Karr said.