How does government regulation impact the internet sector?

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A:

The extent to which government regulation impacts the Internet sector depends on the country and the degree of regulation. Governments around the world regulate various aspects of Internet content, such as child pornography, defamation and information sensitive to national security. As of February 2014, the countries whose governments censored the most Internet content were North Korea, Burma, Cuba, Saudi Arabia, Iran, China, Syria, Tunisia, Vietnam and Turkmenistan. The debate continues as to what could happen if the U.S. government begins to regulate the Internet more heavily by implementing the principle of net neutrality, or open Internet.

Economic studies have shown that in several countries, open-access regulations have tended to depress investments. Those who support this view claim that where open-access rules exist, there is less incentive for telecommunications and cable companies to invest. Other studies have shown that broadband regulation and investment sometimes have a positive relationship and that broadband regulation can negatively affect an overall investment climate. In other cases, researchers have reported inconclusive results.

In November 2014, Barack Obama asked the Federal Communications Commission (FCC) to implement telephone regulations in the Internet sector. One purpose of these regulations would be to stop broadband companies from favoring some providers of Internet services or online media sources over others. At stake here is the ability of companies, individuals and nonprofits to reach consumers directly without additional interference from Internet service providers and broadband providers such as Verizon and Comcast, which can, as of 2015, choose favorites. Opponents of Obama's proposal advocate keeping the broadband market a free market.

At the center of this debate lies the concept of net neutrality. This term refers to the idea that all data on the Internet deserves equal treatment by enterprises, including Internet service providers, and by governments. Those in support of net neutrality point out that small companies would be more likely to enter the market and offer new services if Internet service providers could not control the speed at which customers can access websites, because only larger companies can afford to pay higher rates for faster access. Supporters also maintain that net neutrality would prevent data discrimination by providers of Internet services. Opponents of net neutrality claim that treating all Internet data equally would discourage investments in new infrastructure and would give providers less incentive for innovation. Major telecommunications providers fear that if they were unable to charge different prices for different access, they would not be able to remain competitive and recuperate the funds they have invested in broadband networks.

As of November 2014, Rasmussen Reports noted that 56% of Americans would prefer more free-market competition over increased government regulation to protect Internet users. One-fourth of Americans were undecided on the question.


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