The debate on regulating how Internet service providers manage online use has largely focused on the activities of consumers, but technology executives say they believe the regulation of Internet access could affect the daily operations of financial companies and their vendors.
The Federal Communications Commission is to pick up the debate on Internet neutrality at a meeting this month, voting on a proposal that would enforce new regulations on Internet service providers, or ISPs, and allow tier-based pricing of broadband access.
If ISPs begin to dictate how much bandwidth a company or individual uses based on specific online activities, smaller companies with fewer financial resources for network access would be at a competitive disadvantage, according to Jorge Sauri, the founder and chief technology officer at MortgageDashboard, a Web-based loan origination system provider in Austin, Texas.
A more worrisome concern is that, if an ISP adopted a "packet-routing priority" strategy, it would let providers sell faster Internet connections to those willing to pay for it, as well as give preferential treatment to certain Web applications and services, Sauri said.
"It would be like creating toll roads on the Internet," he said. "The only way that you're going to get technological advancement and bring about new technologies is with unfettered Internet access."
Greater adoption of software-as-a-service applications and cloud computing-based data storage has made high-speed Internet connectivity of great importance to the financial industry. Sauri said it is possible that the next generation of mortgage origination software could include some peer-to-peer functions. But without open Internet protections in place, he said, an ISP could block or intentionally slow the connection speed, a tactic known as throttling.
"If someone developed a SMART Doc application based on peer-sharing software, the ISPs could require the developer to register it with them and likely pay a fee," Sauri said. "And how many times are you going to apply and pay a fee to all the different ISPs?"
Tom Margarido, the president of East Point Systems, said increased expense for Internet access is a major concern in the default mortgage servicing industry. His company provides property management and preservation technology to the real estate-owned sector.
"We do a lot of photos and use a lot of bandwidth. But it's necessary for business," Margarido said. "I certainly wouldn't want to have to start paying a premium for my data going across the line. The profit margins on my end of the business are very thin to begin with; so to absorb that extra cost for bandwidth would cause me to have to push my prices up."
Though the data in electronic loan documents does not require large files, it is repeatedly tapped by many users during origination and underwriting. Cumulatively, opening those documents can use tremendous volumes of bandwidth.
To handle bandwidth volume of as many as 76 million photos per month, Margarido said, East Point pays for fiber optic broadband access that is equivalent to 4,400 T1 high-speed Internet lines. Given that much investment, he said, he does not want to see his business forced to pay more based on the type of its online activities. "I'm paying for it, so I should be able to use it," he said.
"There's a finite bandwidth for a particular line. If I want double that, I have to buy another line. That should be the controlling factor," he said. "If you need more resources, you need more resources, but no one should be a regulator of it and say, 'You can't use it like this.' "
The philosophy of Net neutrality is just that — all users should have equal access and all types of data should be allowed to transfer freely across the Internet.
In 2009, Congress mandated that the FCC devise a strategy to expand the availability and capacity of broadband Internet access in the United States. What became called the National Broadband Plan includes provisions to develop open Internet rules.
This year, the FCC began holding meetings to discuss open Internet rules with a variety of stakeholders, including ISPs, consumer advocates and members of the academic community. Those talks have culminated in FCC Chairman Julius Genachowski's proposal.
Under the plan, ISPs would be allowed to regulate and manage use and activity on their networks, but under new transparency requirements, they would have to disclose those activities. ISPs would also be allowed to price services based on use — opening the door for providers to charge customers more to use bandwidth-heavy activities like streaming video or less for other activities, like checking e-mail. The policy would prohibit ISPs from blocking or throttling connections to legal applications or accessing the Internet with certain devices.
Genachowski said his proposal to regulate ISPs will "protect Internet freedom and openness," but he faces opposition from fellow commissioners on a number of points, including questions about the commission's authority to act and opposing arguments both for and against increased levels of Internet regulation.
