New Market Strategies study reveals consumer attitudes on “fast” and “slow” lanes
Many industries are closely watching the future of net neutrality. Just last month, the Senate voted to preserve net neutrality, blocking a Federal Communications Commission plan to undo rules set during the Obama era. But short of any eleventh-hour political victories, net neutrality is set to end on June 11.
Industries such as telecommunications, technology and media have a stake in this issue. One of the more contentious aspects of net neutrality is what experts call “fast lanes” and “slow lanes.” Without net neutrality regulations, internet service providers (ISPs) could give certain content and streaming services faster connections, while slowing down other sites. It’s so controversial that even our own in-house telecom experts couldn’t agree on the issue.
While the future of net neutrality still hangs in the balance, it’s important for telecoms to understand consumer attitudes and preferences regarding this issue now. To that end, the telecom research division of Market Strategies International conducted a study to explore the potential consequences for both ISPs and streaming services. Our findings provide guidance on next steps for ISPs as politicians and consumers debate the future of net neutrality.
Transparency is key
The impending demise of net neutrality doesn’t mean ISPs would have free reign. In fact, one key finding in our study is that consumers are overwhelmingly against the concept of “fast” and “slow” lanes. Almost 3 in 4 believe that the practice of providing faster lanes to certain content providers is not beneficial to customers. Just as many consumers agree that ISPs shouldn’t be allowed to allocate faster and slower connections.
But if an ISP were to establish fast and slow lanes, it needs to be transparent about it. Almost 9 in 10 consumers agreed that ISPs should be required to disclose which sites or streaming services are being given access to fast and slow lanes.
Interestingly, however, consumers hold slightly different attitudes depending on their current ISP. AT&T and Verizon customers are more likely to agree that ISPs should be allowed to establish fast and slow lanes. This finding requires further exploration, particularly surrounding Verizon, but my hunch regarding AT&T is that it’s driven by existing promotions with popular content providers such as DirecTV and HBO. Perhaps AT&T customers believe faster lanes would be provided to these content partners. In any case, individual ISPs would benefit from doing additional customer research to better understand the potential impact to their business.
Streaming services have the leverage
The concept of fast and slow lanes adds an interesting wrinkle to the relationship of ISPs with streaming services such as Netflix, DirecTV Now and Hulu. In an effort to win consumers, many wireless and wireline ISPs have started selling bundles that include these streaming services. But if net neutrality dies, the thought is that ISPs could potentially have some leverage in this relationship since they can offer select streaming services faster connections.
Our data, however, show that ISPs should tread lightly. Consumers, it appears, are making their decisions primarily on the basis of the content provider. We asked consumers what they would do if a streaming service that they use was put in the slow lane of a certain ISP. A majority of consumers said they are more likely to change ISPs than abandon their streaming service.
As a consumer myself, this makes perfect sense to me. If I like Netflix and look out for shows in this service, I will be more likely to change my internet provider than abandon shows I’ve already invested time in. Content is still king.
A symbiotic relationship?
Our study shows that those who are satisfied with their internet speeds are more likely to have a streaming service. At first glance, this finding seems to suggest that streaming services have an incentive to pay ISPs for fast lanes since faster connections appear to motivate consumers to subscribe to a streaming service.
It’s more complex than that though. There’s a chicken-and-egg problem here since it is also possible that customers who have streaming services sought out ISPs with faster connections. In any case, navigating the ISP-streaming provider relationship will require companies to use consumer insight to better understand what customers actually need and want.
The impending death of net neutrality will result in tricky and complex issues for ISPs. The smart move is to embrace transparency and invest in better understanding the impact to the buyer path to purchase. If net neutrality is repealed, it’s a good bet that there will be some consumer outcry—companies will have to figure out how that backlash will shape customer buying behavior, attitudes and decision making.
As we discussed previously, now is the time for telecoms and media brands to get their market research house in order. In the face of changes to net neutrality, companies will need better insight to improve their business strategy, maximize margins and optimize operational efficiencies. Companies that come prepared will reap the most benefits regardless of what happens to net neutrality next.
To learn more about the size of the streaming market, key players, the role of streaming in the lives of consumers, specific consumer needs states, and the service features consumers care most about, download StreamOn™, a sample of our streaming video report.