Net neutrality – the concept that all Internet traffic should be treated equally and openly – has become a hot-button issue as the FCC prepares to consider new rules about how to regulate the web. At the forefront of the pro-net neutrality movement are a group of successful technology companies – Etsy, Reddit, and Netflix, to name a few – who recently urged their users to contact their legislators and lobby for an unrestricted web.
This week, President Obama addressed the public directly on net neutrality, urging the Federal Communications Commission (FCC) “to do everything they can to protect” the Internet’s principles of “openness, fairness, and freedom.”
The issue of net neutrality has been a topic of interest for the startup sector for some time. Venture Capitalists such as Fred Wilson have been campaigning for politicians to embrace it. We decided to take a broad look here at what net neutrality – and the potential lack of it – could mean for startups’ ability to compete and thrive in a changing Web environment.
1. Net neutrality creates space for competition: Protecting net neutrality is vital for giving startups the chance to challenge and disrupt industries dominated by long-standing giants. One of the FCC’s proposed restrictions to net neutrality would allow Internet service providers to prioritize web traffic for companies that pay a fee. Industry giants would be able to pay a toll for access to an Internet “fast lane,” and better service to their customers. Startups, unable to pay the fee and provide comparable services, would be boxed out of the competition almost entirely.
2. Innovation depends on a level playing field: A lack of competition between industry giants and tech startups would have a disastrous effect on innovation. Small companies with superior products would be buried beneath larger companies with access to faster Internet highways, leaving little room for new products to reach audiences, much less compete with the status quo.
3. Consumers will pay: Net neutrality allows startups to offer services to consumers at the same or lower prices than existing large companies. With prioritized data, startups offering free or affordable services could be forced to either pay a fee for competitive functional speeds or shut their doors. Consumers will feel the weight of a restricted net in a lack of free or low-cost alternatives. Therefore the cost of keeping the Internet fast for everyone will fall on the consumer.
4. Restricting the Internet is a slippery precedent: Creating an “Internet fast-lane” accessible only to the companies who can pay for it is a dangerous precedent to set. The Internet has become a necessary mode of everyday communication, which connects people around the globe and serves as the arena for new ideas to take shape. Allowing a hierarchal system of prioritized data to take hold makes this form of modern communication vulnerable only to further restriction, harming our ability to make connections, innovate, and compete.