Why Startups Need to Take Net Neutrality Very Seriously
By Matt Bennett
If you have been on the internet this morning then you may have noticed a trend — banners, messages and blog posts about net neutrality. In fact, quite a few of the largest sites on the internet, people like Netflix, Airbnb and Spotify, are running banners; Twitter and Google have blog posts up as well, with more action expected from them and other internet giants like Amazon, Kickstarter and Facebook. And (perhaps to be expected) Reddit has gone all out — just head to /r/technology and take a look.
This is all part of a “Day of Action” organized by the Internet Association, a trade and advocacy group which, among other things, raises awareness about net neutrality and lobbies Congress to protect it. The event falls just five days before public comment end on the FCC’s plan to end Title II protections of net neutrality, in a move almost universally agreed will put an end to net neutrality.
So on a day when so much of the internet and related news will be talking about this topic, let’s spend a few minutes and discuss briefly what net neutrality is and what it means especially for startups and entrepreneurs. Because there are so many good explanations of exactly what net neutrality is (see here for one well-written example), I’m not going to spend a lot of time digging into the technical details; rather, let’s talk about why you need to care about this issue and why you need to get involved.
Net neutrality is basically the idea that internet service providers (ISPs) — those beloved, easy-to-deal-with benevolent institutions like Comcast, Cox and AT&T — will provide all data at the same level of speed and availability. That speed may change based on your service plan, even vary based on outages or traffic volume, but it should not change based on the content being accessed — with net neutrality in place, delivering our Startup Southerner webpage to your browser should be treated just the same as Facebook or Google or Amazon.
Of course, ISPs hate this — if they are allowed to treat different content differently, it opens up a whole new income stream for them, charging content providers extra to prioritize their data, and/or charging customers more to access websites of their competition, etc. You can imagine that this will only have a negative effect on small business (more on that shortly). In 2015, fearing this very thing would begin to happen, regulations were passed to enforce net neutrality, giving the FCC a mechanism to prevent preferential treatment of data.
However, there is a proposal by the new chairman of the FCC, Ajit Pai, to dismantle that protection and roll back the regulation. I’ll try to steer clear of partisan politics here, but I think it is reasonable to mention that in between many years of civil service related to the communications industry, Pai has also been a Verizon employee and worked as a lobbyist for that industry as well. My point is simply to say that in rolling this back, it is probably not small business he is trying to help.
So here’s the punchline: If net neutrality is scrapped, and ISPs begin to charge more for preferential treatment, it can only negatively affect startups and small businesses, who will lack the negotiating power to compete for favorable rates against established competitors.
Consider some scenarios:
You are a tech startup in a southern city with only one ISP choice. Unfortunately, your major competitor has negotiated a preferential service agreement with that ISP. Now, data from your competitor does not count against customer’s monthly cap, but yours does. Your pages are delivered more slowly, and at peak traffic times may be unavailable.
Or, you run a website, which relies on a third party service (for instance, an ecommerce solution). However, since the competitor of that ecommerce company has negotiated an agreement with some ISPs and not others, that plugin (iframe redirect, whatever) is disabled or has reduced functionality for some of your customers and not for others based on the customer’s ISP.
Email from services that have not paid up with your ISP may be delayed, driving you to change to an email service which is run by the ISP themselves, or by a firm that the ISP is invested in. When you email a customer who uses another competing ISP, that ISP then delays or drops your mail unless you pay extra for “multi-service coverage.”
Admittedly, some of these are much more likely scenarios than others; ISPs are skilled at managing the infuriation of customers to maximize profits (all while donating millions to legislators to squelch reform) and they are unlikely to make a ton of changes at once. But if you are a bootstrapping startup, even a partial scenario like the ones above might be expensive enough to keep you off the market; beyond the initial cost is the additional effort to manage this new relationship with the ISP and the changes it will require.
The only people who will really benefit from a loss of net neutrality are the ISPs themselves who can extract more money for the same (or even reduced) service, and the largest websites, who will be capable of negotiating high-volume preferential treatment and force their smaller competition out of the market or into a merger — using ISP relationships to devalue small companies and buy other people’s innovations as cheaply as possible.
Nothing about this will benefit the startup community, whether tech companies or bakeries or hairdressers, anyone. Everything gets harder.
So, if you are now properly infuriated and concerned — make your voice known! Go to https://netneutrality.internetassociation.org/action/ and you will find a link where you can comment directly to the FCC on this proposed removal of net neutrality protections.
Don’t forget to share that link (feel free to share this article, too) on social media; as I mentioned earlier, there are only fivedays left until comments are closed, and it will take a loud and combined voice to prevent these changes. If you believe in the power of the internet, to unite people, to disseminate knowledge and understanding, to provide a medium for innovation and prosperity, then you need to help protect it. Take this one seriously.