I decided to write my first blog post on net neutrality.
Okay, I know what you’re thinking (for the 3 friends reading this out of sympathy)— What an exhilarating topic to kick things off. Guy leaves his Wall Street for music tech. and this is the best he could come up with?
Fair enough. But net neutrality is an important issue, both for young startups like ours (Superphone) and consumers alike. I was close to the issue during my equity research days, and scouring the news over the past few weeks I’ve been unable to find hardly any publications that correctly report the dispute. (Outside mainstream press, I like USV’s summary and opinion on the matter here.)
For the most part, the mainstream press has pinned the FCC’s “regulation of the Internet” negatively. And while some of the negativity has reason — given the FCC’s chairman Tom Wheeler was previously a lobbyist for the cable companies and regulation on any industry usually does mean less competition, less innovation, etc. etc. — in this case I believe the press has created the misconception that the FCC is in fact trying to regulate the Internet when in fact it is not.
You can read the new rule’s Cliffs Notes here.
The FCC’s proposed rule is actually to keep the Internet free and open and ensure access to the Internet is uninhibited by broadband providers:
1) Blocking traffic (preventing access to content/applications)
2) Throttling traffic (impairing access to content/applications)
3) Prioritizing traffic based on whoever pays more
The most talked about example is Netflix, given at times the service can account for up to 1/3rd of all broadband traffic and Comcast has somewhat already succeeded in ensuring Netflix “faster pipes” at a higher cost. Without regulation, cable companies could continue letting larger, better-capitalized companies pay for faster access.
While you’d think Netflix would be in favor of such a system, they are one of many Internet companies in favor of the FCC’s proposed “regulation”.
Why? Shouldn’t Netflix and other large Internet companies want to pay-up for faster speeds? Shouldn’t consumers be happy that their Netflix content will not ever be held up or interrupted? The answer, in my opinion, is no.
An open Internet has allowed small companies with great ideas the same level playing field as big ones. It lets us get our news fast, and from whichever source we deem best. It’s turned café fashion bloggers into famous entrepreneurs. And if broadband providers were allowed to block, throttle and prioritize traffic, the now Internet giants (like Netflix) may have never gotten so large; squeezed out by the then size of their bank account.
I’m in agreement with the folks here — if executed correctly the new rules can keep the Internet a level playing field where innovation and quality of product/service wins.