Net neutrality has been in a the news recently due to rumors, speculation and interpretation surrounding Google and Verizon’s newly proposed legislative framework for the enforcement of net neutrality. The key principal behind net neutrality is ensuring service providers (like Verizon) cannot forge agreements with companies (like Google) to exclusively provide an unfair advantage by means of, say, increased bandwidth – thus maintaining neutrality. For startups and entrepreneurs, the debate is one to be monitored with a watchful eye, and some venture capitalists bloggers have begun to chime in once again on the issue.
“A regulated Internet is a comforting thought to the access providers and a frightening thought to entrepreneurs and the ecosystem around them.”
– Fred Wilson
One thing to note about net neutrality is that it is not something that proponents are looking to change about the net. As it is now, the Internet is a level playing field, and service providers cannot discriminate between their customers. Net neutrality is instead something its supporters are looking to uphold – a fundamental cornerstone of the net whose loss would be detrimental to most.
The level playing field of the net today allows small companies to grow very quickly and to challenge larger players. With everyone operating on the same bandwidth (for example), a startup can theoretically compete with large established companies. Without net neutrality, the larger companies with bigger budgets could position themselves to wedge out any smaller competition, stifling innovation.
Though some large companies like Google are seen as being at the forefront of innovation, a lot of this progress comes through acquisitions of smaller companies with fresh ideas. Without a level playing field, these smaller companies are at a severe disadvantage, and thus innovation would suffer. Union Square Ventures partner Fred Wilson shared his concerns this morning in a blog post on the topic.
“[Access providers] have been regulated for a long time. They know how the game is played and they use it to their advantage,” writes Wilson. “They want our government to regulate the Internet and they want those regulations written in a way that allows them to do what they want to do. A regulated Internet is a comforting thought to the access providers and a frightening thought to entrepreneurs and the ecosystem around them.”
Brad Burnham, Wilson’s colleague at USV, wrote an article syndicated by the New York Times earlier this week voicing the firm’s concerns from the Google/Verizon legislation. As Brunham points out, the proposal from the two corporate giants leaves much to be desired in terms of mobile web usage, while the remainder is complex and “not easily enforced.” What does this mean for startups then?
“Between the lack of any protection on the wireless side and the qualifiers and complexity on the wireline side, young startup companies will have difficulty finding financing and building businesses of scale,” writes Burnham. “If an Internet access provider discriminates against a startup directly or through its network management practices, it is unlikely the startup could afford a long and expensive process to seek redress. So this proposal favors the incumbent applications and access providers.”
It’s going to take a while for a general consensus about net neutrality to emerge. With big companies like Google and Verizon looking to protect their interests with their joint proposal, it’s not surprising that startups would take issue with it. Thankfully, the venture capital community, led by VC bloggers like Fred Wilson, is generally very good at raising its voice on behalf of startups and innovation.
