Jan 15, 2014

Who Killed Net Neutrality?

Yesterday, much of the FCC's power to implement "net neutrality" regulations was struck down in federal court, opening the door for telecoms and internet service providers (ISPs) to have more control over the bandwidth they provide.  While it may be very appealing to think that we all could someday have very affordable (maybe even free) data plans that would allow us to endlessly stream heavy data consuming apps such as Netflix, Pandora, and YouTube, the consequence of this would be devastating to innovation and internet freedoms.


An interesting article by Josh Herrman at Buzz Feed delves into the problem in more detail, but suffice it to say that the recent ruling could allow big companies, such as Netflix or Pandora, to "sponsor" data plans in order to make their service more readily available to their consumers.  The negative of this is that they would also have leverage over ISPs to control how bandwidth is distributed to consumers, potentially limiting the opportunities for new, innovative companies and ideas from reaching the tens of millions of mobile data subscribers.

It's not just a possibility, it is most likely a certainty.



Fred Wilson, a highly respected VC in the field, provides a thought-experiment in this regards.  It's interesting.
Entrepreneur: I plan to launch a better streaming music service. It leverages the data on what you and your friends currently listen to, combines that with the schedule of new music launches and acts that are touring in your city in the coming months and creates playlists of music that you should be listening to in order to find new acts to listen to and go see live.
VC: Well since Spotify, Beats, and Apple have paid all the telcos so that their services are free on the mobile networks, we are concerned that new music services like yours will have a hard time getting new users to use them because the data plan is so expensive. We like you and the idea very much, but we are going to have to pass.
Entrepreneur: I plan to launch a service that curates the funniest videos from all across the internet and packages them up in a 30 minute daily video show that people will watch on their phones as they are commuting to work on the subway. It's called SubHumor.
VC: Well since YouTube, Hulu, and Netflix have paid all the telcos so that their services are free via a sponsored data plan, I am worried that it will hard to get users to watch any videos on their phones that aren't being served by YouTube, Hulu, or Netflix. We like you and your idea very much, but we are going to have to pass.
Entrepreneur: I plan to launch a photo sharing service where the faster your friends like the photos, the faster they disappear. It's gamified social snapchat.
VC: Well since Facebook, Instagram, Twitter, and Snapchat have paid the telcos so the photos that are served up in their apps don't use up any of the data plan, I worry that users won't want to use any other photo sharing services since they will have to pay high data costs to use them. We love your idea and would have funded it right here in the meeting back in the good old days of the open internet, but we can't do that anymore. We are passing.
In case you need a Net Neutrality 101 review, check this:


Let's hope for everyone's sake that this doesn't play out as advocates would like.