The rising furor regarding proposed changes to net neutrality has so far failed to delay a vote next week on proposed new Open Internet rules at the Federal Communications Commission’s (FCC) monthly meeting on May 15th.
At question is the idea to allow ISPs to sell faster access to consumers to companies that have the cash. This would create a ‘faster lane‘ for some content, rebalancing the market away from the small the new and the poor, in favor of incumbents and ISPs.
FCC Chairman Tom Wheeler has repeatedly indicated that his concept wouldn’t allow ISPs to treat normal content poorly, meaning that the ‘normal’ Internet experience for firms that couldn’t afford for better service would at least be passable. However, you can easily track the profit incentive for ISPs, and thus deduce that they would be directly rewarded for helping the large by delaying investment in the small — allowing for pay-to-play fast lanes is in fact a Bad Idea.
Are we being alarmist? After more than 100 tech companies sent a letter to the FCC in opposition to the proposal, the Huffington Post came up with the proper title for the story: “Basically Every Big Internet Firm Signs Letter Against FCC’s Net Neutrality Plan.” Correct.
The latest proposal from the FCC on net neutrality now adds another impediment to the already challenging fund-raising environment for digital media startups. I don’t know if either of my startups, Spinner and Crackle, would have successfully raised funding or more importantly been viable businesses if this new proposal had been implemented then.
Other venture capitalists have said similar things, indicating that the FCC’s decision could have a material, and immediate impact on investment in companies that would be put at a disadvantage if the proposed rules were put into place. That sounds tautological, but sometime we can allow tautology to cover us to point out obvious truths. (What we’re saying here — unironically — is that in economics and market economies, incentives matter. Groundbreaking, I know. Someone alert Piketty.)
I spoke to another venture capitalist on the condition of anonymity who indicated that the proposed rules wouldn’t harm enterprise-level companies, but would impact high-bandwidth companies, and especially video-facing firms. Again, hardly surprising, but good to repeat out loud.
It isn’t clear how the vote will go. Public comment is now over. As The Hill reported: “Due to the FCC’s transparency rules, the agency must stop accepting public comments on an item one week before that item is set to be discussed at an open meeting.”
But sustained public comment is always impossible to ignore, even if heard through unofficial channels. The set of rules proposed by Chairman Wheeler would change the framework of the Internet. This vote matters.