It may seem melodramatic to say that the future of the Internet in the United States was put in jeopardy earlier this year when a U.S. Appeals court killed net neutrality. Unfortunately, it is not melodramatic at all.
Net neutrality rules had been put in place to ensure that Internet service providers and other related entities treat all data as equal without giving preferential treatment to large companies that might otherwise be able to pay extra for faster connections.
Since January when the United States Court of Appeals for the District of Columbia struck down net neutrality laws that had been put in place in 2010, we have already seen things begin to change for the worse.
A brief glimmer of hope emerged last month when the FCC announced that it would try to bring net neutrality back from the dead, but hope quickly turned into outrage when people realized that the FCC’s new net neutrality proposal appears to be designed specifically to ensure that the Internet is not neutral.
Is the FCC’s new proposal really as bad as it seems? According to a new report, the new guidelines are already ruining the Internet despite the fact that they’re still far from becoming law.
MIT Technology Review on Wednesday issued a report that really is quite horrifying.
In a nut shell, the report notes that the mere possibility that the FCC’s new net neutrality proposal will pass is causing venture capital firms to stop funding startups with services that rely on fast Internet connections for videos, music or other services. The fear is that such companies may need to pay a ransom to large ISPs in the future, and those fees could dramatically impact their profitability.
Pause for a moment to consider how truly terrible this situation is. The next YouTube, Vimeo, Spotify or Pandora might never come to be, simply because the company’s founders were unable to secure funding in a world where the little guy can get squeezed out by big companies ready and willing to pay for faster connections.
From MIT Technology Review’s report:
The cable industry says such charges are sensible, especially when a few large content providers like Netflix can take up a large fraction of traffic. But if deep-pocketed players can pay for a faster, more reliable service, then small startups face a crushing disadvantage, says Brad Burnham, managing partner at Union Square Ventures, a VC firm based in New York City. “This is absolutely part of our calculus now,” he says.
Burnham says his firm will now “stay away from” startups working on video and media businesses. It will also avoid investing in payment systems or in mobile wallets, which require ultrafast transaction times to make sense. “This is a bad scene for innovation in those areas,” Burnham says of the FCC proposal.