Starting an internet company is easy. An idea, some code, a whimsically spelled name, and you’re there, right?
While that is a bit of an oversimplification, all of us owe a debt to the pioneers of the internet who created a global network of interconnected machines. It paved the way for information exchanges and innovations that have made overwhelming impacts on the way we go about our daily lives, making it possible for many well-known companies to find rapid success.
On December 14th, the Federal Communications Commission (FCC) voted on a measure to repeal the landmark net neutrality rule it passed just two years ago. This has major implications for the millions of little-known companies that rely on the internet to run their business. Don’t think about Netflix and its struggles with “throttling” prior to the 2015 rule being enacted. Think about the impact of the FCC’s potential actions on the 28 million small businesses that call the U.S. home.
The promise of the internet isn’t about the companies that have been created. It’s about fostering an environment where businesses that aren’t flush with cash today, but have an idea and an entrepreneurial drive to grow that idea into something bigger, can compete and thrive.
What repealing net neutrality means for internet entrepreneurs.
To understand the impact of this upcoming decision, we need to start with the actual proposed plan and what it’s replacing. That story begins in 2015 when President Obama took an earlier fight over net neutrality in a better direction for entrepreneurs. At his urging, the FCC approved a net neutrality rule to broadly regulate Comcast, AT&T and other internet service providers (ISP’s) as a utility or “common carrier.” That rule, which is what the FCC will vote to repeal, prevents ISPs from selling “fast lanes” to the highest bidders and expressly bans throttling, blocking and paid prioritization.
The net neutrality rule guarantees speed of access is equal regardless if a prospective customer is visiting your ecommerce site or Amazon. The rule took how the internet has always worked and made it the law of the land, harkening back to the way Americans think about other utilities like water and sewer, landline phones, natural gas and electricity. You and the bigger business next door with more cash receive identical electric service.
FCC Chairman Ajit Pai’s plan includes a substantial rollback of the regulations that impacted ISP’s in 2015. Specifically, it would not hold ISPs to the same “common carrier” standard, allowing them to throttle access to certain content and media, and create multiple tiers of service. It would basically allow for the creation of slow and “fast lanes” on the internet for specific content.
Pai calls this “light touch” regulation and claims it will result in more competition that benefits the consumer. However, given the spotty broadband access in the US now, it’s unlikely the free market will trigger price wars outside of urban areas. Consumers and businesses outside of major markets are likely to be exactly where they are today, without real alternatives when choosing their ISP.
Simply put: access to fast, reliable broadband internet is synonymous with opportunity in today’s economy. The bootstrapping entrepreneur hustling to build his or her business has too many challenges to overcome already. Adding how to afford “pay-to-play” access for reasonable bandwidth to the list is unfair and maybe fatal for many businesses. It actively limits innovation by raising the barriers to access the most powerful business resource around.
While ISPs might offer “reasonable access,” that access won’t hold a lot of promise for the average entrepreneur who already struggles to convert traffic to leads and eventually to sales. Imagine how much harder that’s going to be when pages take forever to load. According to HubSpot, nearly 80 percent of customers who wait longer than three seconds for a company’s webpage to load won’t shop there again. A satisfactory time is roughly two seconds per page and by three seconds, most prospective customers are gone. That kind of margin doesn’t leave a lot of room for growing businesses now, and it certainly won’t improve under throttling or “slow lane” internet access.