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Net Neutrality: A Victory for Digital Innovation

Re/code logo Re/code 2/27/2015 David Richards
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It’s the quintessential Silicon Valley fairy tale. In the autumn of 1998, two students went about formally incorporating a company that was to spend much of its early life operating out of a dusty garage. The founders had set out in search of a research project around which they could base their Ph.D. dissertations, motivated by a desire to explore the fundamental properties of the World Wide Web.

Later abandoning their studies, they sought to redefine the accuracy of Internet searches, presenting results based on the volume and manner of other Web pages that linked to any given website. This simple process was handled by a mish-mash of commodity computers, held together by a combination of Lego bricks and sticky tape that was ultimately used to give the company logo its recognizable color scheme.

In no time, the company had outpaced its competitors, becoming the market leader that handled 84.7 percent of all Internet searches at its peak.

Google’s rise is the stuff of legend. But the story of a startup outmuscling established players is not unique to Larry Page and Sergey Brin. Whether it’s Facebook’s emergence at the expense of Bebo and Myspace, or Amazon’s growth from challenger to largest online retailer, the last decade is littered with similar examples.

Incumbents are ultimately usurped by organisations that reinvent industry standards and improve what’s currently available. In each of the cases listed above, innovation was guided by improvements to the customer experience, whether that was by helping access information more easily or by personalizing the recommendations for online shoppers.

Larry Page and Sergey Brin in the Menlo Park garage where Google was born. © William Mercer McLeod Larry Page and Sergey Brin in the Menlo Park garage where Google was born.

Silicon Valley is defined by its knack of churning out startups that challenge the status quo. It’s easy to forget just how young many of today’s most influential businesses are. The S&P 500 estimates that 66 percent of its membership in 10 years’ time will be made up of companies that do not exist yet.

Ten years ago, that list would have included Square, Facebook, Uber and Twitter, innovative companies that sprang from nowhere by using the power of the Internet to compete on a level playing field and accumulate multibillion-dollar valuations along the way.

Most people would agree that in its purest form the Internet is a digital democracy to be celebrated, where success is determined by ideas rather than budget, where bloggers can get as many viewers as the biggest broadcasters on the planet, and where tweets — not Reuters — break news. It’s a platform that embodies the very ethos of a competitive environment, one where the quality of content or product rules above all else.

But all this — the competitiveness of the online world, the ability of startups to challenge the biggest of tech titans — was under threat had net neutrality ended and new rules come into play that allowed Internet providers to charge for premium services.

In the simplest of terms, net neutrality means ensuring that everyone has equal access to the Internet, wherever and whoever you are, with all data traveling on cables being treated with the same priority.

Last year saw the Federal Communications Commission propose a new set of rules that would open up the possibility for Internet Service Providers (ISPs) to charge Web companies extra for preferential treatment. Everyone from HBO’s John Oliver to the White House has weighed in on the issue of how these so-called Internet “fast lanes” might affect the ability of startups to compete, transforming what might have been a niche concern into one of the most contentious disputes the FCC has faced in years.

Many feared that these fast lanes, open only to those able to meet additional costs, would have seen the interests of large companies put before those of smaller enterprises — and with good reason.

But yesterday the FCC approved new rules that safeguard the neutrality of the Internet, including reclassifying broadband access as a telecommunications service — and subject to much heavier regulation — and preventing providers from tampering with connections for a fee.

The U.S. Telecommunications Industry Association has already confirmed that it will appeal the decision, but the future of digital innovation depends on this ruling being enforced.

The Internet has been one of the greatest engines of progress and economic growth that we have known, but anything that threatens net neutrality will make the online world a far less democratic space.

As a free and equal resource, the Web means that even the youngest of firms are able to take on the establishment. But it is the neutrality of the Internet that makes this possible — for Larry and Sergey to build a challenger to Yahoo in a garage, for Mark Zuckerberg to blow Myspace out of the water from the comfort of his university dorm.

A two-tiered service would bring this trend to a crashing halt and disadvantage online challengers. Were broadband providers able to charge for premium access, it would likely bring an end to the disruptive impact of startups, insulating incumbent Internet giants and paving the way for a world where monopolies become increasingly common.

And as any economist knows, one of the first things to die in a world without competition is innovation.

Consider a world where net neutrality no longer exists, where the likes of Comcast and Verizon grant faster access for the large organizations that can stump up the cash, and where today’s innovators — read Google, Netflix and Amazon — have cemented their positions.

Now imagine that two Ph.D. students, lets call them Sergey Page and Larry Brin, have developed technology that threatens to put Google’s early accomplishments in the shade, and decide to incorporate a company that has the potential to disrupt the status quo — lets call this Newgle. Without the funds to pay for the speedy service Google offers, Newgle never gets beyond its early stage, and is soon abandoned.

Any innovation that Newgle might have offered is lost or forgotten in a world where we are reliant on the incumbent to take us forward. Directly or indirectly, an end to net neutrality would mean that those who succeeded in making an early land grab dictate progress.

We would never accept a world where only one media outlet determines what’s newsworthy, where one retailer decides what clothes to stock, or one energy company calls the shots on fuel prices. Monopolies are poisonous environments where a lack of choice sees costs spiral and quality nose dive. The dictatorship of the incumbent breeds conditions where progress is rare, innovation rarer still, and where no incentive exists to stave off stagnation.

While today’s online world is a level playing field, any tampering with the status quo would only increase the barriers to entry. It would make it extremely difficult for online startups to compete, while allowing the establishment to grow bloated and cumbersome. In the end, this will only result in the consumer getting a raw deal.

This week marked a milestone in preserving online integrity. Unless we have an open, neutral Internet we can rely on without worrying about what’s happening at the back door, we can’t hope for open government, good democracy, good health care, connected communities and diversity of culture.

David Richards is co-founder and CEO of WANdisco, a public software company specializing in the area of distributed computing. It is a corporate contributor to Hadoop, Subversion and other open source projects. Reach him @davidrichards.

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