With “net neutrality” no more after a federal appeals court ruling on Tuesday, one prominent venture capitalist believes the decision will be a nightmare for startups entering the marketplace.
Fred Wilson, a venture capitalist with New York-based Union Square Ventures, frames the decision — which could allow internet service providers to charge more or restrict access to certain content on the web — as David vs. Goliath for startups of the future facing off against well-established tech giants.
“With yesterday’s court ruling saying that the FCC can not implement the net neutrality rules they adopted a while back, this nightmare is a likely reality,” Wilson wrote on his blog. “Telcos will pick their preferred partners, subsidise the data costs for those apps, and make it much harder for new entrants to compete with the incumbents.”
Many in the tech community supported “net neutrality,” as it ensured a level playing field for ISPs — who were not allowed to charge more for access to Netflix, as just one example — having to treat all traffic on the web as equal. (BI’s Alyson Shontell had a great explainer on what this could really mean for consumers).
In Wilson’s post, titled “VC Pitches In A Year Or Two,” he writes of three different scenarios where he might hear an idea for a new startup and what the possible response might be.
Here’s one of them:
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.
This could mean much more “innovation we may never see,” as entrepreneur and investor Scott Belsky wrote on Twitter.
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