Our regular programming, MBA Mondays, is being interrupted this week for a public service announcement.
The net neutrality debate is front and centre again. FCC Chairman Julius Genachowski has announced that he will ask the FCC to adopt rules to protect the open Internet at its open meeting on December 21st. We have not seen these rules. Apparently nobody has outside the FCC. But we have been briefed on them. And we think that with one small tweak they will work well. But without that small tweak, they are problematic. My partner Brad has posted our firm’s thoughts on the USV blog.
Back in the 80s and 90s, you could start, build, and invest in cable based services. But in order to get your new company distribution on the cable system, you’d have to go to the cable MSOs and give them free equity in your company for distribution. This mafia style shakedown has not existed on the Internet thank god. And the result is literally millions of web services and trillions of dollars of shareholder value.
That’s what this debate is all about. The advent of broadband internet access has resulted in a duopoly in most markets. And the companies that provide you broadband internet access want the ability to “manage their networks.” We think it is critically important to set some rules on how they can manage their networks to make sure we don’t recreate the cable monopoly on the Internet.
We’d love to have an open and unregulated Internet access market. That will take a lot more competition in the last mile than we have now. We need policies that allow the spectrum and fibre to the home to become available and the capital to get invested in making that happen. Until that happens, we need some rules to keep everyone honest in the Internet acccess market.
The FCC’s proposed rules prohibit unreasonable discrimination but don’t define what that is. We think they need to go that extra mile so that startups don’t end up in expensive lawsuits with monoplies with huge bank accounts.
And we are proposing that the FCC adopts the following language:
A non-discrimination rule that bans all application-specific discrimination (i.e. discrimination based on applications or classes of applications), but allows application-agnostic discrimination.
The logic and reasons behind this approach are laid out in our blog post on the USV blog. If you are interested in this debate, and we think you should be, please go read it.
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