Net Neutrality Threat: Crippling the Democratisation of Entrepreneurship

The Internet, for a large part of the developed world, has become embedded into the fabric of our everyday lives. In today’s world, Internet connectivity is crucial in undertaking day-to-day tasks: it has become a vital tool for communication, an entertainment medium and many other things. As the penetration of Internet connectivity continues to boom, so do the opportunities it affords. The ability to consume and share content in a free and open manner has largely contributed to the exponential growth of the Internet. Since its commercialisation in the 90s, numerous regulations have been put in place to safeguard what has commonly come to be known as “network neutrality” aka “net neutrality”.

So what is Net Neutrality?

The term “net neutrality” states that Internet service providers should be required to treat all data from all content providers in the same way, forbidding selective “throttling” (slowing down or blocking) of certain types of content. Net neutrality are legislative safeguards put in place to ensure an open Internet, in which service providers do not cherry-pick content and the speed at which that same content can be consumed. This is a prerogative of the customer.

Democratisation of Entrepreneurship

Beyond content speed traps, net neutrality is aimed at providing equal opportunities for individuals or companies to get their content or service to the their intended audience, without interference and on a level playing field. Currently, anyone wishing to launch a new venture has access to unprecedented online resources, relationships, and services. Good ideas and products can emerge from anywhere and almost instantly achieve national and even global reach. This contrasts starkly with the entrepreneurship landscape just a few years ago, when starting a technology business involved significant upfront investment in equipment and limited access to broadband networks. The foundations of this “democratisation of entrepreneurship” are rooted in a free and open Internet. Whilst the 2015 Open Internet Order (US) was enacted precisely to safeguard a free and open Internet, in December 2017 the Federal Communications Commission (FCC) voted to repeal this. So what are the implications of this vote? And how far reaching will they be?

Threats to Net Neutrality

Firstly, entrepreneurship and innovation are likely to be impacted by this decision. If Internet Service Providers (ISPs) begin to partner with content providers, pushing their content through “fast-lane” traffic (in exchange for exorbitant fees), this no longer provides an equal playing field, and disadvantages budding Internet entrepreneurs. Whilst Internet titans such as Facebook and Google can easily absorb the costs to be “premium” providers, the high barrier to entry could drive smaller less mature companies out of business, resulting in a decrease in online innovation.

From a consumer point of view, the negative impact could be two-fold. Firstly, a decrease in online innovation would mean that the rich web experiences (across desktop, web, mobile) which users have come to expect, and which have evolved so significantly in recent years are now likely to plateau. This is because the incumbents are less likely to be inclined to invest in R&D and innovation due to smaller disruptors’ inability to compete. The second threat affects consumers pockets, since ISPs might choose to change their pricing programs and hike prices to access “fast lane” content by their chosen premium suppliers.

Will technology companies continue to innovate?

So we now find ourselves at a crossroad. On the one hand, there is an appetite in the market to invest in innovation, and we at AND Digital are working alongside clients helping them to build new innovation processes and capabilities. Whilst on the other hand, the entry point for such innovations to succeed are being diminished. With the Internet being such a key success platform, it is pertinent that it remains one that fuels not stifles innovation.

So how does this impact the UK and the rest of Europe?

Net neutrality is vigorously protected in the UK under the European Union’s regulation on Open Internet Access. Andrew Glover, Chair of the UK Internet Services Providers Association Council, said: “The changes to net neutrality rules in the US do not have an impact on customers of UK ISPs. For a long time, UK providers have been committed to preserving an open internet through a voluntary code. More recently, strict EU rules have come into force which clearly state that ‘providers of internet access services shall treat all traffic equally, when providing internet access services, without discrimination, restriction or interference’.”

Whilst there hasn’t been evidence of any immediate changes to broadband packages in the UK, we have already seen some “premium provider” selection in smartphone packages. For example, EE provides customers with free Apple Music subscriptions, and doesn’t count the data used for streaming music through Apple Music. However, your data allowance is deducted if you stream music through rival Spotify on the same EE network. Virgin Media doesn’t count the data used whilst on Twitter, WhatsApp or Facebook Messenger. Vodafone has also started offering paid packages allowing customers unlimited data use through certain selected services.

Whilst this is not the same as deliberately slowing down Internet speed services, it can certainly be seen as a step towards restricting access or the sheer competitiveness of it.

An important aspect that shouldn’t be disregarded here is Brexit. As part of the UK’s decision to leave the European Union, the Great Repeal Bill aims to transfer many of the EU laws we currently adhere to into UK law. Since net neutrality is currently protected under EU law, there is a possibility that MPs choose to make amendments or remove it entirely as they move to absorb regulations into UK legislation. This is highly unlikely and would no doubt be met with fierce competition. It does however reinforce the need for regulators, service providers, tech giants and entrepreneurs to continue working together to ensure that the Internet remains an open platform which can be used in a free and fair manner.