What does net neutrality mean for tech startups? 4 local founders weigh in

by John Siegel
December 12, 2017


On Thursday, December 14, the Federal Communications Commission (FCC) will vote on whether to repeal net neutrality. In its current form, net neutrality is a policy that ensures all internet service providers (ISPs) treat data on the internet equally, thereby ensuring that companies and organizations of all sizes — from startups to major corporations — are granted access to drive innovation and remain competitive.

Net neutrality also ensures that ISPs are unable to play the system to their advantage by blocking or slowing traffic to content or sites they deem unfavorable — meaning content that is either competitive or does not align with corporate interests.

Since FCC Chairman Ajit Pai, formerly a lawyer for Verizon, proposed ending net neutrality in April, a number of tech leaders voiced their opposition of the repeal. With what many are predicting to be a vote in favor of the repeal, Built In LA spoke to four local tech professionals about what it would mean for the tech ecosystem.  


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Greg Cohn, co-founder and CEO of Ad Hoc Labs, the parent company of Burner, was one of a number of tech companies that signed a petition to the FCC advising against the repeal of net neutrality. According to Cohn, the decision would be disastrous for innovation, with a handful of not-so-distant reminders we can all look to for evidence.


How would the repeal of net neutrality impact the tech ecosystem?

The rollback of net neutrality has the potential to impact tech in a number of ways. In its current form, net neutrality protects the public by ensuring that internet service providers treat content and services equally. Not doing so would potentially make it harder for smaller players and startups to compete with the big guys. The speculation on how they might stifle competition includes: charging companies for 'fast lane' throughput, throttling bandwidth, charging end-users more for access to certain types of content or blocking content and services completely if the content is deemed too competitive or simply unpalatable to the ISPs.

These are not just hypotheticals — even though Ajit Pai, the current FCC Chair, denies there are any concerns and suggests the Federal Trade Commission will prevent unfair competition, in recent memory alone, AT&T blocked Apple's FaceTime because it was competitive, Comcast throttled Netflix to apply leverage during a negotiation, and Verizon blacklisted a shortcode that was legally raising money for an abortion-rights organization.  No one knows exactly how this will play out, but without a doubt, it will create uncertainty that is in and of itself bad for startups. It could affect LA startups disproportionately given the emphasis on video, VR and other high-bandwidth content based in our region.


If given the opportunity, what would you tell the FCC before they vote?

Some of what I'd like to say to the FCC's individual commissioners  — the voting being split across partisan lines — is not fit to print. I would remind the commissioners of the charter of the agency, as well as the fact that the FCC has obligations to consider the public comments about net neutrality, which are overwhelmingly in favor of keeping the policy in its current form. In this case, the public opinion seems to be ignored. I would also ask them to drop the bogus arguments about net neutrality inhibiting investments (spoiler alert: it doesn't).


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Ben Johnson
Co-founder and CTO

Ben Johnson, co-founder and CTO of recently launched Obsidian Security, echoed Cohn’s sentiments, adding that the interference of major corporations discourages tech entrepreneurs from turning their ideas into reality because of a fear of outside involvement.


How would the appeal of net neutrality impact the tech ecosystem?

The internet is the infrastructure that provides the platform for much of today’s innovation. If new ventures and innovation have to worry about how corporate interests can influence who succeeds or fails, there’s less efficient competition driving progress. Furthermore, if getting content in front of consumers, or having access to corporate networks requires paying extra for those ‘fast lanes,’ startups that win access might be the most well-funded rather than the ones truly adding the most value.

Lobbying of those who control internet connectivity and other aspects of media will become common, as those who control the connectivity will also have interests in what content that connectivity delivers, and will certainly craft packages and information flow to their advantage.  LA will be very much caught up in this, with media conglomerates and large corporations that control much of the internet connectivity gaining tremendous power and startups having to either circumvent new rules or being more beholden to private interests.


If given the opportunity, what would you tell the FCC before they vote?

The information superhighway should be open to traffic and free from meddling. While most of the debates focus on internet fast lanes, it’s possible large corporations could block particular devices, content or geographies from accessing relevant information. Imagine if a U.S. policy passed stating that you could only drive a Ford — but not a Chevy — on any highway in the country, or that the electric company could determine which devices in your house were allowed to use electricity. This future looks pretty bleak and will only lead to further manipulation of our democracy by adversarial interests.


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Eric Dahan
Co-founder and CEO

Eric Dahan, co-founder and CEO of LA-based Open Influence (formerly known as InstaBrand) is very aware of the challenges facing small- and medium-sized companies, given the fact that these are the companies his business works with directly. According to Dahan, removing net neutrality creates an unfair playing field in which only the companies with money will benefit.


How would the repeal of net neutrality impact the tech ecosystem?

LA's startup scene has been growing rapidly in recent years, driven mainly by the convergence of media and technology. Removing net neutrality means giving the cable companies the ability to fully control the online media industry, and possibly, the digital advertising industry. As a result, it could make it significantly harder for emerging and existing companies in the media industry to compete and may result in less of both innovation and growth in Los Angeles.


If given the opportunity, what would you tell the FCC before they vote?

To be clear: net neutrality is not a partisan issue. Repealing it doesn't favor any American who uses the internet, and it will negatively impact all businesses — both big and small — with the exception of course of the cable companies. Many Americans may not understand the ramifications of a repeal today, but they will as soon as it passes. Voting to repeal net neutrality is corrupt and political suicide.  

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Steve Yi
Co-founder and CEO

Echoing the sentiments of Cohn and Johnson, Steve Yi, co-founder and CEO of LA-based MediaAlpha takes a seemingly pessimistic approach to the bill, adding that should net neutrality get repealed, no good will come to LA’s vibrant startup community.

How would the repeal of net neutrality impact the tech ecosystem?

Technology-wise, Los Angeles is best known for its content, but it has also become a vibrant hub for small- and medium-sized e-commerce and digital advertising companies. For smaller companies, the only real debate is whether the repeal of net neutrality will be only moderately negative or utterly disastrous.

Consumers will be less tolerant of slow load times for websites they have not used before, which will lead to higher customer acquisition costs for smaller companies, whether in the form of reduced marketing efficiencies or fees paid directly to ISPs. And, the consumer uproar that may ultimately protect Netflix and eBay from unfavorable treatment will do little to preserve unfettered access to the websites of smaller, less established companies.

Because of limited brand awareness and lack of scale, smaller companies already pay a disproportionately higher price to acquire new customers through Google, Amazon and Facebook compared to established, well-known companies or brands. The repeal of net neutrality will simply add ISPs to this list of gatekeepers stunting potential growth for startups.


If given the opportunity, what would you tell the FCC before they vote?

I would urge the FCC to retain net neutrality to protect small business.


To learn more about how you can aid the fight for net neutrality, visit Battle for the Net.


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