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Question: What does the end of Net Neutrality mean for young startups and sites with video streaming?

“Not all data is created equal.”

That is what the U.S. Federal Appeals Court decided when it threw out the FCC’s Net Neutrality rules that previously mandated internet service providers (“ISPs”) to provide open access to the internet and treat data equally. This means that, along with many other things, ISPs are now free to build “fast lanes” on their broadband highways, charging companies a fee to have their content delivered to consumers at faster speeds and higher quality – and if you don’t pay, you’ll be stuck in the slow lane. 

This could put future startups looking to go head to head with established players like Netflix, YouTube, or Spotify at a disadvantage when it comes to competing for traffic and delivering the best possible service. For example, imagine you’re the founder of a startup that’s created a new platform for people to share videos - because YouTube, Hulu, and Netflix will have already paid the ISPs to stream their content faster and not count against their users’ data caps, you will have a tougher time convincing users to switch to your platform. You can see how this may be discouraging to future founders and stifle innovation, and why it’s a big concern for those in our industry.

Ultimately, it is still too early to tell if/how ISPs will take advantage of this new ruling - some ISPs will certainly experiment.  There’s been a long history of informal cooperation among ISPs and internet businesses to maintain a fair and open internet as they both jointly deliver the consumer experience. Furthermore, as Netflix clearly pointed out in its latest shareholder letter, services like Netflix, Hulu, and YouTube are major reasons why consumers purchase premium data plans (that drive huge profits for ISPs) – so alienating these services and their consumers would not be a smart idea.

Additionally, was the internet ever truly open before? ISPs have always throttled bandwidth hogging users and some have even tested to find out that ISPs may be prioritized their own VOD services over competitors’ services. Hopefully as broadband technology continues to improve, we can all stream our content at buttery smooth speeds – fast or slow lane. For the startups out there, keep grinding! Consumers will still come to you if you can deliver a stronger value proposition, better content, or killer technology.