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Nothin' but Net Neutrality: Even Amazon and eBay Are Fans

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How the big Web companies and venture capitalists forced the FCC to think again.

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The subject of net neutrality has been dominating headlines and sparking debate whether it should be required by law. Even Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) support net neutrality, the principle that Internet service providers shouldn't be permitted to provide faster, better delivery to some content providers or (flip side of the coin) slower, poorer service to others.
 
It's not easy to convey the importance of the issue without using real-world terms, so let's put this baldly: Comcast (NASDAQ:CMCSA) is the largest ISP in the US and the only broadband choice for many consumers. In the absence of FCC rules, Comcast can decide:

  • Whether to provide speedier delivery to Hulu, Fandango, and E! Entertainment, all sites in which it has a financial interest, but not to their competitors.
  • Whether to offer its best service at an additional cost, effectively relegating shoestring start-ups, small businesses, and ambitious bloggers to the slow lane.
  • Whether to demand additional payment from Web companies with the deepest pockets, raising costs that inevitably must be passed on to the consumer.
All of the above leads to the doomsday scenario that some foresee: a World Wide Web in which big telecom effectively dictates the sites that people see by awarding priority delivery to their own content and that of their deep-pocketed customers.
 
Even reigning Web kings such as Amazon and Google don't want that. That's why their names appear on a long list of major Web companies to leap into the brawl that ensued when a draft of new rules for net neutrality was published by the FCC.
 
The open letter was signed by about 100 Web companies large and small, including Facebook (NASDAQ:FB), Microsoft (NASDAQ:MSFT), Twitter (NYSE:TWTR), Google (NASDAQ:GOOG), LinkedIn (NYSE:LNKD) and Yahoo (NASDAQ:YHOO). Then, at the end of last week, about 50 venture capitalists and angel investors jumped in with their own letter protesting the draft of the rules. The letter was signed by names associated with companies such as Union Square Ventures, Kapor Capital, and Andreessen Horowitz.

All together, they made enough noise to force a quick retreat by Federal Communications Chairman Tom Wheeler. As first reported by The Wall Street Journal, Wheeler is preparing a revised draft that could go to a vote before the commission as early as Thursday, May 15. Sadly, nobody seems to be expecting the new version to be substantially improved. At worst, it could be the same proposal couched in slightly sterner but equally unenforceable language.
 
Based on various leaked reports, it seems that the revised proposal won't forbid Internet service providers from offering companies priority delivery speeds at premium prices. It may include explicit language warning the providers not to assign Web companies that don't pay a premium to a "slow lane." It's supposed to include language that strengthens the FCC's ability to enforce the law, though it may be short on details in that regard, according to a report in The Washington Post.

The latest furor follows a federal court ruling in January that struck down the FCC's old net neutrality rules, ruling that they went beyond the agency's powers. Reaction to that decision, you may recall, was cushioned by the thought that surely the FCC would come up with new rules that ensured net neutrality without flouting the court's decision.
 
In their open letter, the venture capitalists warn that weak rules will be the death of "quirky passion projects" such as those that grew up to be Amazon and eBay. They argue that the next generation of Web start-ups could be forced to allocate their slender resources to buying bandwidth before they even prove their concepts.
 
The letter from the Web companies accuses the earlier version of the FCC rules of "permitting individualized bargaining and discrimination" and calls for the commission to protect against "blocking, discrimination, and paid prioritization" among websites.
 
Wheeler denies that charge, saying that all sites -- and the consumers who access them -- will be guaranteed a baseline quality of Internet delivery.
 
Since this is, after all, all about the Internet, where everyone has a voice, there's an FCC form for use by any citizen with an opinion on the issue, identified as "Proceeding 14-28: Protecting and Promoting the Open Internet."
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