The Atlantic on why recent net neutrality foul-ups are really bad for business, especially the small start-ups that fuel innovation.
Entrepreneurs and startups know that the threat of blocking and discrimination undermines their ability to get funding. As legendary venture capitalist Fred Wilson—whose firm Union Square Ventures was an early investor in Twitter, Foursquare, Zynga, and other Web 2.0 household names—pointed out:
“Many VCs such as our firm would not invest in the mobile Internet when it was controlled by carriers who set the rules, picked winners, and used predatory tactics to control their networks. Once Apple opened up competition with the iPhone and the app store, many firms changed their approach, including our firm.”
In 2007, while the FCC was investigating Comcast’s blocking of peer-to-peer file-sharing applications like BitTorrent, many entrepreneurs told me that they couldn’t get funding because investors were concerned their application would be singled out for discriminatory bandwidth management. And when the D.C. Circuit Court of Appeals in 2010 struck down the FCC’s Order that had required Comcast to stop interfering with BitTorrent and adopt application-agnostic methods for managing congestion, entrepreneurs heard the same investor concerns again. The bottom line: uncertainty about how new applications and services will be treated on the network does not create a climate conducive to investment.