For a while there, it looked like Netflix was on its own in fighting the Federal Communications Commission’s bone-headed and double-speaking effort at institutionalizing “net neutrality” rules, but on Wednesday the floodgates burst open. A raft of technology companies, venture capitalists and even FCC commissioners added their voices to the now-strong opposition chorus. Suddenly, it’s FCC chairman – and former cable industry lobbyist – Tom Wheeler who appears to stand alone.
In case you missed it, Wheeler set the Internet on fire earlier this month when it emerged that he had a plan to institute a right for Internet providers – cable and phone companies – to create a “fast lane” for online services and websites. In a blog post defending his proposal, he suggested such rules would prevent ISPs from blocking content or slowing it down, and that fast lanes would have to be negotiated at “commercially reasonable” rates.
No one seems to be buying that argument. On Wednesday, 150 technology companies – including giants such as Amazon, Google, Facebook and Microsoft – sent Wheeler a letter decrying his ideas, saying they represent a “grave threat to the Internet:”
Instead of permitting individualized bargaining and discrimination, the Commission’s rules should protect users and Internet companies on both fixed and mobile platforms against blocking, discrimination, and paid prioritization, and should make the market for Internet services more transparent. The rules should provide certainty to all market participants and keep the costs of regulation low. (Emphasis added)
As if to put an exclamation point on the letter, fellow FCC Commissioner Jessica Rosenworcel also voiced her opposition on Wednesday.
“I have real concerns about FCC Chairman Wheeler’s proposal on network neutrality – which is before the agency right now,” she said during a Washington speech. “While I do not know now where this conversation will head on a substantive basis, I can tell you right now I have real concerns about process.” At the very least, she suggested that next week’s scheduled vote on the proposal be pushed back so that more views can be solicited.
What’s amazing is the damage that just a proposal can do. Venture capitalists are already avoiding startups that will require big bandwidth, which would necessarily bring them into conflict with ISPs, or into a position where their costs of doing business would be too high. “This is absolutely part of our calculus now,” says Brad Burnham, managing partner at New York-based Union Square Ventures. His company will now “stay away from” investing in new firms dealing with media and video because “this is a bad scene for innovation in those areas.”
Such statements are silver bullets into the heart of Wheeler’s proposal. The concept of innovation-without-permission has been central to the U.S.-led Internet revolution of the past 20 years, and is indeed responsible for creating the likes of Google, Amazon and the rest. As the VC comments attest to, the next generation of such firms is already under threat.
The good news for net neutrality supporters is that even if the FCC does push forward, Wheeler’s plan is unlikely to pass a required vote. Rosenworcel and fellow Democrat Commissioner Mignon Clyburn both oppose the proposal, while both Republican Commissioners are unlikely to back any net neutrality rules.
The revolt puts both Wheeler and President Barack Obama, who appointed him, in the hot seat. Questions swirled around Wheeler’s lobbying past when he was first given the job last year; will anyone trust him now after his wrong-headed (and bull-headed) championing of a potentially devastating policy? And just how much egg does the president, a self-professed net neutrality supporter, have on his face for making such an obviously bad appointment?