Net neutrality and permissionless innovation

15 Jan 2014

A lot is being written about the FCC’s open internet order being struck down. Many of the articles focus on cost, because we might have to pay more for our “content”, in the context of big media conglomerates that own both the Internet provider and the content provider, such as KabletownComcast.

It’s true that you might need to pay more for Netflix if Netflix has to pay a bribe to your ISP (in addition to what you have already paid your ISP!), but that’s just money. Netflix and Comcast and Google/YouTube and Verizon are all big companies with money and leverage. They’ll work out their business arrangements, and we will pay a little more, and things probably won’t change that much.

It’s worth noting that government mandated net neutrality is only necessary because most people only have a few choices for Internet access. Net neutrality regulations are largely irrelevant in the wholesale market. If you happen to be located in a major data center, you might have a choice of a dozen different carriers, and none of them would have the leverage to blackmail anyone to have to pay to reach you. (There are a few notable exceptions.)

The real problem with abandoning net neutrality is that we also abandon the culture of permissionless innovation that is the best part about the Internet. Anyone can start their own Internet service, or launch a mobile app. They might need money, but they don’t need insider connections, they don’t have to impress a telco executive, and they don’t even have to make a phone call or have a meeting. That state of affairs looks less and less likely to persist.

Some technology markets never had permissionless innovation, or did not until very recently. Before the iPhone, there were, in fact, mobile apps on feature phones. To get them onto Americans’ phones, you had to be approved by each mobile carrier. For all the complaints about the App Store, this process was much worse: you basically had to bribe, convince or fool the carrier into carrying your app.

In the gaming console world, it is still the case that for most consoles, you can’t just sign up online, download the SDK, and start building your game. The console maker approves every game developer and every game, making it very hard for smaller developers with only a few employees—let alone a part time developer in a coffee shop—to create and distribute console games.

The innovation we would lose by getting rid of net neutrality is a much graver cost than the extra money we would pay.