Start-ups in horror as Pai neutrality plans trigger shock waves

FCC Chairman Ajit Pai has announced the foundations for his long awaited, long dreaded plans to unravel net neutrality regulations on ISPs – a move that will undoubtedly stifle innovation and harm budding US startup companies in the US.

Addressing the net neutrality rules that were put in place by the FCC in 2015 under the Obama administration, Pai said, during a speech in Washington DC, “two years ago, I warned that we were making a serious mistake. It’s basic economics. The more heavily you regulate something, the less of it you’re likely to get.”

This statement sounds more like the words of a hungry businessman rather than the words of a man in a position to make genuine forward thinking changes to broadband in the US. A man who seems more intent on airbrushing the work of his predecessor, Tom Wheeler, from every piece of FCC regulation, rather than allowing future internet startups to flourish.

As we have highlighted before, Pai is driving an agenda which represents the interests of the President, rather than the Republican party in general.

The truth is that the less regulation the FCC applies – or more accurately, regulation that will eventually be in the hands of the FTC –  the lazier, and weaker the likes of AT&T and Verizon will get, amid a period of fleeing fixed line customers.

Although initial plans for the proposal remain vague, Pai claims that the primary benefits will be more high speed internet across the US, more jobs, a boost in competition, and it will also create the best path towards protecting the online privacy of internet users. Still these far-fetched claims come without any backbone on how the removal of Title II will have any pro-consumer benefits, and the FCC does not yet have the answer.

Pai claims that scrapping of Title II will achieve all of this while allowing AT&T, Verizon, Comcast, and Charter to block or slow down online content from competing services, while the ISPs continue to hike their broadband prices in the process.

Pai stated that the era before Title II gave birth to today’s most successful online giants, and claimed that in order for more pioneers like Google and Netflix to break out, Title II must be revoked. Pai name dropped these companies like they were on his side during his speech, but Google and Netflix love Title II being placed on ISPs, and are part of the Internet Association along with Microsoft, Pandora, Uber and Lyft – which all state clearly that the internet would be a worse place if net neutrality rules were removed.

Pai also claims that Title II has hindered investments in technology and broadband network infrastructure, with no solid evidence to back it up. He claims that for the country’s 12 largest ISPs, domestic broadband capital expenditure declined by $3.6 billion between 2014 and 2016, but the likes of Verizon and AT&T have consistently failed to deliver on broadband promises going back years before Title II was implemented – leaving consumers in parts of the US in the dark ages.

Infrastructure spending may well increase in the coming years, but what is the worth of better broadband speeds if there is no open ecosystem to thrive on it? This is where the FCC’s focus should be, not in giving the ISPs more power to divert spending as they choose and choke the online ecosystem in the process.

Unsurprisingly, AT&T CEO, Randall Stephenson, praised Pai’s proposals, “it’s obviously been an amazing few months in our industry, and there’s clearly a return to a lighter-touch, pro-growth regulatory philosophy.” We’re not sure what amazing few months Stephenson is referring to – the same months in which AT&T missed revenue estimates by more than $1 billion?

Pai waxed lyrical during his speech, lowering the tone so much as to call out all Title II supporters as liars, and repeatedly pointed out how the US had a free and open internet before 2015. If allowing big businesses to block access to competing services is what Pai defines as free and open, then our definition of a liar must be misconstrued.

Pai intends to introduce a Notice of Proposed Rule Making (NPRM) on May 18 at an FCC open meeting. The NPRM proposes a light-touch regulation to reclassify broadband services to Title I, as well as eliminate the internet conduct standard, in which the FCC will “micromanage” the internet, and finally, it seeks input from organizations on the “bright line rules” on blocking and prioritization.

In response, a group of more than 800 startups, investors and innovators sent a letter to Pai and the FCC this week, which stated, “the success of America’s start up ecosystem depends on more than improved broadband speeds. We also depend on an open internet – including enforceable net neutrality rules that ensure big cable companies can’t discriminate against people like us. We’re deeply concerned with your intention to undo the existing legal framework. Protect net neutrality, don’t leave America’s innovators behind.”