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Mike Fratto
Mike Fratto
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Think Net Neutrality Will Kill Innovation And Jobs? Think Again

I simply do not understand how Net neutrality detractors think that the proposed rules the FCC wants to put into place could hurt innovation. Even a cursory read of the rules shows that they are trying to set a level playing field, ensuring that those who control the last mile cannot arbitrarily limit or restrict access to Internet services. Open access does not stifle innovation. Open access to Internet services is the catalyst to innovation. Let's face it: Telcos and cable companies are the le

I simply do not understand how Net neutrality detractors think that the proposed rules the FCC wants to put into place could hurt innovation. Even a cursory read of the rules shows that they are trying to set a level playing field, ensuring that those who control the last mile cannot arbitrarily limit or restrict access to Internet services. Open access does not stifle innovation. Open access to Internet services is the catalyst to innovation. Let's face it: Telcos and cable companies are the least innovative companies around. They only innovate to protect their turf.

Robert M. McDowell, a commissioner of the Federal Communications Commission, cranks up the Fear, Uncertainty and Doubt (FUD) machine in the Wall Street Journal article The FCC's Threat to Internet Freedom: "Analysts and broadband companies of all sizes have told the FCC that new rules are likely to have the perverse effect of inhibiting capital investment, deterring innovation, raising operating costs, and ultimately increasing consumer prices. Others maintain that the new rules will kill jobs," he says. Kill innovation and jobs at the same time! That's hitting some pretty powerful and primal fears. Investors like innovation since it shows a company is moving and shaking. That's good for business. Not being innovative is a death knell to investors. No business wants to be viewed as stuck. But losing jobs? In the last two to three years, who hasn't been worried about being out of work? And that has nothing to do with Net neutrality. Both claims are pure and baseless FUD.

Neither the incumbent telcos nor cable companies have any incentive to innovate Internet content services, outside of figuring out how to get more money out of your pockets for horrible services. So, let's see how many innovative and useful services have come from telcos and cable companies:

  • Search engines? Where is the innovation coming from? Google, Microsoft, Yahoo, the recently defunct AltaVista. No telco or cable company in the list.
  • What about some user-to-user communications. Who is innovating? AOL, Skype, Yahoo, Twitter, Google. No telco or cable companies in that list.
  • Online shopping? Amazon, Zappos, Apple and 1,000s of other on-line stores, none owned or operated by cable companies or telcos.
  • What about something that cable companies should be good at, like delivering media? Innovation: Apple, Netflix, Hulu, Youtube, Tivo. Is there a cable company or telco in that list?

Seriously name even one innovative content offering that has come from a cable company or telco. Based on past performance, telcos and cable companies won't be the ones innovating. What telcos and cable companies want to do is force you, the customer, to use their non-innovative, poor-performing and over-priced services, and make it harder to use innovative ones available on the Internet because they can't compete. Look, breaking into a market is hard. It took Microsoft years to even put a dent in Internet search and I believe it is still a distant second to Google.

As I already said before in Opposing Net Neutrality Means Opposing Innovation, if the last-mile ISPs could limit and restrict your access to Internet content, would Internet start-ups like Hulu, Youtube, Twitter, Facebook or any other of the hundreds or thousands of Internet based start-ups have seen the light of day? These innovative Internet companies thrived because, at the time, there were no restrictions on what services users could access. Cable companies and telcos want to get into the content game, and they see the innovative companies thriving. But rather than putting together a competitive content service, they'd rather squeeze out competition. Net neutrality opponents want to let last-mile owners close off access and, by doing so, give the last-mile owners the ability to squish the innovative competition out of the market. How is that not obvious?

Mike Fratto is a principal analyst at Current Analysis, covering the Enterprise Networking and Data Center Technology markets. Prior to that, Mike was with UBM Tech for 15 years, and served as editor of Network Computing. He was also lead analyst for InformationWeek Analytics ... View Full Bio
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