Net neutrality - a regulation that forces US ISPs to treat all content producers and distributors the same - appears to be coming to an end. This could be a blow to budding entrepreneurs in the US.

There is this sense - maybe it is more than a sense - that Donald Trump and his gang of old economy billionaire allies, favour older, more traditional US companies over Silicon Valley’s finest. Now a move by the US Federal Communications Commission (FCC) may have just given old world economy telecoms a massive advantage over the techs that seem to represent so much of the anti Trump sentiment in the US.

Net Neutrality

Back in 2015, the FCC passed rules to stop ISPs “artificially directing customers to sites and applications they control or with whom they share special business relationships.” And what that means is that in the US an ISP can not charge content producers and distributers such as Alphabet via its ownership of YouTube, or Facebook, or Netflix more money for distributing their content, or indeed slow their content down, distributing their data down a slow lane.

The telecoms say that the current rules regarding net neutrality are not fair - that they have to provide full access to services that eat up more bandwidth. They say that net neutrality means that they are held back from investing in new infrastructure.

On Thursday, December 14th, the FCC, under its chair, Trump appointee Ajit Pai, voted 3:2 in favour of dismantling net neutrality rules.

The big techs are up in arms.

As an aside, it is interesting to speculate how this move will affect the new Disney, once and if its purchase of 21st Century Fox is completed. Disney, it seems, is emerging as the super titan in online subscription just at the moment when the balance of power may be favoring the US telecoms.


But how might changes to net neutrality rules affect startups, entrepreneurial businesses looking to develop apps or content?

The new rules will, assuming they don’t get blocked by the courts, probably impose much higher costs on content producers - another layer to bypass, namely the support, perhaps partnership of a telecoms company. For many in the US start-up scene, this will be a disaster.

On the other hand, if the result of ending net neutrality rules is indeed an improved internet infrastructure in the US, as the telecoms claim, this will be good news for everyone else.


But the impact on European companies may be limited - unless they seek distribution in the US. Rules on Net Neutrality across the EU are stringent. ISPs are simply not allowed to treat content/data producers differently. And post-Brexit, the Great Repeal Bill will mean those rules will still apply in the UK, at least for the foreseeable future.