60px

451px

Amadeus

Blog

Net neutrality changes: will they inhibit innovation?

Katherine Grass

Head of Innovation and Ventures, Amadeus IT Group

It has recently been announced that the Federal Communications Commission in the United States has voted to repeal so-called net neutrality regulations that prohibit broadband providers from blocking websites or charging for higher-quality service or certain content.

checking


There can be no doubt that the internet has changed society and how we live, consume and play. While some people question whether the internet has been a force for good, my view is clear. It has given millions of people access to more information, more ways to connect with friends, colleagues and family around the world, and it has opened up new opportunities for work and entertainment previously unimaginable. The value of the web has been its openness, removed from censure and regulation that many other channels are subjected to.

The consequences of this decision are still being debated.

But what will be the impact of this move on innovation? I’ve been thinking about two areas: startup activity and competition.

Hindering startup companies?

Startups usually enter the market with tight budgets, saving money where they can while they build their businesses and spread awareness of their offering. Net neutrality shields smaller business from fees for faster line access, therefore levelling the playing field.

While larger companies may have no qualms about paying fees to deliver engaging content at fast speeds, for budding businesses this may prove prohibitive and therefore stifling, and potentially put even small and medium-sized businesses at a disadvantage. So much innovation is happening within the developer and startup community, as well as within large corporates, it may be dangerous to stifle these businesses with the potential introduction of greater cost and complexity.

What will competition look like?

By making things more difficult for smaller businesses and startups, removing net neutrality may result in the internet, and the broadband sector in general, becoming a less competitive space.

Currently, 55% of the US is served by one broadband provider, with the remainder being served by two others. This is unlikely to change, and has the potential to result in the content consumers see becoming controlled by a few major players. As these major players are also aiming to become content-providers themselves, they may be able to unfairly favour their own content above other providers’.

An uncertain future

However, despite these concerns, some have argued that net neutrality has actually reduced investment in internet service provision so repealing its rules may be a positive thing. There is also an argument to say that if all businesses are offered the same deals when it comes to paid-prioritisation of their content, then that is a fair game.

In truth, it remains unclear as to how a future without net-neutrality will play out, but to hinder the potential of small-scale, innovative businesses is something we should care about. In today’s world, innovation comes from an open and democratised environment, not creating a walled garden where only those with the most money can thrive.