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50 leading tech investors tell the FCC a pay-to-play internet would kill startups

50 leading tech investors tell the FCC a pay-to-play internet would kill startups


Venture capitalists fear a big chill on innovation

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Would it be possible to build the next YouTube or the next Netflix if big ISPs like Comcast and Verizon were allowed to charge companies for a "fast lane" that privileged their data? That has been a major concern for tech investors and entrepreneurs ever since the FCC lost its court battle with Verizon back in January. Today a group of leading venture capitalists published an open letter to the FCC calling on them to prevent what they say would be the end of net neutrality and a crippling blow to young startups.

"The internet will no longer be a level playing field."

"If established companies are able to pay for better access speeds or lower latency, the internet will no longer be a level playing field," they write. "Startups with applications that are advantaged by speed (such as games, video, or payment systems) will be unlikely to overcome that deficit no matter how innovative their service."

The group includes investors from around the country, including Union Square Ventures, Andreessen Horowitz, First Round Capital, and many more. Collectively they have funded companies like Twitter, Facebook, Foursquare, Tumblr, and others. You can read their full letter here. They join a group of the world's biggest tech companies who filed a protest with the FCC yesterday.

So far these "fast lanes" are just hypothetical.

A good example of a young startup that could suffer from paid fast lanes is Twitch, which sits at the intersection of video and gaming. During its peak hours, Twitch already sends more traffic than giants like Facebook or Amazon. But of course it doesn't yet have anywhere near their revenues. If it had to pay for a "fast lane" to ensure its data got to customers, its business could be crippled.

So far these "fast lanes" are just hypothetical. Many companies, like Netflix, Google, and Microsoft, already pay for special interconnection to ISPs. But this is a separate issue than the FCC's ruling on whether companies like Verizon and Comcast can charge to privilege some data in the so-called "last mile" between their networks and consumers' homes. The FCC has promised that all those deals will be regulated to ensure they are "commercially reasonable," a vague term that has net neutrality advocates very worried. More concrete details will emerge next week, on May 15th, when the FCC is set to publish the full draft of its proposal for new rules governing the open internet.