Lack of Net Neutrality Threatens Small Businesses, Web 2.0 Startups

I tend to write regularly about the Internet, because the Internet has been a major factor in freeing small businesses from the confines of our small size. The Internet has given us the ability to compete with larger businesses. The low-cost, open Internet architecture has made possible all those startup Web 2.0 sites.

An issue is brewing that threatens what small businesses have gained through the Internet. The issue is: can certain providers block our access to lawful Internet content or services — or force us to pay a variety of extra gatekeepers in order to use features of the Internet or get preferred treatment.

Any of these moves would put small businesses at a distinct disadvantage. Without an open-architecture Internet, we small businesses would not have a level playing field to compete with larger and better funded competitors.

A paper by John Windhausen, Jr., available at, frames the issue, which has been dubbed “Net Neutrality”:

Broadband providers now have the same authority as cable providers to act as gatekeepers: the network owner can choose which services and equipment consumers may use. Network operators can adopt conflicting and proprietary standards for the attachment of consumer equipment, can steer consumers to certain web sites over others, can block whatever Internet services or applications they like, and make their preferred applications perform better than others.

This concern is not just theoretical — broadband network providers are taking advantage of their unregulated status. Cable operators have barred consumers from using their cable modems for virtual private networks and home networking and blocked streaming video applications. Telephone and wireless companies have blocked Internet telephone (VoIP — Voice over the Internet Protocol) traffic outright in order to protect their own telephone service revenues. Equipment manufacturers are marketing equipment specifically designed to ‘filter’ out (i.e. block) VoIP traffic. Wireless companies often write limitations into consumers’ service agreements that have nothing to do with excessive bandwidth consumption.

The problem is likely to become worse in the near future. One telephone company executive threatened to put a stop to on-line providers that use the telephone network ‘for free’ (even though on-line providers pay to connect to the network). Another telephone company executive openly announced that his company intends to establish a higher-priced ‘tier’ of service reserved exclusively for content providers chosen by the network operator. This raises the concern that consumers and start-up application providers will be relegated to the ‘slow lane’ on the information superhighway.

The Small Business and Entrepreneurship Council, a small business advocacy group, has taken a stand in favor of Net Neutrality, and sums up why this is such an important matter to the small business community: “… the Internet has delivered many advantages for small businesses: It has made the smallest shops national suppliers; streamlined communication between consumers and vendors; and created global venues for entrepreneurs, liberating them from the confines of traditional brick and mortar storefronts. Furthermore, thousands of entrepreneurial companies are the power behind the Internet, providing software, hardware, security systems, and more.”

This past week the U.S. Senate Commerce, Science & Transportation Committee held a hearing on the matter of Net Neutrality. You can read the hearing testimony at the Committee’s website. Be sure to check out the testimony of Professor Lawrence Lessig (PDF) — founder of the Creative Commons content license you see on so many blogs — who eloquently explains why the Internet was the “great economic surprise of the 20th Century” and why free market competition is so crucial to its success.

This is an important issue that could impact the millions of U.S. small businesses, including Web 2.0 startups, that rely on the Internet to conduct our businesses. We need as much openness and free access as possible, not only in the U.S., but everywhere. And my guess is, the same issue of Net Neutrality may surface in other countries, if it has not already.

Tags: small business; net neutrality; business; web 2.0

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.