Every large business on the internet started out small. There was a time when Google, Amazon, and Facebook were scrappy upstarts who could barely afford to pay their hosting bills. Today these organizations are forces that shape our society, and whether you think that’s a good thing or not, there’s no doubt that the ability to communicate freely with customers and users on a level playing field was key to their success.
In 2017, hosting companies across the world provide bandwidth to tiny companies that may become the next Google, Amazon, Medium, or Facebook. None of us can tell which of these little businesses will become tomorrow’s unicorns or sustainable small businesses. But we know this: if net neutrality is eroded the little businesses will have a much harder time competing against the established giants.
Disruption is the driving ideology of Silicon Valley and the tech world, but without net neutrality, the ability of new ideas and business models to compete is in jeopardy.
The concept of net neutrality is simple: ISPs can’t give preferential treatment to businesses who pay for the privilege. Consider the practice of zero rating, in which a business pays so that its users can download content without it impacting their bandwidth caps or data usage charges. That sounds great for the user, but only if we disregard the negative effects on market innovation.
As Jamie Wilkinson of VHX has said: “We only exist because of net neutrality,“ With net neutrality rules, broadband providers “aren’t able to create fast lanes that my company, and most of my customers, couldn’t afford.”
Zero rating benefits established companies who can pay to have the bandwidth usage of their users zero rated, but it’s terrible for smaller competitors who can’t pay for preferential treatment. Users will turn to established content providers whose deals with ISPs allow them to deliver content faster and cheaper, rather than smaller content providers whose performance is artificially constrained.
Performance is of critical importance in the e-commerce industry. Studies have shown that small latencies have an outsized impact on revenue. That’s why our customers pay us for optimized web hosting: they want to provide the best possible service to their shoppers. If net neutrality is abandoned, it won’t be enough to have a fast website: you’ll also have to pay last-mile ISPs a proportion of your revenue to ensure that your site isn’t artificially slowed-down relative to the retail giants who can pay the toll.
See also: How Will AI Impact E-Commerce In 2017?
The online economy thrived because of an understanding: companies pay web hosting providers for bandwidth at their end. Consumers pay last-mile ISPs for bandwidth at the other end. Information flows from data centers to consumers without preferential treatment.
If net neutrality rules are overturned — something that seems a near certainty as I write — the ISPs will demand to be paid twice for the same thing: once by consumers, and once by the companies who want to reach those consumers. The inevitable result is a stifling of the online economy. The big companies will be fine, and so will the ISPs, but tomorrow’s unicorns and today’s small businesses will be at a substantial disadvantage.
About the Author
Graeme Caldwell works as an inbound marketer for Nexcess, a leading provider of Magento and WordPress hosting. Follow Nexcess on Twitter at @nexcess, Like them on Facebook and check out their tech/hosting blog, https://blog.nexcess.net/.