Net Neutrality and startups

How much power should the operator have? I was involved in related discussions for some ten or more years at previous job.

So let me emphasize first that I have nothing against operator business.

The problem, however, is some kind of relative instability: either the operator is a bitpipe which neither they nor the investors like, or then they have significant power and vertical integration happens which seems to be bad for innovation. Unluckily there are few middle-ground examples.

Now the leading daily in Finland, Helsingin Sanomat had today a big story how the net neutrality related legislation may give the operators in Finland some new freedoms. Sorry, this in Finnish, but you can guess the main points.

The story outlines that the consumer may be sold service bundles with some services as operator-preferred, with better QoS. 

Firstly, it would be naive to think that there would be only some such service plans sold, it is easy to see that this is where the operators would focus on with collaborative efforts.

Why is this important? What has changed?

After the Nokia layoffs, the Finnish startup scene has been remarkably lively and this has been noted by international media too. 

But now there are dark clouds in the horizon with this emerging (Finnish) Net Neutrality issue.

Then why is this an issue not only for the netflixes and skypes? The answer is simple: this current debate and its outcome will impact everyone. Most startups are partly or fully web-based or their value proposition is based on a web service. And now, technology will allow the easy integration of realtime functionality to web apps.

This has been possible until now of course, but it will now happen in a smooth transparent easy-to-use way for developers, thanks to the WebRTC standard.

It is no wonder that e.g. Google, Mozilla seem to be keen to drive forward the WebRTC. They seem to see a vision where isolated non-compatible VoIP (and video) islands is replaced by dynamic apps having realtime components which will be compatible for the consumers.

This change will apply to companies, big and small alike. And this is especially important to make happen the right way in Finland, as our future depends on innovation taking place in the startups and small companies which should be treated on equal terms.

A non-value adding "bitpipe tax" by operators will prove harmful for the startup scene.

Of course a similar-type discussion is on-going in the USA. According to the Helsingin Sanomat story, Barack Obama is here against treating the bits flowing in the Internet differently, depending if they are operator-preferred or not.

This makes perfect sense. In the USA, the operator industry has lost tens of thousands of jobs, while the Internet-oriented startups are creating a major boost in productivity. 

So, we have a similar discussion ahead of us in Finland. Of course, the operator camp will downplay the impact of regulation-related decisions ahead. 

However, let's note here that besides high hopes on new innovative companies, the Finnish communications market is also vulnerable as it is less attractive for alternative providers than for e.g. the UK market.

In Finland, it is widely acknowledged that growth will emerge from small and medium-sized growth companies. The risk scenario is that an application by such companies would need "operator approval" to perform well, allowing in essence an operator tax, is a scary one. 

Domestic regulation could be more strict in Finland than in competing EU markets or in the USA. Interestingly, there seems to be debate in the EU Commission on the topic.

In such a market, one could ask how this would motivate a Finnish company with some initial success to stay in Finland.

It is annoying to read the argumentation from telecom industry which has methodologically laid off thousands of people over recent years. Their lobby, FICOM, is arguing that new methods are needed to make capacity management successful. It is easy to note that for some reason, current setup is working well as seen by the innovative companies and the consumer. Skype video calls have dominated in popularity similar telecom-centric services in the market place.

One does not want to throw good money after bad. It is important to understand that the true role of the telco operator is that of a utility. Let Finnish innovation happen unharmed!