The internet is a level playing field where everyone, from big companies to small startups, can access and send data quickly and without discrimination. However, a new European law is causing concern among entrepreneurs.
Brussels has initiated an online consultation regarding the future of the connectivity sector and infrastructure. This consultation could potentially lead to internet providers charging websites fees for access and disrupting the principle of net neutrality, which ensures equal treatment of all internet users.
While the focus may be on big tech companies, startups are worried about the unintended consequences that this law may bring. They fear that restricting internet access could distort the startup ecosystem, hamper innovation, discourage new market players, and hinder investment in the tech industry’s growth.
Johann Svane, head of policy at Danish Entrepreneurs, expressed his concerns about the negative impact on startups and urged to maintain the current net neutrality regulations, emphasizing that there is no need to fix something that isn’t broken.
The ongoing debate can be compared to cars on a motorway, where big tech companies are like the large number of cars, and broadband providers are the ones responsible for maintaining the infrastructure. Broadband providers argue that it is unfair for them to bear all the costs and propose that big tech companies contribute towards upgrading the infrastructure they heavily rely on.
Thierry Breton, the EU’s internal market commissioner, also supports this argument, suggesting the need for a new financing model to address the substantial investments made by telecoms companies.
Inés Moreno-Alonso, director at Allied for Startups, voices the need to understand this conversation from a broader perspective beyond big tech versus big telco. She emphasizes that startups, SMEs, and consumers should have a say, as they are integral parts of the internet ecosystem.
Startup founders express their worries about the uncertainty surrounding the issue. They feel powerless and excluded from the discussion, highlighting that there is minimal awareness and dialogue about the potential changes to net neutrality.
Although Brussels claims that any new regulations will not violate the principle of net neutrality, Moreno-Alonso argues that introducing network fees will inevitably create an imbalance. She states that allowing payments within networks will lead to a two-tiered internet, which contradicts the net neutrality principle.
Startups are concerned that if fees are imposed on larger companies, it may discourage their scaling and competition against established incumbents. They fear that the introduction of fees could also pave the way for smaller players to be subjected to such financial burdens in the future, further inhibiting their growth.
Similar fees implemented in South Korea have demonstrated negative consequences, such as a decrease in content production and quality, slower digital transformation, increased prices for consumers, and reduced investment in network infrastructure. This experience serves as a cautionary example for the potential impacts of introducing fees.
Research conducted by the European Parliament also suggests that the South Korean experiment has not been successful, with reports and expert opinions largely agreeing on its failures.
A report from Startup Poland, which surveyed 143 startups in central and eastern Europe, found that almost all respondents believed that imposing fees on larger companies would make it more challenging to create successful startups. Furthermore, 72% of startups anticipated a negative effect on fundraising.
Startups like inStreamly, which operates in the intersection of video games and live-streaming, foresee potential disruptions due to increased traffic and new regulations. They worry about losing a significant portion of their market and see the idea of a paywall on the internet as both surprising and regressive.
The proposed changes challenge the established norms of open and unrestricted internet access and pose significant concerns for startups and the future of innovation. The outcome of the consultation and subsequent decisions will shape the landscape for internet businesses and users going forward.