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Net Neutrality Ruling a Blow to Web Startups

A D.C. appeals court struck down FCC rules on Internet traffic, which could cost businesses that need fast content delivery.
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UPDATED at 3:40 p.m. with comments from Michael Beckerman, President and CEO of The Internet Association.

A federal appeals court dealt what could be a fatal blow to net neutrality on Tuesday, potentially forcing businesses to pay more for fast, reliable delivery of their Web content.

In Verizon v. FCC, the U.S. Court of Appeals for the District of Columbia Circuit struck down Federal Communications Commission rules that compelled Internet service providers (ISPs) to treat all Internet traffic equally, or neutrally. The court ruled that because ISPs are not categorized as traditional telecommunications services or "common carriers," and therefore the FCC cannot impose its anti-discrimination regulations on them.

The FCC enacted its Open Internet rules in 2010. Based on the principle of net neutrality, the rules were intended to prevent Internet providers from selectively blocking or degrading certain companies' traffic on their broadband networks. Supporters of the concept say it's a way to prevent telecoms from engaging in anticompetitive practices. In the absence of such rules, for example, a company like Time Warner could block its competitors' websites, or charge its customers for premium service, privileging content from large media companies while squeezing out individual bloggers.

The court's decision is a victory for Verizon and other telecoms, who had long argued that net neutrality is an undue burden on them. As a result of the ruling, they would be free to make deals to provide faster service to large content providers, which could come at the expense of smaller businesses whose pockets aren't as deep.

Michael Beckerman, the president and CEO of The Internet Association, a Washington, D.C.-based trade group for Internet businesses, says the ruling may have damaging effects on content companies.

"You don’t want to ever get into a place where an ISP or anybody else has control over who can get to individual Internet users or where users can go," Beckerman tells Inc. "And that's the whole point of why these rules were put in place."

Beckerman declined to predict whether the FCC would try to write new rules or how his organization and the companies it represents--which include Airbnb, Gilt Groupe, and Lyft, as well as larger businesses such as AOL and Amazon--might respond to the decision in the near future.

IMAGE: Shutterstock
Last updated: Jan 14, 2014

DOUG CANTOR | Staff Writer | Senior Editor

Doug Cantor is a senior editor at Inc.com. His work has appeared in Bloomberg Businessweek, Popular Science, Esquire, and other publications.




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