Thursday, April 24, 2014

Foreign Aid for the 21st Century

Goodbye net neutrality.

While this is really going to hurt innovation in the American internet business, it could prove to be a real boon for people in other countries with net neutrality. For example, if I had an idea for a new creative way to deliver entertainment over the internet that was better than what already exists and I want to start a new company, these new rules would allow the incumbent companies that I wanted to compete against to cut me off from high bandwidth unless I paid the big bucks for it. Plucky start ups don't generally start out with big bucks, so here in the U.S. my great idea would probably die.

But what I could do is go to the UK, where they treat the internet infrastructure as a "common carrier" and thus have protected net neutrality. I could start my company there and if my idea really does turn out to be big, maybe I could turn into a big player who earns a lot of money. At that point, I would have the big bucks necessary to buy my way into the fast lane back in the U.S. So Americans would eventually get  to enjoy my great idea, except that: (1) their enjoy would be delayed to give me time to establish my idea abroad and build enough success to afford the high entry costs in the U.S., (2) the U.S. would  lose out on the economic benefits of having my company grow up and be established as an American company, and (3) when Americans finally get to benefit from my idea they will have to pay more for it, as the cost of the internet "fast lane" gets passed on to them.

Those three things seem like a big deal to me. And overall this means that the U.S. will become less business friendly over time. But it does favor the current big players in the American internet business. No naturally our government is going to do their bidding. Never mind that it actually serves the interest of our country's economic competitors more than it does the American people over the long term.