Obama announces support for net neutrality

Barack Obama’s proposal for an open Internet would be a victory for Netflix Inc. and its binge-watching users and may be a bigger boon for a generation of startups working on tools to connect cars, thermostats and even offshore oil rigs to the Web.

In urging the U.S. Federal Communications Commission to regulate broadband under the “strongest possible rules,” the president aligned himself with Netflix Inc., Reddit Inc., Yahoo! Inc. and others that contend equal transmission speeds are better for their customers. He proposed an explicit ban on Internet-service providers being able to demand extra payments for speedy delivery of content and data.

“For startups, our advantage over a big company is we move fast,” Zach Supalla, chief executive officer of Spark Labs, said in an interview. “If something starts to slow us down, that’s where we start to lose our advantage over the bigger guys who obviously have a lot more resources.”

The tolls and extra fees favored by cable and wireless companies — though burdensome for established companies like Google Inc. (GOOGL) or Yahoo — would pose an even bigger financial challenge to newer companies dependent on venture capitalist cash to make payroll while developing new software and gadgets.

Proposals around fast lanes for the Internet would have “crushed product innovation in America,” said Barbara van Schewick, a law professor at Stanford University. “Those kinds of companies would have no chance in the world where they would have to pay to be competitive with everyone else.”

Cable and wireless-service providers responded swiftly and sharply, saying stricter rules for the Web would be bad for business.

Under Obama’s proposal, Internet providers wouldn’t be able to give superior service to content providers willing to pay for it.

Netflix, Amazon.com Inc. or Google’s YouTube would be on equal footing in terms of how quickly and seamlessly their customers could download and stream, and startups without deep pockets could introduce new technologies with the same Internet access as richer competitors.

“It has tremendous implications,” said Rebecca Lieb, an analyst at Atimeter Group. “When a company is placed in the slow lane or the fast lane — depending on whether they’re paying to play or not with the telcos — this is going to impact the user experience.”

Source: bloomberg.com, youtube

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