
VC Pitches in a Year or Two - SethMurphy
http://www.avc.com/a_vc/2014/01/vc-pitches-in-a-year-or-two.html
======
r0h1n
This is already reality in some countries. Like India for instance.

1st Indian entrepreneur: I plan to launch a search engine that understands
Indian languages and contexts better than Google.

VC: Well since Google has already paid telcos like Airtel
([http://www.airtel.in/free-zone/](http://www.airtel.in/free-zone/)) so their
searches and even some results don't use up any of the data plan, we are
passing.

2nd Indian entrepreneur: I have an idea for a social network that is better
than Facebook.

VC: Sorry, Well since Facebook has already paid telcos like Airtel
([http://www.medianama.com/2014/01/223-airtel-facebook-free-
hi...](http://www.medianama.com/2014/01/223-airtel-facebook-free-hindi/)) so
their site/app doesn't consume data while being used, we are passing.

~~~
Grue3
Enterpreneur: I plan to launch an encyclopedia that people can edit, and it's
better than Wikipedia

VC: Well, since Wikimedia Foundation has already convinces telcos to provide
their data for free
([http://wikimediafoundation.org/wiki/Mobile_partnerships](http://wikimediafoundation.org/wiki/Mobile_partnerships)),
we are passing.

Now wait a goddamn minute. This doesn't make any sense. The alternative is
even worse: no free access to Wikipedia. Is this what you're arguing for?

~~~
nightpool
The difference is Wikimedia doesn't pay for this benefit, the telcos are doing
it because they support Wikimedia's mission. Any company with a similar
mission and better execution has a chance of talking the telcos into a similar
deal.

The argument is that the paid types of mobile partnerships add another cost
onto the already high barrier to entry into the market. This supports
monopolistic practices by these companies, and reduces competition in the
industry. That's the problem with removing Net Neutrality.

~~~
wdewind
But this still breaks net neutrality. You don't get to treat some traffic
differently because it's served by a 501c3.

------
TTPrograms
The author is missing the point that the ruling was about the specific
language of the FCC regulations. See: [http://gigaom.com/2014/01/14/breaking-
court-strikes-down-fcc...](http://gigaom.com/2014/01/14/breaking-court-
strikes-down-fccs-net-neutrality-rules/)

"That said, even though the Commission has general authority to regulate in
this arena, it may not impose requirements that contravene express statutory
mandates. Given that the Commission has chosen to classify broadband providers
in a manner that exempts them from treatment as common carriers, the
Communications Act expressly prohibits the Commission from nonetheless
regulating them as such. Because the Commission has failed to establish that
the anti-discrimination and anti-blocking rules do not impose per se common
carrier obligations, we vacate those portions of the Open Internet Order."

It seems very likely that the FCC will rewrite their regulations to fix this.
Everyone knows that net neutrality is important, and this ruling is just an
issue in legalese. It's a little early to resort to torch-and-pitchfork
hyperbole.

~~~
fredwilson
I am "the author" and I do understand that but the point of my post was to
simplify the issue for the vast majority of folks who don't get the net
neutrality issue

------
legutierr
I think the pertinent question now is whether the FCC rewrites its rules to
classify ISPs as common carriers. It seems to me, given the local monopoly or
duopoly that the vast majority of ISPs enjoy, that this is an obvious move.
But I have heard it barely discussed, which is distressing.

~~~
rayiner
It's not an obvious move. Being classified as a common carrier carries a ton
of baggage. The common carrier regulations are very much 1970's-style
oppressive regulation, complete with extra taxes for providing service to
rural subscribers, regulatory oversight of every business decision, etc. The
FCC didn't want to impose that burden on ISPs in 1996, and they don't want to
do it now.

As an aside, it's amusing to me how people trumpet common carrier status here
on HN while also complaining how U.S. providers lag the rest of the world in
speed and prices. Imposing the common carrier regime on ISPs won't make that
situation better, it will make it worse. Look at Google's approach to building
out gigabit: focus on urban areas where the density lets you hit more
subscribers per mile of fiber. That's exactly what you _can 't_ do if you're
classified together with the phone companies and are forced to spread capital
expenditures thin over the vast swaths of rural America.

The current situation isn't ideal, but I think it's myopic to advocate
treating telecom networks as regulated public infrastructure. I don't know if
you have noticed, but public infrastructure in the U.S. sucks. One of the
reasons it sucks is that we have a huge, spread-out country and gerrymandering
that weighs rural votes about 2x as high as urban votes. We can't have nice
high speed rail along the northeast corridor because politics mandates that
Amtrak also has to support money-losing lines through rural Pennsylvania. Do
you really want to bring the weight of all this ridiculousness down on the
internet?

~~~
snowwrestler
I don't think the rural telephone surcharge is a necessary component of common
carrier. For example railroads are all common carriers and they are under no
duty to run rail lines to every single community in the U.S.

My understanding of common carrier is that is simply mandates that the
provider must publish a single public rate card with objective criteria for
the rates, and then charge everyone equally by those criteria. It's to prevent
UPS (which I believe is regulated as a common carrier) from taking extra money
from Amazon to slow down or lose shipments from Walmart.

~~~
rayiner
The relevant sense of "common carrier" in this context is as a classification
in the Telecommunications Act of 1996. It's a detailed set of regulations
applicable to telephone companies. Classifying ISPs as "common carriers" would
not just implicate all of those regulations, but implicate one of the
animating principles of phone service under the Telecom Act of 1996, which is
universal service.

"Common carrier" is also a classification for various services under common
law, but that's not what the recent D.C. Circuit opinion was about. Those
involve not formal regulations, but certain rights and liabilities under
common law, which differ depending on the particular kind of service.

~~~
dragonwriter
> The relevant sense of "common carrier" in this context is as a
> classification in the Telecommunications Act of 1996. It's a detailed set of
> regulations applicable to telephone companies. Classifying ISPs as "common
> carriers" would not just implicate all of those regulations, but implicate
> one of the animating principles of phone service under the Telecom Act of
> 1996, which is universal service.

You are conflating two related but distinct issues, and then compounding that
by badly confusing the issue of universal service. Of the conflated issues:

First, is requirements that _define_ a common carrier, which the FCC can apply
to entities designated as "telecommunications providers" under the
Telecommunications Act but cannot apply to entities designated as "information
service providers" under the Act, per the DC Circuit ruling recently, those
requirements include things like the non-discrimination/non-blocking rules in
the recent _Open Internet Order_. Designating a new category of
"telecommunications service providers" (provided such designation survives any
challenge -- there are definitions of what consistutes telecommunication
service in the Act and the FCC would have to have reasonable grounds for this
designation) allows the FCC to apply provisions that are essentially common
carrier rules to entities in the newly defined category.

Second, is the _particular_ regulations that the FCC _has_ applied to
particular classes of telecommunications providers, such as landline telephone
providers. Designating a new class of telecommunications service providers
would not automatically apply any existing regulations that the FCC has
adopted for previously-defined classes of telecommunications providers to the
newly identifed class.

Finally, universal service is not an "animating principle of phone service
under the Telecom Act of 1996". Universal service was adopted for phone
service in the Communications Act of 1934. The Telecommunications Act of 1996
was notable in expanding the role of universal service to include "advanced
telecommunication and information services". This expressly includes non-
common carrier "information services" as well as common carrier
"telecommunication services", so it is completely irrelevant tot he common
carrier issue.

> "Common carrier" is also a classification for various services under common
> law, but that's not what the recent D.C. Circuit opinion was about.

Actually, applying the common law definition of "common carrier" to the
particular regulations that the FCC adopted in the _Open Internet Order_ to
see if they conflicted with the Telecommunication Act's provision that common
carrier rules could be applied only to "telecommunication service" providers
and not "information service" providers (given the FCC's designation of ISPs
as the latter rather than the former) was central to the DC Circuit decision.

~~~
rayiner
I'm not really sure what distinction you're trying to create with the term
"telecommunications service provider" versus "telecommunications provider" and
"information service." The term "telecommunications service provider" doesn't
appear at all in the D.C. Circuit's opinion.

Moreover, the phrase "common carrier" is more or less coextensive with Title
II of the Telecommunications Act of 1934, which creates a heavy regulatory
oversight regime. I'm not sure how the FCC could classify ISPs as common
carriers and not bring them under the purview of Title II.

While Universal Service was not created in the 1996 Act, it is definitely an
animating principle of the Act, because the Act expands the program. However,
it doesn't go so far as to extend it to ISPs. Universal service contributions
aren't totally coextensive with telecommunications provider versus information
service classification, but are almost so. Anyone that provides something
similar to voice telephone service (including cellular and VOIP), contributes,
but internet providers do not.

I don't mention universal service to confuse the issue. I mention it as an
example of the heavily-political, expensive, misconceived sort of program that
becomes fair game when you bring internet service into the world of common
carriers. The world of telecom has many different regimes. Not just from a
legal standpoint, but from a philosophical and political standpoint. Phone
service is considered crucial public infrastructure. It is subject to Title
II. It is subject to USF. It is subject to extensive FCC oversight. It is the
subject of political bellyaching about how people in rural America are
entitled to have their high-cost service subsidized by everyone else. That's
one regime. The other is internet and cable service. This is a land of ponies
and cupcakes. Once you reclassify internet services as common carriers, you
put internet service in a whole different bucket, not just legally, but
philosophically and politically. And you don't want internet service in the
same bucket as phone service. It's an awful place, full of people who think
that companies shouldn't spend money building gigabit in New York when people
in rural Alabama still have 256 kbps DSL.

Your point about the common law definition of common carrier is well-taken. It
isn't irrelevant, because the D.C. Circuit did look to it in its opinion.
However, it's _indirectly_ relevant.

If you start at the last paragraph of page 45 of the opinion:
[http://www.cadc.uscourts.gov/internet/opinions.nsf/3AF8B4D93...](http://www.cadc.uscourts.gov/internet/opinions.nsf/3AF8B4D938CDEEA685257C6000532062/$file/11-1355-1474943.pdf)
you can see that the court is interpreting the _statutory_ definition of
"common carrier." Specifically the phrase: "A telecommunications carrier shall
be treated as a common carrier under this Act only to the extent that it is
engaged in providing telecommunications services.” 47 U.S.C. § 153(51).
"Common carrier under this Act" essentially refers to Title II of the
Telecommunications Act of 1934.

On page 47, the court notes that: "Offering little guidance as to the meaning
of the term 'common carrier,' the Communications Act defines that phrase,
somewhat circularly, as 'any person engaged as a common carrier for hire.' 47
U.S.C. § 153(11). Courts and the Commission have therefore resorted to the
common law to come up with a satisfactory definition."

In other words, there are two definitions of "common carrier," one in the
statute and one at common law, and because the one in the statute is
underdefined, the court looks to the common law definition. But they are still
separate definitions. 'snowwrestler said: "I don't think the rural telephone
surcharge is a necessary component of common carrier. For example railroads
are all common carriers and they are under no duty to run rail lines to every
single community in the U.S."

The fact that the D.C. Circuit looked to the common law definition of "common
carrier" to elucidate the statutory definition does not mean that the
statutory definition cannot carry an independent set of obligations, different
from the common law definition. Clear as mud?

~~~
legutierr
You write about these two regimes (telephony and cable/internet) as if their
separate existence is inviolate. In today's world, where voice is often just
another application running on top of IP, the existence of two regimes seems
backwards, enshrining a century-old technology (POTS) that already starting to
disappear.

If we as a society don't want to impose a requirement that rural communities
be connected to the nation's essential communication infrastructure, then let
that be the case; let's get rid of the requirement and rethink the whole
thing. But if we as a society believe that rural areas _should_ have access to
the country's communication infrastructure, then we should change the
requirement that service be provided via a 19th century technology. In the
21st century, isn't it just as bad for Internet access to be expensive and
slow, as it was 80 years ago for telephone access to be expensive or
unavailable? Standards have changed.

It seems to me that (specific legalities of the decision aside) you are
focusing too much on the technical aspects of common carrier status, and not
enough on the underlying policy objectives of that regulation. If universal
service regulation is to have any relevance today, it should align itself with
the reality of modern communications technology (where access to the Internet,
not telephone networks, is what matters), and with what it means today to be
"connected".

A "universal service" policy that ignores the fact that TCP/IP-based broadband
Internet has replaced telephony as the essential communication technology is
just a farce.

~~~
dragonwriter
> A "universal service" policy that ignores the fact that TCP/IP-based
> broadband Internet has replaced telephony as the essential communication
> technology is just a farce.

It is also not an accurate description of the _status quo_ : the grandparent
post talks a lot about the 1996 Telecommunications Act and its supposed
foundations, but doesn't understand:

1) The distinction between "telecommunication services" and "information
services" that controls where common carrier regulation can be applied, from
that Act, or

2) The fact that the 1996 Telecommunications Act eliminated the "separate
buckets" treatment of phone and other services for universal service,
promoting universal service for access to "advanced telecommunication and
information services" not just telephone service.

3) The fact that reforms to the regulations of the Universal Service Fund
following and based on the 1996 Telecommunications Act mean that it is now
used not just for telephone but also broadband access, demonstrating that --
whether or note ISPs are defined as "telecommunications service" providers
subject to common carrier regulations and whether or not open internet / net
neutrality rules are adopted -- broadband is already moving substantively into
the same "bucket" as telephone service.

~~~
rayiner
I was using USF as an example of the onerous, misguided sort of program that
is imposed on telecommunication service providers regulated under Title II. I
wasn't trying to imply that _only_ telecommunication service providers can be
subject to USF fees (frankly, I was trying to punt on explaining the
distinction because in practice voice providers are subject to USF fees but
broadband providers are _not_ subject to those fees). The fact that USF money
is now being used for broadband doesn't change the fact that internet service
is not subject to the tax. Moreover, while classification as an information
provider doesn't prevent internet providers from being subject to USF fees,
classification as telecommunications providers would pave the way for them to
be taxed.

------
zxcvvcxz
Not the point of the article, but is anyone else annoyed by these
"entrepreneur-sounding" ideas? I'm so sick of low-tech, solve-first-world-
problem ideas and conflating that with entrepreneurship. If I were the VC, I'd
tell them to get the fuck out, and it'd have nothing to do with Telcos.

~~~
josefresco
You missed the point. The author was choosing startup ideas that compete with
entrenched entities that are also potentially data-intensive. I don't think
the ideas themselves were supposed to be judged, just that they fit a loose
model of ideas that would be almost impossible to fund/execute without net
neutrality.

~~~
prostoalex
He's right in the sense that all ideas were copying something out of big
companies' playbook and were a hard sell to consumers who were sensitive to
mobile data pricing.

What if the idea was around instant video conferencing with on-demand doctor
or a lawyer? Would interested parties still be concerned about the
(additional) cost of a data plan?

~~~
001sky
_Would interested parties still be concerned about the (additional) cost_

Yes. This is the whole point. The telcos' will extract rents from any
profitable biz model. The more profitable, the larger the extracted rents will
be. The net result is that, if people feel that the value they are creating
will be expropriated by a third party on poor terms, those services will never
make it beyond the cocktail napkin stage. And if...the founders are still
optimistic and willing to let this happen...the VCs are not likely to play
along...knowing what will predictably happen. As long as either of those two
factors is in play, the economy ultimately will suffer in the sense that those
services will "never happen" if people take that approach. Or, at least that's
the argument if I understand correctly.

------
OoTheNigerian
The issue of Net neutrality is a global phenomenon/risk. Telcos in Nigeria
abuse their positions as the primary carrier of data and they are protected by
having 'licenses'

MTN and Rocket Internet recently tied a deal. I wrote about the risk here

[http://oonwoye.com/2013/12/17/mtn-rocket-internet-deal-
worri...](http://oonwoye.com/2013/12/17/mtn-rocket-internet-deal-worries-me/)

------
antr
I'd like to believe that many European entrepreneurs will reconsider going to
the US to start a company. The European Parliament and the Commission have
been straight shooters with net neutrality and they will not consent telcos to
play with the pipes.

~~~
eloisant
Still, if you're located in Europe but want to target the US audience as well
(a huge market), you're going to be affected anyway.

~~~
antr
Yes, but it's rarely the case. US startups don't target any other places
outside the US at first. The friction to start is in the US not in Europe.

~~~
troels
I don't think that's true. Most consumer focused startups will target the US
market, even if within the EU. It's by far the largest homogenous (well,
relatively) market. Targeting "Europe" isn't really a thing - You have to
target each country individually.

------
avighnay
The blog places its argument on the basis that data plan cost is going to be
high. Would this be the case in the future? What if data plan costs are that
negligible that it does not matter?

Secondly, compare this to TV networks, consumers watch TV and pay for them
too, a part of the cost is subsidized by advertisers who are willing to pay
the network to reach the audience. The consumers are in that network only
because of the content, remove the content providers or reduce the quality of
the content then the consumer vanishes. An empty network is worth nothing.

Would telcos, not harm themselves and their whole data plan business by
attempting to charge the content providers (Google et al) and would the
content providers 'advertising model' margins justify paying out to the telcos
just to get through their infrastructure?

------
mwsherman
Here’s the problem: what AT&T is doing does not violate any technical
definition of net neutrality, unless we ad hoc append new parts to it.

This is the core problem of net neutrality arguments, which it is often
defined as ‘I know it when I see it’. It amounts to principles, but if we are
going to have an enforceable law, we need to do better than that.

AT&T is not offering any priority to any bits here. Nothing is being blocked
or degraded. Content providers who pay for sponsored data do not get faster
bits nor do they slow down anyone else’s.

It’s free shipping: [http://clipperhouse.com/2008/06/03/the-long-game-on-
metered-...](http://clipperhouse.com/2008/06/03/the-long-game-on-metered-
pricing-free-shipping/)

Now, I can understand objecting to it on its merits, and Fred is making that
argument, which is great. And I can understand why it _feels_ like a violation
of net neutrality, but we need to do better than feelings.

Here’s how we test whether we’re defining net neutrality ad hoc: show me a
clear, specific, widely accepted definition of net neutrality that describes
AT&T’s behavior here, and that _existed before this behavior was publicized_.

------
anovikov
Scary thing, this is same thing that created Rockfeller-era monopolies: they
had right and did pay railways to create preferences (price-wise and
otherwise) for their traffic, literally derailing competition. Internet is the
bloodline of the post-industrial economy just like railways were of industrial
one. That is much worse than most of you think.

------
ankitml
Facebook already does this in india. I remember seeing an advertisement of a
telco that said you wont be charged for data for facebook. Does this means
that India already had this non neutral internet? It didn't change the
scenario much here.

~~~
suhailpatel
I remember here in the UK, Three (a UK mobile network operator) allowed for
free access to Facebook. This was before the days of the iPhone though and it
took you to a stripped down mobile site.

~~~
rahimnathwani
Three also offered free access to Skype. It used (uses?) a Three-specific
Skype client (available for many, but not all, models of phone) to do the
presence and signalling over data, and the voice over the normal mobile voice
channel:

[https://support.skype.com/en/faq/fa10976/how-can-i-get-
skype...](https://support.skype.com/en/faq/fa10976/how-can-i-get-skype-for-
my-3-phone)

To protect revenue, SkypeIn was blocked, and SkypeOut was restricted to non-UK
numbers.

------
exelius
Most VCs would pass on these ideas regardless. They're all in mature,
saturated markets. One of the signs of a mature, saturated market is that the
incumbents have taken great lengths to create barriers to entry that are very
high. This is a discouraging thing for VC investment because it increases the
chances that a new entrant will fail.

Besides, you've had to pay for access for years. The big difference is that
before, you had to go through a CDN like Level3 or Akamai. Part of what you
paid them went to the ISPs to ensure fast connections. All this means is that
the YouTubes of the world will begin to buy interconnects with the big ISPs.
Small ISPs will likely just band together into a cartel and sell access that
way.

Yeah, there will be a fast lane and a slow lane, but the advent of CDNs in the
early 2000s already created that anyway. The data caps are disappointing, but
not really unexpected if you look at the mobile market. We're reaching the
point where in many major cities, there is no media consumption that requires
a much faster connection than is already available. So why will consumers pay
for more speed when their existing 50mbps cable modem is enough to stream 4k
video from Netflix? Those speeds ARE possible today if you buy carriage
through a CDN like Akamai (and I regularly get those speeds from Steam
downloads) and the fact that Netflix hasn't is really more of an implication
of their business model.

The most recent ruling really changes nothing, because net neutrality has been
dead for 10 years anyway. While everyone on the internet was complaining about
it, the business side moved on and built a few billion dollar companies around
it. Capitalism at its finest.

~~~
ericb
And if pay to play had been in place when Google debuted against
Lycos/Altavista? If we were stuck with that old search tech today, we'd be
_suffering._

------
badman_ting
Yes, current giants are going to continue consolidating and buying up
businesses and amassing power. In America we used to have ways of dealing with
monopolies but that is now passé -- we don't like the government "punishing"
successful businesses (in the same way that taxes "punish" the rich). A lot of
times I feel like something very bad will have to happen for things to change.
Until then, hey.

------
mathattack
I get that this is an issue, but I'm a little curious why AT&T's stock price
didn't pop as a result.

[http://finance.yahoo.com/echarts?s=T+Interactive#symbol=t;ra...](http://finance.yahoo.com/echarts?s=T+Interactive#symbol=t;range=1y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;)

------
rexreed
While I hate the loss of Net Neutrality as much as the next person (as long as
that next person isn't one of the incumbent carriers), this is the sort of
thing that happens frequently in other markets. You want to see entrenched
competition? Try launching a company in the Cleantech markets or in certain
hardware or biotech or healthcare fields. Big pocket incumbents regularly flex
their muscles here.

The loss of net neutrality is bad from many perspectives, but to be honest,
there will ALWAYS be opportunities for startups and entrepreneurs in the space
and VCs will not be want for good ones. All this does is shake out many ideas
in favor of other ones.

I don't see why the VCs have reason to panic. And while I understand the
Entrepreneur ideas were straw men utilized to illustrate a point, the quality
of these ideas are pretty low. Maybe we should see the silver lining on this
dark cloud in that it will shake out some of these deals from being funded
when they probably shouldn't be anyways.

------
andrewescott
There seems to be an assumption in the original argument that not every
company will be able to get access to sponsored data, e.g.

> Well since Spotify, Beats, and Apple have paid all

> the telcos so that their services are free on the mobile

> networks, we are concerned that new music services like

> yours will have a hard time getting new users to use them

> because the data plan is so expensive

If a new music service could make a deal with telcos so that their service is
free too, wouldn't this problem go away? In other words, if sponsored data was
open to all, does this address the concern described?

The real concern seems to be that the cost base of a new service will go up
because it will be forced to pay for sponsored data in order to compete, and
VCs aren't happy about having to cover increased costs of their portfolio
companies.

A similar argument could have been made about CDNs. Because the big services
use CDNs to provide a better service, startups have to pay to use CDNs also in
order to compete, and hence their costs are higher.

------
napoleond
So basically it will become even harder for startups to disrupt the
established players. Until a disruptive telco comes along and everyone
switches to them, while also learning an important lesson about net
neutrality. Maybe the whole thing will even cause society to re-think the way
we allocate access to the internet and cellular networks.

(A man can dream!)

------
n00b101
Entrepreneur: I plan to launch a better [XYZ] hosted on Amazon AWS.

VC: Well since Amazon has paid all the telcos so that services delivered
through AWS "telco-optimized elastic IPs" can be free on data plans, all you
have to do is include Amazon's surcharges in your business plan.

------
prolifically
I hear him, Internet could become a caste system for businesses. But from what
I understood, the ruling was more about the FCC trying to bend rules to
accomodate everyone with carrier types (common carrier?). Yesterday's ruling
raised awareness but the game is far from over.

------
crgt
A friend of mine was part of the team that made the decision for UHC to
participate in AT&T's new sponsored data program. When I found this out, I
tried to point out the broader implications of a shift towards pay-to-play,
but had trouble getting past the narrow vision of "but we just want to get our
content out to people that can't pay for mobile bandwidth". Just wanted to say
thanks for this article for demonstrating what some of the implications are of
a shift to a pay-to-play model. Non-techies really seem to struggle to get
their heads around what happens to the entire ecosystem if net neutrality
dies, and articles like this are helpful for making the consequences clearer.

------
dzink
I am watching the reactions of non-technical people after they hear how this
latest Net Non-Neutrality development affects them. Some are saying "Google,
Apple, and the other big guys will step in for us". Others reply that when gas
prices jumped to $3 everyone cried out and legislators started shuffling, yet
we are now paying $4 and being thankful. Unless the outcry gets bigger this is
going to pass through the cracks.

Do any of the big tech companies really have an interest in stopping this
development? They could afford to buy themselves an "unrestricted by cap" deal
with internet distributors and suffocate every other potential competitor?

------
BrownBuffalo
What's interesting are the comments below the post about Net Noot. The problem
really comes less about the fact that traffic shaping may not occur, but there
are no safe guards if someone attempts to do so. In smaller markets, its more
and more sounding like a small cottage industry will start because of the lack
of existing laws to protect the consumer. The larger markets will have power
in numbers, but mom-pop towns like Marion, AL with only a small regionarl
carrier - not so much. Problematic and there is SOME truth to this in scale of
economy.

------
SethMurphy
While I agree with his premise, there are already industries that used to be
startup focused where there is a gatekeeper. E-commerce has Amazon,
advertising has Google (and possibly Facebook), which already destroy new
startups before they really get started through this same VC mindset. It seems
to me that the balance of power is just moving up the line a bit to industries
where VC's have little to no power to influence.

~~~
rhizome
In what way(s) is Amazon a "gatekeeper" to e-commerce?

~~~
SethMurphy
Maybe I didn't word it properly. It is in the sense that VC's say, well Amazon
could do that too, we'll have to pass. They are more of a gate that does not
open.

------
josefresco
Forget net neutrality, doesn't this reality already exist when you factor in
data caps? Most of these startup ideas use a fair amount of data which is now
being capped more often than it has in the past.

I may be alone in my worry that as we move to capped data plans, and the pay-
per-bit model that many new ideas and concepts (say for example always
connected appliances) won't be financially feasible for consumers.

------
delinka
So someone should plan to launch a VPN service that will pay telcos so its
traffic doesn't use any of its customers' data plans. Configure the mobile
device to route all data via the VPN, encrypted. It'll charge its customers
for access to unlimited apps, sites and streams without incurring a data plan
hit.

~~~
talkingquickly
Myself and some guys with a telecoms background spoke to various telcos about
that ~2 years ago. Feedback was that they were already so over stretched with
data usage they weren't going to embark on any projects likely to increase it
until there had been a lot of network upgrades. May have changed since then
though.

~~~
gtirloni
I think the biggest risk in doing this for a VPN service is that the usage is
impracticable given its nature and secrecy.

With services like Facebook, Twitter, etc, the telcos know more or less what
they can expect in average data usage from users (and plan/charge
accordingly).

~~~
delinka
I don't follow. The VPN provider will still have to insist on limits, because
the telco will insist on limits. It's not like Facebook is automatically
unlimited, it's just limited to what Facebook is willing to pay for its users.
It becomes Facebook's problem to understand data usage by its users and its
apps and to pay accordingly (or not pay, and let the data start counting once
the user is past the 'Facebook limit.')

Therefore, a VPN provider will be in the same position. So instead of paying
AT&T for your data plan, you're basically paying the VPN people for your data
plan plus privacy from AT&T.

------
codingdave
I get the point you are trying to make, but it wasn't presented in a way that
non-tech folk will appreciate.

My parents' reaction to your scenarios would be something akin to: "Really?
For the monthly rate I'm already paying, I now get Netflix and Hulu included
for free? NICE!"

~~~
ricardobeat
If your parents were reading a VC blog, they'd get it.

------
hackaflocka
Bandwidth isn't free. The universal all-you-can-eat model is very unfair to
the bandwidth supplier.

Either customers will need to be charged by meter.

Or producers will need to pay by meter.

It's only capitalism.

By the way, why can't the VC say, "we love your idea, and we'll front the
money you need to pay the telcos."?

~~~
rhizome
What if the telcos won't allow anybody else to pay?

~~~
hackaflocka
Agreed, regulations can address this.

------
thejosh
Australia has been doing this for years for mobile data plans. Even though
data plans aren't as expensive as they use to be, Facebook, Twitter,
Foursquare, eBay, LinkedIn & MySpace are all "free" on the Optus network.

~~~
gz5
interesting. do you know if they are paying Optus? does Optus have competition
in major Australia markets?

~~~
ecdavis
Optus is one of several major mobile telcos in Australia. Telstra also offers
free Facebook, IIRC.

I'm not sure whether FB is paying Optus/Telstra, but I would think so.

------
dredmorbius
This is the best possible thing that could happen.

Perhaps we'd see startups aimed at building out solar capacity, grid-scale
storage solutions, electricity-to-fuels solutions, solar-powered airships,
high-efficiency wind-steam hybrid shipping, high-efficiency retrofits to
existing building stock, and management or treatment for TDR-TB, rather than
an endless stream of privacy-invading "social" surveilices, games, and new
forms of intrusive and annoying advertising.

Though building out an alternet that bypasses the telco's "authorized"
channels wouldn't hurt either. Mesh and darknets.

Get cracking, HN!

~~~
sehr
Most of the startup community is aimed towards web-centric ideas for obvious
reasons -- the gateway to entry is incredibly low. This doesn't mesh well with
hardware, and only puts more reliance upon VC's.

~~~
dredmorbius
_Most of the startup community is aimed towards web-centric ideas for obvious
reasons_

Yes, and that's pretty much part of the problem.

I've commented before on how Kleiner Perkins' failure in cleantech is really
sobering:

[https://news.ycombinator.com/item?id=6997397](https://news.ycombinator.com/item?id=6997397)

Actually, there was a whole post on the topic I seam to have missed "The Rent-
Seeking Economy"

[https://news.ycombinator.com/item?id=5548730](https://news.ycombinator.com/item?id=5548730)

Source article: "Great Problems: The Rent-seeking Economy"
[http://intellectual-detox.com/2013/04/14/rent-seeking-
econom...](http://intellectual-detox.com/2013/04/14/rent-seeking-economy/)
(Devin Finbarr)

I see financialization, increasing advertising focus (much of which is
supported by ... wait for it ... the FIRE industries[1], and "software eats
everything", all as elements of catabolic collapse[2]. They're extracting
_financial_ value from the economy and transferring that _financial_ wealth,
which changes who _holds_ real physical wealth, but doesn't much increase it.

Finbarr's blog piece explores this in much greater detail.

The focus of Silicon Valley over the past decade and more on ephemera and
trivialities is very much part of the problem. The fact that the only
remunerative opportunities for talent are in the FIRE and social / advertising
/ gaming industries is _not_ a good thing. And the fact that even VC with long
track records of success in technological application fail when trying to
operate in the Greentech / alternative space is should be read as
_exceptionally_ cautionary.

Yes, there's good news out there. Elon Musk is doing fascinating things with
Tesla. Solar is absolutely exploding -- in the past two years, solar
generation in the US hasn't merely increased, hasn't doubled, but is up _seven
times_ [3]. That's a rate of growth which, if sustained, would have solar
being _half_ of all electric generation within a decade. I'm skeptical that
the rate of growth _can_ continue, but even if it moderates significantly,
doubling times of a year or two can grow a small base hugely, and we need all
the help here we can get.

But I really wish that the hacker community would pull its collective head out
of its collective ass on occasion and look around at what problems _should_ be
solved. And a choking off of the backbone for new trivial ventures really
could be a powerful refocusing mechanism, all snark aside.

______________________________

Notes:

1\. "What Are The 20 Most Expensive Keyword Categories In Google AdWords?"
[http://techcrunch.com/2011/07/18/most-expensive-google-
adwor...](http://techcrunch.com/2011/07/18/most-expensive-google-adwords-
keywords/)

2\. "How Civilizations Fall: A Theory of Catabolic Collapse"
[http://www.indiana.edu/~workshop/colloquia/materials/papers/...](http://www.indiana.edu/~workshop/colloquia/materials/papers/masters_abstract.pdf)

3\. EIA: "Table 7.2a Electricity Net Generation: Total (All Sectors)"
[http://www.eia.gov/totalenergy/data/monthly/pdf/sec7_5.pdf](http://www.eia.gov/totalenergy/data/monthly/pdf/sec7_5.pdf)

------
neovive
I guess this makes open city WiFi networks much more compelling. In most urban
areas, how often are people not within range of a WiFi network?

------
tarr11
I guess we need a chrome extension to uuencode your next social network over
FB status updates.

------
orenbarzilai
imho in the near future most countries will have unlimited data plans or
similar, so this argument will be irrelevant.

------
excitom
Well, I'm no fan of losing net neutrality but if the _worst_ thing that
happens is that lame VC pitches are no longer funded, I'm OK with it.

