Obama’s Net Neutrality Support Boosts $1.3 Trillion Industry

Barack Obama’s surprising support for net neutrality could help boost internet startup innovation, causing the online market to more than double in value by 2020.

Obama said earlier this week that the Federal Communications Commission should reclassify the internet as a Title II utility. Such a move would prohibit broadband providers from distinguishing between different types of data services, and restricting or slowing down access for some services over others.

Barack Obama’s surprising support for net neutrality could help boost internet startup innovation, causing the online market to more than double in value by 2020.

Obama said earlier this week that the Federal Communications Commission should reclassify the internet as a Title II utility. Such a move would prohibit broadband providers from distinguishing between different types of data services, and restricting or slowing down access for some services over others.

A new study by IDC, a market research firm, shows that the internet-connected marketplace is likely to grow to over $3 trillion by 2020, up from $1.3 trillion currently. IDC believes the internet of things market will grow at a compound annual growth rate of 13% over the next five years.

According to IDC Senior Vice President Vernon Turner, the internet of things ecosystem will involve complex and overlapping revenue streams that will be dependent upon cross-corporate and international partnerships. “The opportunities presented by IoT are driving widespread attention among both traditional and non-traditional ICT vendors looking to take advantage of emerging revenue opportunities,” Turney said. Carrie MacGillivray, VP of IoT and Mobile Service & Infrastructure for IDC notes that the internet-connected “market will rely on partnerships, federation, and innovative services to create truly valuable IoT solutions.”

Obama: “No Blocking, no Throttling”

President Obama said in his speech that internet service providers should not be allowed “to restrict the best access or to pick winners and losers in the online marketplace for services and ideas,” adding that he wants the FCC to implement “common-sense steps” to keep the internet from being limited by providers.

The four focuses of Obama’s speech aim to keep internet access open to all content producers and distributors. The rules will make it illegal for ISPs to block content from a particular website or service. Additionally, ISPs cannot throttle or slow down one service intentionally and they cannot ask content producers or distributors to pay a fee to have those throttles removed or lessened. Likewise, Obama asked the FCC to “make full use of the transparency authorities the court recently upheld” to ensure cooperation amongst American ISPs.

Net Neutrality to Boost Startups

Spark Labs CEO Zach Supalla told Bloomberg in an interview that the net neutrality would help startups, because it will make it impossible for big companies to slow down access to newer, smaller companies. One concern expressed by technology analysts was that smaller startups would be unable to afford paying for fast lane service, which would hinder innovation in the market.

Prior to Obama’s comments, analysts had worried that broadband companies like Comcast Corporation would limit access to more competing data services after rumors surfaced that ISPs were throttling competitors’ content. Earlier this year, Netflix offered to pay Comcast and Verizon to keep both internet service providers from throttling Netflix streams, which both companies had been intentionally slowing to discourage users from using the service.

Both Comcast and Verizon saw their stock prices slide on the news of Obama’s support for net neutrality. Netflix and Google rose on the news.