Proposed Internet access rules could hurt Miami tech community

A proposal passed Thursday by the FCC could allow companies to pay for priority access on the Internet. Miami tech startups fear the move could stymy growth but the FCC chairman says the new system contains safeguards.

05/16/2014 12:00 AM

05/15/2014 11:16 PM

In the wake of a Federal Communications Commission vote Thursday to establish new net neutrality rules, South Florida tech startups sounded off against an uneven competitive field that could be debilitating for their businesses and stymy the region’s growing tech sector.

Under the new rules, backed by FCC Chairman Tom Wheeler, Internet companies would be able to pay Internet service providers to prioritize traffic to their sites, affecting net neutrality – the concept that Internet traffic should be treated equally.

In a 3-2 vote the FCC agreed to forward the plan and begin four months of public comments before shaping the final rules. Wheeler has said he wants the rules in place by the end of this year.

But Miami tech startups fear that the new rules will quell innovation. Under the new rules, established brands with thick wallets could feasibly pay for high speed delivery, leaving start-ups stuck at the tolls.

“The whole ability of startups to have Internet access is what let Google and Facebook flourish,” said Nabyl Charania, managing director of Rokk3r Labs, a Miami Beach portfolio company that helps tech startups enter the market.

Under the new rules, Charania said, a company that is making a similar or better product to one out of Silicon Valley can find itself in the “slow lane,” unable to pay the expenses of a fast Internet connection that would put its product on the same playing field as those from companies that can afford the charges.

“You lose the game before you even start,” Charania said.

The additional delivery costs could be especially difficult for a burgeoning tech community like Miami, where companies already face a shortage of investment capital.

“Because Miami is already somewhat sparse in its funding landscape, it’ll be harder for startups to get off the ground,” said Brian Breslin, a web entrepreneur and co-director of Refresh Miami, the largest technology networking organization in South Florida.

As executive vice president of FastFiBR, a tech startup focused on bringing high-speed Internet to South Florida, Breslin is concerned about how the new rules will affect a business that is based entirely on high bandwidth.

On a broader scale, some Miami investors are concerned the new rules could drastically change the future of communication.

Joseph Ricard, founder of music app Tunebash and president of Miami-based Development Capital Group, which invests in and develops tech startups, said he expects investors to pull back from video streaming applications that don’t go through major companies. Initiatives such as online learning also might be negatively affected.

The rule change, he said, “can completely kill a whole industry.”

Some others in the local investment community are less concerned.

The ruling “is not an earthquake,” said Rhys Williams, president and co-founder of New World Angels entrepreneur investment group in Boca Raton.

“As Miami goes, there’s such a huge groundswell of entrepreneurial talent, novel technology and market investment capital that Miami will quickly overcome this additional obstacle,” Williams said. “People are not going to shut their doors. They’re not going to quit.”

The FCC proposal has triggered outrage among public interest groups, online activists and many liberals with a plan that would for the first time allow the possibility of so-called pay-for-priority deals.

A previous set of rules adopted in 2010 was struck down by an appeals court in January after Verizon challenged them. The FCC says the revised regulations now under consideration follow the blueprint set forth by that court decision.

The commission also will consider the possibility of defining Internet service providers as “common carriers,” like telephone companies, which are subject to greater regulation than Internet providers, under Title II of the Communications Act of 1934. If the FCC adopts the common carrier option, then Internet service providers would be required to treat all traffic on their networks equally, just as telephone companies have had to do on their lines for decades.

Wheeler said that the new plan has been misconstrued and that it would not allow broadband providers to block any legal content or slow down connections in a way that is commercially unreasonable.

Still, one of the commission’s two Democrats, Jessica Rosenworcel, who voted for the new rules, criticized the process as rushed.

“I support network neutrality,” she said. “But I believe the process that got us to this rule-making today is flawed. I would have preferred a delay. I think we moved too fast to be fair.”

The announcement comes a week after eMerge Americas Techweek, Miami’s biggest homegrown tech conference, drew more than 6,000 and helped place South Florida on the tech-talk radar.

Rokk3r Labs’ Charania, who attended, said he was concerned the new rules could erode advances made at the conference.

“I think it should be made [into] a rallying cry for all startup innovators in Miami,” he said. “If we don’t get together and do something about this, we are shooting ourselves in the foot.”

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