I am glad to see the net neutrality debate raging.  As Union Square Ventures and on our personal blogs (AVC, Continuations) we have long been proponents of net neutrality (the USV link is from 2006!).  Our own bias here is clear: we are pro-startup and pro-innovation.  Both are of course essential to the venture capital business, but we believe they are also the lifeblood of the economy.  Surprisingly, a lot of people who argue against net neutrality don’t seem to make the connection to innovation and startups at all.  That is even more surprising when the criticism comes from someone like Henry Blodget who is clearly the beneficiary of the level playing field provided by net neutrality.

As for the Google-Verizon proposal, my partner Brad has done a terrific job pointing out two of the key problems.  I want to go a step further though.  Much as I am glad that Google has been a proponent of some aspects of net neutrality, Google is no longer a startup itself!  Google’s ability to cross-subsidize new markets from its amazing core business poses a potential threat to innovation that I have written about before.  This access to nearly limitless funds is especially important to keep in mind when looking at net neutrality.

Because there are a lot of subtleties once one drills down, it is easy to lose sight of the most basic principle that net neutrality is trying to achieve: the ability for innovative startups to deliver their content and services on a level playing field with incumbents.  It is easy to forget this because we have actually de facto had net neutrality, which is what has allowed the creation and rise of services and companies such as Google in the first place. It is hard to argue that the Internet has not unleashed a torrent of innovation that has hugely benefited endusers (at the cost of disrupting some existing businesses).  Net neutrality is all about codifying this existing state of the Internet and preventing a distorted playing field that favors incumbents.