As the most isolated archipelago on Earth, Hawaii has long had a challenging economic riddle to solve: How does a group of remote islands in the middle of the Pacific participate in today’s global economy? The answer has depended on Hawaii’s ability to connect with the world through technology.
How we embrace, foster and export homegrown technology in the coming decades could redefine Hawaii’s economy for the millennium. This is why net neutrality is so vital to Hawaii and its ability to compete on a global scale. It’s also why recent efforts in Washington, D.C., to end net neutrality and shift gatekeeper control to large internet service providers (ISPs) have local startups concerned about their ability to compete.
Net neutrality has governed the internet for nearly two decades, leveling the playing field for everyone. Under its principles, any website, blog or software has equal access to the internet. Whether it’s a streaming service or an online class, internet content can’t be blocked, throttled or prioritized by an ISP. Consumers pay for access to the entire internet, not tiered services.
In 2015, net neutrality principles were strengthened, helping to democratize the internet further, giving rise to streaming services that saved consumers money and offering them access to the music and videos they love. It also grew cloud migration for businesses a whopping 38 percent, saving startups thousands on server fees. Factor in the added efficiency gained through online software, and net neutrality has helped drastically lower the cost and time it takes to start a business.
Fueled by an open internet, the world of innovation is at an exciting point in time. Hawaii has witnessed an explosion of activity in its innovation ecosystem, with four nationally recognized venture accelerator programs — XLR8UH, GVS Transmedia Accelerator, Blue Startups and Elemental Excelerator — that have deployed millions of dollars into scalable ventures and technologies. A December 2016 report by Sultan Ventures showed that between 2012 and 2016, Hawaii’s accelerators funded 145 startups, which generated about $250 million in capital, and created more than a thousand new jobs.
The growth our startups have seen over the last decade has been dependent on our ability to access an open internet. Net neutrality has allowed local companies to grow and reach new markets without relocating. Not only has this created new jobs and revenue opportunities for Hawaii, but it also has delivered exponential value to consumers around the world who now have access to the unique products and services Hawaii has to offer.
Due to the Federal Communications Commission’s about-face on net neutrality in December, all of Hawaii’s valuable ideas and economic contributions — from clean energy solutions to songs written in university dorm rooms — are at risk of being withheld from the world. Without an open internet, ISPs will be able to pick and choose the winners online. Streamers and cloud companies will be forced to pay higher interconnection fees. The internet will no longer foster an environment where innovation is supported. Paid prioritization will favor established companies who can afford a fast lane, squashing startups in the process.
While the FCC argues that ISP transparency requirements could replace net neutrality, the fact is, consumers are held hostage by an oligopoly of ISPs. About 89 percent of Americans have only one or two choices of internet providers. Without choices, consumers suffer.
The ISPs claim net neutrality rules hurt investment in broadband networks. However, one look at their financial reporting tells a different story. Of all the publicly-traded ISPs in the U.S., not one has ever told investors or the Security Exchange Commission that net neutrality had a negative impact on its investments.
The good news: Our elected officials can lead the fight to save net neutrality and stop FCC regulators from ending the internet as we know it. The internet is not only an engine of economic growth, it’s also an open forum for democracy. In addition to closing the divide between mega-corporations and innovative startups, net neutrality embodies the core American tenet that anyone who works hard can succeed.
Ideas are powerful things, and the internet is the bridge to the ideas and innovations of the future. Without net neutrality, Hawaii’s bright economic future is at risk.
by Tarik Sultan, managing partner at Sultan Ventures based in Honolulu.