Thursday, Nov. 23, 2017 | 5:45 a.m.
David Callicott needs to be online to run his small company, GoodLight Natural Candles in San Francisco.
Dozens of orders from wholesale customers like Whole Foods and Bed Bath & Beyond are relayed online each day to fulfillment warehouses, which send out Callicott’s paraffin-free candles. The GoodLight website accounts for 15 percent of its sales, which could reach $1.5 million this year; the e-commerce behemoth Amazon makes up another 10 percent. And many of the company’s business documents are stored in cloud-based data centers.
But the costs of doing business on the internet may be about to rise.
A proposal Tuesday by the Federal Communications Commission would undo so-called net neutrality rules that barred high-speed internet service providers from adjusting website delivery speeds and charging customers extra for access.
Without those regulations, GoodLight and other smaller businesses fear they may not have a level digital playing field to compete against deep-pocketed industry giants that could pay to get an edge online.
“For such an analog product, we’re heavily reliant on the digital world and the internet for our day-to-day operations,” said Callicott, who helped found the company nearly eight years ago and now works with three other full-time employees. “The internet, the speed of it, our entire business revolves around that.”
The regulations, established by the FCC in 2015, have heavyweights on both sides of the debate. Internet giants like Google and Amazon say that net neutrality preserves free speech; telecom titans like AT&T and Verizon warn that the existing rules put a chokehold on free-market commerce. In a blog post Tuesday, Comcast’s chief executive, David N. Watson, wrote that his company “does not and will not block, throttle, or discriminate against lawful content.”
Internet service providers say that the proposal would lead to a better variety of services for online customers and more innovation in the industry.
For small businesses, a rollback could fundamentally change how, and whether, they do business. Many started online or turned to e-commerce to expand their thin margins.
“Things are already difficult enough as it is for a small businesses,” Callicott said. “You’re busy enough just keeping your company running, trying to grow and succeed or just stay alive, that you don’t have the resources or the time to contemplate how to prepare for something like this.”
In the United States, 99.7 percent of all businesses have fewer than 500 employees, according to government statistics. Of those, nearly 80 percent, or more than 23 million enterprises, are one-person operations.
More than a quarter of small firms said they planned to expand their e-commerce platforms in 2017, according to the National Small Business Association.
In August, the American Sustainable Business Council and other small business groups published an open letter to the FCC on behalf of more than 500 small businesses the country. Weakening or undoing net neutrality protections would be “disastrous” for U.S. businesses, according to the letter.
“The open internet has made it possible for us to rely on a free market where each of us has the chance to bring our best business ideas to the world without interference or seeking permission from any gatekeeper first,” the groups wrote.
Many entrepreneurs worried that, without net neutrality provisions, internet providers would wield their increased power to control how businesses reach consumers.
Online consumers are a demanding crowd. Research from a Google subsidiary suggested that visitors who have to wait more than 3 seconds for a mobile site to load will abandon their search 53 percent of the time.
Critics of the FCC proposal say internet service providers could manipulate traffic speeds to establish a “fast lane” of sorts or cap or block access to certain sites, charging fees to lift the restrictions. Small enterprises would struggle to pay, leaving them at a commercial disadvantage, they said.
Independent contractors like Clayton Cowles, who works in upstate New York, could also be vulnerable.
Cowles draws the text for comic book publishers including Marvel, DC and Image, and has worked on Batman, Star Wars and other popular series.
Each month, he pays Spectrum, his internet service provider, $90.70 for the company’s most powerful service package, which is supposed to allow him to send enormous digital documents within seconds. Instead, his files sometimes take 15 minutes to be delivered, he said.
A more deeply deregulated Spectrum is one of his “greatest fears,” he said.
“They pretty much have a monopoly,” he said. “I’m stuck with them.”
Changes in net neutrality regulations could also affect the freelancers, franchisees and temporary workers who earn a living doing piecemeal work in the so-called gig economy. Nearly a quarter of U.S. adults made money last year using digital platforms to take on a job or a task, selling something online or renting out their properties using a home-sharing site like Airbnb, according to the Pew Research Center.
A pay-for-play internet system could also be problematic for Codecademy, an education company founded in 2011. Its services include courses on tech-related subjects like data analysis, website design and coding language — all conducted online.
But Zach Sims, the company’s chief executive, said that students, many of whom are aspiring entrepreneurs, would suffer most.
“They’ll perceive it as an unfair playing field,” he said. “As every industry is upended by tech, the barrier to entry is knowing what technology is and how to implement it, but this adds another level of confusion, making the hurdle even higher for normal businesses to participate.”
