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January 15, 2014

Neutrality will be the web’s Outsourcing moment.

Over the past more than a decade, there has been a debate over whether outsourcing of jobs overseas is a good or bad economic move.  The debate rages from both a macro economic perspective and from the way decisions should be made within a business.  Crucially, does outsourcing drive economic value.

Neutrality will be the same issue for the web.  Just as no one knows whether outsourcing truly creates additional value, no one is going to know whether discarding neutrality principles will create additional value.

The reason that there is a debate is because each involves non-measurable trade-offs.  Outsourcing separates corporate economics from national economics.  Additionally, outsourcing changes he economic balance by changing the mentality around products – how they are designed, built and marketed.  This trade-off may lead to better per unit product costs but are the total revenues and margins lower than they otherwise would be?  That’s the unknown.

Neutrality principles drive the same issue.  The common belief is that as we leave a world of net neutrality there will be less business innovation and competition on the web.  Non-neutral providers are going to change the dynamics of the marketplace.  So, for those providers, are they increasing or decreasing their organizational effectiveness (it goes without saying that it will likely look good on paper, the question is last opportunities).  And for the macro economy, does those companies leaving neutrality add to or detract from overall economic growth.

It’s going to be interesting to see all of this play out.  Personally I hope that neutrality wins out as I believe the network effects created by neutrality are tremendously beneficial.  But we’ll have some early tests it appears.

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