Beforethe

FederalCommunicationsCommission

IntheMatterof )
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ProtectingandPromotingthe
OpenInternet

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GNDocket1428

CommentsofYCombinator

July14,2014

AlexisOhanian
YCombinator
335PioneerWay
MountainView,CA94041

FederalCommunicationsCommission
44512thStreet,SW
WashingtonD.C.20554

July14,2014

Re:OpenInternetRemand,GNDocket1428

DearChairmanWheelerandCommissionersClyburn,Rosenworcel,Pai,andORielly:

YCombinatorisSiliconValleyspremiereearlystageinvestor.YCombinatorhasbeeninvesting
inearlystagestartupssince2005andnowhasaportfolioofover700companiesvaluedatover
$20billionandcreatingover3,000jobsatquicklygrowingcompanies,manyofwhomare
aggressivelyhiring.YCombinatorwasanearlyinvestorinDropbox,Airbnb,Stripe,Scribd,
Heroku,Pebble,Twitch,Loopt,WePay,Crowdtilt,Teespring,Codecademy,Hipmunk,Coinbase,
Cloudkick,Wufoo,ZenPayroll,SocialCam,Parse,andreddit.

TheNewYorkTimescalledYCombinatorSiliconValleysStartupMachinetheTimesalso
describedYCombinatorsdemodays,whereourearlystagecompaniespresenttheirproducts
andservicesto450oftheworldsrichestandmostinfluentialtechnologyinvestorsasa
biannualmilestone,SiliconValleysversionoftheN.F.L.ScoutingCombine.Wewerethe
subjectofabookbytheTimessformerDigitalDomaincolumnist,TheLaunchPad,inwhich
EricRiescalledusanationaltreasure,aSiliconValleyseedfundthatismassproducingnew
startups,andMarcAndreessendeclaredwewerethewhitehotcenterofthenewSiliconValley
startupecosystem.WithinSiliconValley,receivingfundingfromYCombinatoroftencarries
morecredibilitythanadegreefromHarvardorStanford.Wereceivethousandsofapplications
fromcompaniesforfewerthan60investmentsanacceptanceratelowerthananyofthe
nationstopuniversities.

IwasluckyenoughtobeintheveryfirstroundofYCombinatorsinvestmentsandcreated
reddit.comwithmycollegeroommateSteveHuffman.Weweretworecentcollegegraduates
withnoconnectionsand$12,000infunding,raisedfromYCombinator,buildingsomethingfrom
apairofcomputersinasmallrentedapartmentinMedford,MA.Todayredditisatop50website
withover110millionmonthlyuniquevisitorsmoretrafficthanCNN.comorNYTimes.com.We
livedtheAmericanDreamthankstotheopeninternetandtodayImapartneratYCombinator.

How?Theworldisntflatbuttheworldwidewebis.Itmustremainthatway.

WeneedtheFCCtokeepthelevelplayingfieldthatletmeandsomanyotherssucceedas
entrepreneurs.Thereasonsomuchinnovationandwealthcreationhashappenedintechover
thelastdecadeisthatanyAmericanwithherlaptopandInternetconnectioncouldbuildastartup
andcompetewithincumbents(andevenbeatthem)withoutateamoflawyersandwithouta
largebudgettopayforpriorityfromISPs.

Letmebeclear:weneedabrightline,perseruleagainstdiscrimination,accessfees,andpaid
prioritizationonbothmobileandfixed.

TitleIIoftheCommunicationsActseemsthemostappropriatewaytoproperlydefinebroadband
ISPstobeofferingtelecommunications.SpeakingonbehalfofYCombinator,Imurgingyouto
adoptsucharule.

Theruleyouhaveproposed,basedonSection706oftheTelecommunicationsActof1996,
wouldnotsuffice.WeknowSection706cannotsupportaruleagainstdiscrimination,access
fees,andpaidprioritizationbecausetheappellatecourtinVerizonv.FCCruledonthese
matters.TheCourtwrote:WethinkitobviousthattheCommissionwouldviolatethe
CommunicationsActwereittoregulatebroadbandprovidersascommoncarriers.Giventhe
Commissionsstillbindingdecisiontoclassifybroadbandprovidersnotasprovidersof
telecommunicationsservices[underTitleII]butinsteadasprovidersofinformationservices,
suchtreatmentwouldviolatetheAct.TheCourtheldthat,absentreclassifyingbroadband
providersasTitleIIcarriers,theFCCwouldbetreatingbroadbandprovidersascommon
carriersunlessitleftopenroomforsubstantialroomforindividualizedbargainingand
discriminationinterms.

Therefore,theFCCcannotimposeanondiscriminationruleunlessitclassifiesbroadband
providersunderTitleII.TheCourtalsoheldthat,withoutclassifyingbroadbandprovidersunder
TitleII,theFCCcouldnotbanchargingfeesforpriorityaccess,eventhoughtheFCC
recognizedsuchfeeswouldbeasignificantdeparturefromhistoricalandcurrentpractice.The
FCCcouldnotbansuchfeeswithoutTitleIIbecausebanningthefeeswouldleavenoroomat
allforindividualizedbargaininganddiscrimination,whichisnecessaryunderSection706.The
Courtsimplycouldnthavebeenclearer:solongastheFCCrefusestoclassifybroadband
providersastelecommunicationsservicesunderTitleII,theFCCcannotbanISPstechnical
discrimination,accessfees,orpaidprioritization.

WhiletheChairmanhassoughttoprotectinnovationthroughacommercialreasonableness
testandaminimumserviceguarantee,unfortunatelyneitherwouldprovidestartupsanyrelief.
NostartuphasthefundsandlawyersandeconomiststotakeonbilliondollarISPsinanFCC
actionbasedonthevaguelegalstandardsintheproposal.Indeed,thestartupecosystemneeds
abrightline,perseruleagainstdiscriminationratherthanamultipart,
totalityofthecircumstancesstandardwithacasebycaseapproachorevenamere
presumptionagainstdiscrimination.Anythinglesswouldcauseconsiderableuncertaintyfor
entrepreneursandinvestorsandprovidelittlecomfort,asstartupsandsmallbusinessesare
resourceconstrainedandneedtoknowthataccesstotheInternetwillremainneutral,asithas
beeninthepast.

And,evenwithaccesstoatleastminimumservice(oftenmetaphoricallyreferredtoasaslow
lane),startupswouldstruggletocompeteagainstthosewhowereabletoaffordpayingfora