The net neutrality controversy came to a head last week when the Federal Communications Commission (FCC) repealed the Obama-era open internet regulations following a meeting on Dec. 14. These protections required broadband internet providers to offer equal web access without added fees for preferential treatment or higher speeds. The net neutrality rollback won in a 3-2 vote under party lines led by FCC Republican Commissioner Chairman Ajit Pai.
The repeal has been contested by the real estate industry, consumers and Democrat lawmakers, who sought to keep streaming and internet service provider (ISP) choice in consumers’ court.
What Is Net Neutrality? Also known as “open internet” or “internet freedom,” net neutrality is a set of regulations enacted by the Obama Administration in 2015 that protects against the misuse of internet data by ISPs such as Comcast, Verizon and AT&T. These regulations maintained that providers could not use consumers’ streaming data against them to block competitor’s pages, force them to use specific services and visit specific websites, and/or increase prices by imposing additional costs for “package deals.”
Removing these protections opens the door to tiered service from ISPs. Tier one, or the “fast lane,” would allow businesses to buy into preferential treatment and faster speeds to their websites. Meanwhile, tier two companies (most likely small businesses who can’t afford to pay higher fees) would suffer slower internet speeds or even blocked pages. Without these protections, all of these business practices would be considered legal, as long as ISPs post their policies online or report them to the FCC.
With the rollback, the FCC is restoring the framework implemented before 2015, which featured a “light-touch” philosophy when it comes to FTC involvement.
“In particular, the FCC’s action…has restored the jurisdiction of the Federal Trade Commission (FTC) to act when broadband providers engage in anticompetitive, unfair or deceptive acts or practices,” according to an FCC statement that followed the rollback announcement. “The framework adopted by the Commission…will protect consumers at far less cost to investment than the prior rigid and wide-ranging utility rules. And restoring a favorable climate for network investment is key to closing the digital divide, spurring competition and innovation that benefits consumers.”
How Will This Impact Real Estate? While the FCC maintains that this rollback will not affect how the internet is used, consumers are concerned that ISPs will take advantage by imposing added charges, obstructing their open internet rights and forcing them to sign up with ISP-specific streaming services, versus allowing them to subscribe to a competitor.
When it comes to real estate, brokers and agents are currently on a level playing field on the internet. With this repeal, high-earning brokerages may be able to pay for preferential treatment, creating an unfair advantage against small real estate businesses. This can also affect the visibility of certain MLSs, trickling down to consumers who may not want to list with a brokerage that doesn’t offer internet advantages.
Larger companies may also be able to create exclusive deals with certain companies to showcase their websites and block competitors’. Not only would this affect the consumer experience, but it could also impact marketing efforts. Independent brokerages could suffer if their marketing is hindered by slow internet speeds to their pages. Brokerages may also end up paying more for their internet if ISPs decide to go the cable route, charging higher fees for services and eventually changing to an à la carte platform that charges according to service packages (i.e., social media, streaming services, etc.)
The National Association of REALTORS® (NAR) has been challenging the proposed repeal since July, citing internet as critical to the success of the real estate industry, especially with new technology—such as mobile apps, drone photography and virtual reality—that requires open internet access. After the FCC’s announcement of the rollback, NAR released the following statement:
“The internet as we know it today is a fair and open platform that puts everyone on a level playing field,” said NAR President Elizabeth Mendenhall. “FCC’s rollback of the Open Internet Order will mean higher costs and slower service for millions of American consumers and businesses. REALTORS® have strong concerns about what that might mean for the way consumers search for homes online and real estate is transacted.
“The last thing small businesses need today is additional costs and competitive disadvantages that put them on the defensive. This isn’t just an issue for Silicon Valley or large telecommunications shops; this is a main street concern that affects businesses and consumers across the country. We intend to make our voice heard on this important issue.”
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