How would the end of net neutrality impact retail?

Discussion
Nov 27, 2017
Tom Ryan

The Federal Communications Commission (FCC) announced plans last week to roll back net neutrality rules that require internet service providers (ISPs) to provide open access to their networks for all digital content.

The rules, initially put in place by the Bush administration in 2005 and later formalized by the Obama administration in 2015, prevent ISPs from charging customers extra fees for high-quality streaming and other services. ISPs are also prohibited from favoring certain sites by slowing or stopping content delivery at others.

In a statement, Republican FCC Chair Ajit Pai said the current “heavy-handed, utility-style regulations” have “depressed” investments in expanding broadband networks and innovation by ISPs. His proposal promises to bring back the “light-touch regulatory approach” established by the Clinton administration and a Republican Congress.

Mr. Pai’s draft order will require ISPs and telecom companies to be transparent about their offerings instead of being regulated by the FCC.

The telecom titans such as Comcast, Verizon and AT&T have said the rules prevent them from offering customers a wider selection of services at higher and lower price points. They have also argued that data-gobblers like Netflix and Amazon.com should have to pay more for the disproportionately high bandwidth they use.

Twitter, Amazon, Facebook, Google, Reddit, Netflix, Airbnb and Spotify have all protested the changes. In an unregulated internet, they argue, ISPs would wield too much control over how and what users see by charging extra for faster speeds.

Some see the internet is a modern communication method and, as such, restricting access a free speech issue. Smaller companies in particular are expected to be challenged competing against larger players such as Netflix or Amazon that would be able to absorb any increase in fees or have the leverage to become part of bundled packages.

In an open letter to the FCC, a group made up of 1,000 small businesses from around the U.S. wrote: “Without net neutrality, the incumbents who provide access to the internet would be able to pick winners or losers in the market.”

The Republican-controlled FCC is likely to vote 3-2 along party lines in favor of the plan at its regular monthly meeting in December.

DISCUSSION QUESTIONS: Should both large and smaller players in the retail industry be protesting or supporting the potential repeal of net neutrality rules? How might a repeal impact how retailers and brands sell and reach customers on the internet?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The potential repeal of net neutrality rules will not only have a negative impact on the entire retail industry, but also commerce in general."
"[Net neutrality] is un-American, anti-freedom, badly designed, poorly implemented, has unintended consequences and ultimately is entirely unnecessary."
"Comcast, Verizon, AT&T and other providers will become middlemen — expect to pay a cut of your online sales in exchange for access to your consumers."

Join the Discussion!

29 Comments on "How would the end of net neutrality impact retail?"


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Mark Ryski
BrainTrust

All players in the retail industry should be opposed to the proposed repeal of net neutrality. Net neutrality enables all retailers to play on a level playing field and by eliminating this, the largest players like Amazon and Walmart will have an even greater advantage over most every other retailer. While the impact on retail will be significant, the repeal of net neutrality has consequences to virtually every aspect of how we use the Internet. I strongly agree that this proposal will put far too much power in the hands of ISPs to control what has become an essential service.

Seth Nagle
BrainTrust

Great point Mark. Additionally, as digital continues to grow and defines its place in the market, the last thing retailers need to worry about is their ISP and incurring more costs to their digital budgets.

Brandon Rael
BrainTrust

I could not agree more, Mark. Once the democratization of the net is eliminated, we will become a society that is literally counting the MBs they are using by the hour, day and week, which would have such a significant impact as to how we interact online.

Very concerning, to say the least!

Cathy Hotka
BrainTrust

Ninety-eight percent of Americans support net neutrality. This proposed FCC action gives ISPs the power to control what consumers see and do on the Internet by favoring certain content or blocking it altogether. Brands and retailers alike should be alarmed, and should visit http://www.gofccyourself.com to comment. It’s hard to imagine that this basic right is endangered, but it is, and good people will have to step up.

Dave Bruno
BrainTrust

I could not agree more, Cathy. Well said and well supported … all retailers (and consumers) who believe in a level playing field for all should actively and vociferously oppose the proposed change.

Paula Rosenblum
BrainTrust

Whether they would actually block content or not, I can just see consumers counting their available megabytes (as I did after the hurricane down in Miami when I was using a cell modem) and choosing to watch a TV show instead. This is potentially awful for retailers and consumers alike.

Max Goldberg
Guest

Everyone and every business should be protesting the GOP’s repeal of the net neutrality rules. The repeal will effectively put control of the Internet in the U.S. in the hands of a few ISPs. The Internet has become a basic communication utility, like phone service, and should be regulated as such.

Brandon Rael
BrainTrust

The potential repeal of net neutrality rules will not only have a negative impact on the entire retail industry, but also commerce in general. All of the benefits of a level playing field of the online marketplace would be removed, and only the dominant commerce goliaths, such as Amazon, Walmart, and others, would be able to survive and thrive, as they have the ability to absorb the incremental costs.

Smaller, entrepreneurial digital companies would be hard-pressed to compete in this new paradigm, and it could have a stifling impact on small businesses who have an online presence as well. Our economy would also be impacted by this repeal, and the consequences could be broad reaching, beyond just the retail industry.

Gene Detroyer
BrainTrust

“Should both large and smaller players in the retail industry be protesting or supporting the potential repeal of net neutrality rules?” How about if everyone protests. Not only does this give greater power to the large users like Amazon and Walmart, it discourages new ideas and entrepreneurs from using the internet to develop new businesses. I think it is ironic that the commentary suggested that the heavy users will be charged more. Since when do we charge our best customers more? The reality is that the heavy users will get discounts while the light users will pay a premium.

Shawn Harris
BrainTrust

A repeal of net neutrality would lead to “tolls” on the Internet, which will find their way to the consumer’s pocket. It is management’s role to maximize value for shareholders, and due to personal incentives they often have only a near-term view. Undoubtedly, ISPs will want to tap into the revenue streams of Amazon, Facebook, Google, Reddit, Netflix, Airbnb, Spotify, et al.

In the pursuit of value, ISPs could establish comparable services for free. However, if a consumer wishes to access competitive sites and services an ISP could charge consumers similarly to how they charge for content today (e.g. “online shopping fee” or “social media fee” or “music streaming fee”), block services, or otherwise degrade the experience. ISPs could selectively charge service providers to gain access to customers as well.

If repealed, I think this will also lead to great competition for the ISPs as certainly the larger Internet companies will start to move more aggressively into the space. Facebook and Google already have land-based and air-based Internet service offerings.

Lee Peterson
BrainTrust

Like so many things this year, I just don’t get it. Retailers should go in blazing about this. Good news for Spectrum and others, but everyone else? Baffling.

Zel Bianco
BrainTrust

Stupid, unfair and counterproductive. We cannot let this happen. Walmart, Amazon and any other major player must be on the side of an even playing field or retail and many other industries will suffer the consequences and it will not be pretty.

Cynthia Holcomb
BrainTrust

Let’s see. Comcast, Verizon and AT&T say “the RULES prevent them from offering customers a wider selection of services at HIGHER and lower price points.” Are you kidding me? Reflect upon the past 20 years of nightmare customer experience and customer service with these three telecoms? Oh sure, “Mr. Pai’s draft order will require ISPs and telecom companies to be “TRANSPARENT” instead of being regulated by the FCC.” Talk about “suspending disbelief!” Have we learned nothing from the past?

A repeal lets the monsters out of their cages, gobbling up the net neutrality we all enjoy, making it unaffordable for many retailers to compete. STOP the mind-boggling suspension of disbelief. Or find an the internet run by corporations with unlimited access to wealth.

Ken Cassar
BrainTrust
Ken Cassar
Principal, Cassarco Strategy & Analytic Consultants
2 years 8 months ago

Imagine if the highways were privately owned and the owner had the right to deny trucks owned by certain companies from using the highway, or to relegate them to lanes filled with traffic and potholes. While the “Internet as superhighway” metaphor may be beaten to death, it is entirely appropriate here. One might hope that the cable companies wouldn’t abuse their power and only, as they say, charge more for super-fast content delivery. The reality, though, is that these companies are monopolies, the result of government subsidization and protection, which will focus first, second and third on their bottom line. They are not going to be satisfied using their newfound power to extract a little bit of extra revenue from online powers such as Netflix, Google and Amazon.

Camille P. Schuster, PhD.
BrainTrust

This is a terrible move that will only lead to preferred providers, extra costs to consumers and more fine print passing as transparency. Everyone should be up in arms about this.

Neil Saunders
BrainTrust
There are so many myths and erroneous assumptions about this; it is hard to know where to begin! The starting point has to be the issue of free speech. Regardless of anything else, this is not a free speech issue. The right to free speech does not equate to the right to be given a microphone, soapbox, an internet connection, bandwidth or anything else that someone has to provide. Those things can only be obtained via voluntary contract and consent. The second issue is that net neutrality assumes that internet infrastructure is a monopoly. In reality, it isn’t. There are a plethora of providers and a whole host of ways in which connections are made and maintained — from server farms to private peering to multihoming. This fluidity means no one player can dominate, impose unreasonable prices or restrict services. As such, the system is self-governing and doesn’t need excessive regulation. The third assumption is a view that, somehow, providers can discriminate without consequence. Ultimately, providers have to answer to customers too. If Comcast decided… Read more »
Ricardo Belmar
BrainTrust

While these are all good points, it assumes an ideal competitive scenario when it comes to ISP services for consumers. Unfortunately, there are many regions around the country where there is very little to no choice for consumer ISP services. I happen to live in one where apart from the cable company provider there are no other viable choices (yes there are alternatives, but they only provide low speed access compared to the 50-100 Mbps cable service which makes them unusable). For consumers in areas like mine, we are at the mercy of the provider. If they choose to create more “options” by offering us more high priced services, we have no where to go. This isn’t a unique situation and it’s amazing that we could have anyone in the FCC that has learned nothing from the past two decades of ISP consumer services.

Neil Saunders
BrainTrust
I quite agree that many areas have poor connectivity and a lack of choice. I have a holiday home in rural Vermont where it’s either Fairpoint (very unreliable) or connecting via an AT&T mobile hotspot. That’s OK for vacation time, but it’s terrible for a permanent residence! However, net neutrality is not the solution to this; in fact, it is part of the problem. After the regulations were introduced there was a 6% decline in broadband network investment — the first ever decline outside of a recessionary period. The brunt of those declines was in rural areas where returns are more marginal. A further perverse incentive of net neutrality is to threaten potential solutions from mobile carriers, which are often a lifeline for rural households that lack good fixed line connections. T-mobile’s unlimited plans — which in no way shape or form are bad for consumers — have come under investigation and fire because they happen to throttle some types of data (restrictions which are made clear to consumers). That’s just dumb, it’s regulating a… Read more »
Ricardo Belmar
BrainTrust
Regarding regulations, we can agree there can be more harm than good here, but not from net neutrality. Going back to my example, I live in a heavily populated, suburban area, yet as I mentioned, we have only one practical choice. There are thousands of possible subscribers just in my community if only the telcos invested here. Net neutrality isn’t holding them back. They would make plenty of money here, however, these licenses are governed by local governments who hold the keys, not the FCC. My county consists of very large, sparsely populated rural areas, and heavily populated suburban pockets. The county refuses to grant licenses to any provider who does not agree to cover the entire county with services. As a result, only Comcast is available and we are at their mercy — every time they introduce a new service tier (which they have done under net neutrality at least 5 times if not more) they automatically “upgrade” you if you are at the current highest tier without notice. They certainly haven’t been restricted… Read more »
Peter Luff
Guest

What a shocker! The internet has always been positioned as a leveller, freedom of access to information for all. Effectively the information being provided, be it entertainment, knowledge or retail will only come from the businesses the ISP decide can meet their cost model. We know that will only be a limited big few, this means for the consumer the choice will shrink of where they take their feeds from.

This reminds me of George Orwell’s book, Animal Farm, everyone was equal until some manipulated their position to be more equal than others!

ISPs and the Goliaths in this space will be in a position to dominate everything the Western world sees. Hugely frightening — fight it all the way!

Ralph Jacobson
BrainTrust

The key to this issue is balance. Balancing an open, unrestricted internet versus offering the smaller players to compete on a level playing field with the giants. I think there’s some good reason to support the current regulations, while a repeal would certainly benefit the largest entities, but would most likely restrict unbiased competition.

Adrian Weidmann
BrainTrust

Rolling back net neutrality is yet another thinly veiled excuse to empower the telecom titans to create further tiers of services and charge for access to a system that was funded by American taxpayers. It’s another way for the rich to become a lot richer while allowing the corporate and wealthy elite to control information and communication. History has taught us that any time a select few selectively control information flow to the populace, we all suffer. It will be interesting to find out how our current President and his minions have their financial interests in these telecoms … rest assured, they do!

Craig Sundstrom
Guest

Without any particular tech background, I, and others like me I imagine, are left to our default answer: (assuming) anything this Administration proposes and/or favored by telecoms is bad for people; hardly the way I like to approach issues, but there you have it.

And I don’t think anyone really knows what the impact will be, since there will likely me a wide gulf between what is possible and what will actually take place (both good and bad). Nor is it terribly useful to simply look at the “before” picture, two decades ago … the Pleistocene of the Internet Age.

William Hogben
Guest

Comcast, Verizon, AT&T and other providers will become middlemen — expect to pay a cut of your online sales in exchange for access to your consumers.

Brian Kelly
Guest
2 years 8 months ago

All retailers should protest. Net neutrality protects against “pay to play” — ISPs charging more for a more dominant presence, thereby allowing digital titans to dominate. How else does retail protect itself against Facebook, Google, Apple and Amazon, who are all looking for opportunities to get a leg up on bandwidth? See Scott Galloway’s “The Four.”

One question: Where does the NRF stand?

Ricardo Belmar
BrainTrust
Everyone associated with the retail industry, from consumers to major brands should stand together in opposition to the repeal of net neutrality rules. This has been the only thing keeping the closest to a level playing field as the industry will get, allowing retailers and brands, big and small, equal access to their consumers. To say that “data-gobblers” like Netflix should pay more than others is un-American to say the least, equivalent to penalizing them for their success with consumers! If the telco providers were to create these “low-cost” options they claim, would you see equal access to Netflix and small content providers alike? Probably not — given they would more likely strike content deals with a Netflix or other large provider at the expense of smaller ones. When have ISPs had consumers’ best interests at heart? The end result will be that retailers will end up paying more to access their own customers with the content they’ve been asked to provide that ISPs and telcos want to block, or at the very least take… Read more »
Chuck Palmer
BrainTrust

Everyone should be working to protest the proposed repeal of net neutrality. Everyone.

As for retail, I worry this polarizes e-commerce and squeezes out mid-sized and smaller brands and retailers. I can only see this as limiting choice and innovation.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
2 years 8 months ago

At the risk of being attacked … I am not up in arms about this issue. Mark Cuban observed last week that he’s not opposed to Net Neutrality but concerned that NN managed by the FTC is not going to have the result that the Net Neutrality proponents hope for. (I’m also skeptical that we’re being drawn into a fight between self-interested behemoths on both sides — Google, Amazon, and Netflix match Verizon, AT&T and Comcast in their zest for self interest.)

It’s a stretch for me to believe that ecom will suffer from this battle. The critical reality is that services like Netflix consume HUGE proportions of web bandwidth and retailers should be most concerned about that.

My advice to retailers is that they have far more important issues to fight — like having good, interesting, innovative product mixes displayed in stores people want to visit at prices where they make profit and supported by advertising that drives foot traffic.

Ken Morris
BrainTrust
Ken Morris
Retail industry thought leader
2 years 8 months ago

Everybody should be protesting the potential repeal of net neutrality rules. The only companies that have something to gain from this are the Internet providers like Comcast, Verizon and AT&T.

This would be horrible for retailers and consumers, as it would open the doors for Internet providers to charge exorbitant rates for Internet services. It will also make it cost prohibitive for start-up companies that offer data intensive services. Without data neutrality, we would not have witnessed the rise of companies like Facebook or Netflix. It would be the end of the world as we know it and would stifle the creativity that has made us the tech powerhouse we are today.

wpDiscuz
Braintrust
"The potential repeal of net neutrality rules will not only have a negative impact on the entire retail industry, but also commerce in general."
"[Net neutrality] is un-American, anti-freedom, badly designed, poorly implemented, has unintended consequences and ultimately is entirely unnecessary."
"Comcast, Verizon, AT&T and other providers will become middlemen — expect to pay a cut of your online sales in exchange for access to your consumers."

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