REPEALED! What does the latest Net Neutrality verdict mean for e-comm?
In June, “net neutrality” rules and regulations were officially repealed.
Net neutrality was implemented in 2015 in order equalize the playing field on the internet by requiring all service providers to offer equal access to all data, regardless of content, platform and target audience. The recent repeal of this decision raised concerns by many companies, consumers, and elected officials across the country. Without equal access required by law, could companies use finances or other influence to dictate who sees what?
Outside of the telecom companies (AT&T, Verizon, Comcast, etc.) who control the “airwaves,” who really won with this decision? The answer is likely “no one.” The recent trend of internet service providers (ISP) companies joining together through mergers and acquisitions means that fewer companies control more of the internet. Among Internet users, there’s an undercurrent of fear that a small number of corporate monoliths now control the entire World Wide Web; as of now, it doesn’t seem that there are a lot of checks and balances to the process.
The keepers of the gates
So who controls what? What is owned by whom? Here’s a breakdown of the new slate of “owners” of the Internet.
- AT&T owns cellular, home broadband and telecommunication. They have merged with Time Warner and DirectTV.
- Comcast owns its own cable TV, broadband and some cell service along with NBC Universal.
- Verizon owns wired and wireless broadband, Fios TV, AOL, Yahoo, HuffPost and other online brands.
Providing happiness…for some
What do these internet providers say about the situation, now that the rules restricting them from showing favoritism to certain websites and adjusting their cost structure to reflect that are extinct?
Simply put, large providers are happy with the decision. The general consensus of ISPs the same as that of the FCC: the ruling does away with unnecessary, heavy-handed regulations and replaces them with common-sense regulations that will promote investment and broadband deployment.
In a way, it’s understandable that the ISPs are happy. They have more control now. This ruling has opened the door for these providers to block websites/apps, slow site speed down on content they don’t want on their networks (e.g., Netflix, YouTube, etc.) and create a “fast lane” available at a higher price. A fast lane is related directly to the speed content gets to consumers and businesses. Every online marketplace and e-commerce website we use in the U.S. today has a valid reason to be concerned.
Couldas and wouldas for e-comm
So how will this unregulated free-for-all impact e-commerce marketplaces? As mentioned above, ISPs could charge consumers higher prices to have access to Amazon or even charge an extra fee for the “speed” at which Amazon operates. It doesn’t mean they will. But whatever they decide to do would also apply to other marketplaces like Walmart, eBay, Jet, etc. For the small- to medium-sized businesses who rely on sites like these for their livelihood, this could mean losing sales and customers. When a customer must pay extra for a site to run faster or even to have access to a site, they will start looking for another source from which to purchase their favorite, or even switch products all together. Presumably, the larger companies with a presence on these marketplaces can afford to pay these ISP companies the premium that they may start requiring in order for the brands to retain their current customers. But even they might be affected.
Online? Out of luck!
This repeal will also impact an e-commerce business’s regular website. For some time, e-commerce sites have relied on paid prioritization including pay per click and digital ads, among strategies. These sites have also relied on SEO to rank organically, but this could be another area targeted by the ISPs. This could mean a business’s e-commerce site would run slower and that the content could be regulated to a point where their sales or traffic could decrease significantly. Unless they submitted to the ISP’s demands. Again, we don’t know what will happen. But we do know that money talks.
But it isn’t a total free-for-all for the big ISPs. They’ll be monitored. Which could also be bad news! According to CNN, “In the absence of a firm ban on these actions, providers will be required to publicly disclose any instance of blocking, throttling or paid prioritization. It will then be evaluated based on whether or not the activity is anti-competitive.” The FTC will be governing body to help make these decisions. This could open the door for providers to use “transparency” as a tool to throttle speeds and filter content as long as they are open with the public about it.
It ain’t over till it’s over
There is, however, some hope. The Senate is still strongly interested in preserving net neutrality on a federal level and are coordinating with the House of Representatives on this issue. At the time this was published, there was no resolution between the two houses. The predictions from a variety of political analysts that they’ll be able to create a mutually agreeable plan aren’t looking promising, though. On a local level, 20 states have filed suit to halt the net neutrality repeal. Some states have even started to enforce net neutrality inside their state borders.
With all of the unknown factors of what these ISPs will do, how does a customer or business prepare for an uncertain online future?
- Risk Analysis: The first step is to conduct a risk analysis identifying a variety of scenarios, and what a contingency plan looks like.
- ISP Budget Plan: Plan for an upcharge with your ISP on your monthly or annual payment. Take a look at your contract very carefully to ensure there is no fine print allowing the ISP to raise your rates even if you were guaranteed a fixed rate.
- Marketplaces Budget Plan: In addition to preparing for an ISP to increase your monthly payment so you get a “faster” speed, prepare for an upcharge to have access to each marketplace website as a customer. Don’t forget to include the backend platform you use to control all your content on with these marketplaces.
- Cost Reallocation: Think about how you will redirect your business cost structure if you are putting more money to these ISPs and paying for access to marketplaces. A possible strategy may be to re-evaluate prices to distributors, marketplaces, and in the worst case, consumers (MSRP).
- Customer Location: If your company can’t afford a single “big” ISP, take a deep dive into where your customers are located, and determine the largest internet service provider in each area. This will help validate your decision on the ISP to choose if you can’t afford to be partnered with all three.
- API Evaluation: Evaluate who you are connected to through API. These API connections may go away depending on how the ISP will charge for your connections to these sources (i.e., social media, e-commerce marketplaces, automation tools, AI tools, etc.).
- Brand focus: What has helped distinguish yourself in years past? What’s currently working? How do you capitalize on this?
Fight for your right
There is quite a bit of unknown territory to be explored here. For more information, or if you’re concerned about the repeal, contact your local and federal representatives early and often.