What Does the Net Neutrality Ruling Mean For Retailers?
By Christine Kern, contributing writer
e-commerce giant Amazon favors the ruling, but opponents say they will fight in court
The FCC has ruled in support of Net Neutrality, meaning that Web traffic for all users will be treated equally and denying the creation of so-called “fast lanes” of access for a higher fee. Supporters cheer the move as one that will preserve a wide-open Internet, while opponents have vowed to fight the decision in legal battles.
The move by the Federal Communications Commission prohibits providers from blocking or slowing certain online traffic or from offering faster services in return for fees, and, for the first time, it brings wireless Internet service fully under federal regulation as a utility.
The FCC passed the move in a 3-2 vote that was broken down by political party lines, upholding a position held by the Obama administration and fervently opposed by cable and telephone carriers, who believe that the move is one step towards rate regulation.
An earlier set of net neutrality rules was passed by the FCC in 2010 but was voided by a federal appeals court, and the debate raged on.
"Net neutrality only bans the idea of slow lanes and fast lanes, which is an incremental amount of revenue," Columbia Law School Professor Tim Wu, who coined the term "net neutrality," told CNBC. "And yes, so on the margin, there's a tiny bit of revenue that might be lost but the main income just comes from the regular business model."
One retailer, however, supports the move. "Amazon welcomes action to protect net neutrality—the fundamental openness of the Internet—which has been so beneficial to consumers and innovation," says Paul Misener, Amazon vice president of global public policy, according to the L.A. Times.
AT&T has vowed to challenge the new net neutrality measure in court.
Netflix, in a statement, called the FCC vote "an important step toward ensuring greater consumer choice."
"These actions kick off a new era that puts the consumer, not litigious corporate giants, at the center of competition policy," Netflix said.
Although many smaller retailers seem not to be paying much attention to the issue, indicating the vote will have no immediate impact on their businesses or planning, ultimately it could have an impact on their marketing and branding via social media and other internet venues.
As Retail Dive pointed out last June, “If the internet has different speed lanes, advertisers could benefit if ads are seen as a way to pay for the added expense of fast lanes that brands may be forced to employ. Content-rich sites are also increasingly an effective way to engage customers, while slow websites are an irritation. Retailers should be very much invested in an open internet.”
And ultimately, Brian Kilcourse, managing partner at Retail Systems Research, concludes, what is at stake is customer satisfaction, something that must be central to every retailer’s game plans.