Why retailers should care about net neutrality

The internet we are all familiar with is an open market -- the “open internet.” In a guaranteed open internet, which has existed de facto since the internet's beginning, carriers are barred from slowing down content like websites or streaming media. But in April, the Federal Communications Commission said it was looking at new rules that would allow internet providers to create fast lanes for companies that pay more. 

There is controversy about whether the FCC’s proposed rules would violate the established tenet of the open internet, known as “net neutrality” -- a term coined by Columbia law professor Tim Wu.

The FCC is in the midst of taking comments about its rules for 60 days until July. In a comedic though informative segment, comedian John Oliver last month urged internet commenters to stop trolling about stupid things, and let the commission know about the importance of its rule on the issue. While that has garnered a good amount of flaming, retailers may, in all seriousness, want to join them with their own comments.

First, though, here's a quick primer on net neutrality and its importance to retailers.

Early days of net neutrality

The FCC has grappled with net neutrality since at least the 1990s, well before the broad use of the internet known today. In 1999, Harvard law professor Lawrence Lessig gave a speech in which he compared the architecture of the internet to that of telecommunications. In it he seems to clearly understand the value of the open internet as it was emerging. The World Wide Web, he said, was designed to keep users and ideas in power, where in telecommunications the phone companies (the providers of internet service then) had the power to discriminate. 

“Innovation can flourish because an architecture promises neutrality. Innovation can flourish because the code remains open, and that open code assures neutrality,” Lessign said. “Innovation can flourish because the code decentralizes it; because it is not vested in the hands of a committee, as in AT&T, or even the hands of a genius, as in Microsoft; it is vested through an architecture in the millions who might innovate, develop, and expand this platform of the Net."

The FCC says it’s in favor of net neutrality

The FCC has largely left the internet unregulated, relying on some telecommunications law and general precedent to keep access open. With internet speeds increasing in the 21st century, President George W. Bush’s administration attempted to tighten regulations; under President Barack Obama the FCC has tried to pin down the rules that would guarantee net neutrality. This attempt led to a lawsuit won by Verizon, which challenged the FCC’s claims that existing rules allowed it to write these net neutrality rules. 

The FCC says the proposed rules, unveiled in May, would still prevent internet providers from slowing data; that it would protect the open internet. Yet they would also allow those providers to charge extra for faster service, known as fast lanes. 

Essentials of the rules mean that the FCC would continue the 2010 regulation that bars internet providers from blocking access to certain content. But it would add a provision allowing content providers (websites, streaming services, etc.) higher-speed access. And the new rules would bar only “commercially unreasonable” practices when internet providers treat content differently. Currently the rule prohibits “unreasonably discriminating” among content providers. 

Clearly, these are legal and regulatory definitions that include many fine points and room for argument. Part of that problem comes from the fact that some of the FCC regulation of the internet derives from old law, some as far back as the 1930s that governed telephone companies, or even earlier, at the time of the telegraph.

In the Verizon lawsuit, a federal court in January struck down some of the FCC’s existing rules, sending the commission off to establish new regulations that would pass muster. In fact, some observers are scratching their heads because some of the proposals by the FCC don’t seem to address that court case. 

Bottom line? To net neutrality activists, creating fast lanes also creates slow lanes, and that, to them, is the beginning of the end of net neutrality, if not the end itself.

The importance of net neutrality for retailers

While this mess that is net neutrality and the question of where it is going may not be at the top of many retailers’ concerns, it likely should be

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.

Indeed, what’s at stake, says Brian Kilcourse, managing partner at Retail Systems Research, is customer satisfaction, something that, at the end of the day, every retailer promises.


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Top Image Credit: flickr: tpower1978