How Could New Net Neutrality Rules Affect Your Wholesale or Distribution Business?

There’s no doubt you’ve noticed the internet is abuzz with the news on net neutrality — the Federal Communications Commission voted on Dec. 14 to scrap Obama-era net neutrality rules that prevented internet service providers (ISPs) from slowing sites or demanding payments from them for fast delivery. Net neutrality rules also prohibited ISPs from blocking websites, charging for higher-quality service, and charging for certain content. The vote also declared that the federal government will no longer regulate high-speed internet as if it were a utility, like phone service. Rather, oversight and investigation into any unethical practices of ISPs will fall on the Federal Trade Commission.

SalesPad explains how the repeal of net neutrality laws affects wholesale, distribution businesses

A boiled-down way of explaining net neutrality regulations is that the rules essentially prohibited ISPs from interfering with a visitor’s connection to a website in any way.

While there have been several predictions that any significant changes to consumers’ online experience won’t take effect within the next year, you’re probably wondering how the new rules could affect you — and more specifically, could affect your wholesale or distribution business.

With the old regulations gone, here are a few ways new net neutrality rules could affect businesses.

Small businesses won’t be able to pay for visibility to customers on the internet.

Many have argued that net neutrality levels the playing field for small business owners and large corporations by offering the same opportunities when it comes to the internet. Without the rules, ISPs potentially have the ability to limit internet speed between different websites or apps — and thus, charge individual websites for data prioritization. Data prioritization would allow a website's users to have high internet speeds while browsing that site. This prioritization could get pretty pricey, and small businesses probably wouldn’t have the budget to foot the bill to ISPs.

Additionally, without premium internet service, businesses wouldn’t be able to access their target customers via the internet (and everyone knows that if a business isn’t visible online, that’s not a good sign). If your business uses the internet to advertise to potential customers or provide information to current customers via your website, you could lose internet speed as bigger corporations push out smaller competition.

Businesses could see higher general operating costs as internet prices increase.

No one likes slow internet. But, in a business setting, slow internet speed is more than just a nuisance — it hinders productivity and efficiency. Getting internet at a reasonable speed may include a price increase. Additionally, subscription rates for certain content providers could also increase on top of that.

To illustrate this, let’s say that your ISP increases your plan rate price. You look at other ISPs, but they’re all raising prices. So, you go with the cheapest plan possible — and it’s one that limits internet speed on certain websites. Additionally, let’s say your company pays for a video streaming service. That video streaming service has also been charged extra by ISPs in order to have priority speed — so they also pass along those fee increases to you.

One Forbes contributor sums it up like this: “... from a consumer point of view, the effects are likely to be real and material for most of us: slower service and more limited choices.”

Ecommerce operating costs could increase.

For many wholesale, distribution or retail businesses that sell goods online, internet speed and accessibility is crucial. Just as net neutrality prevented ISPs from hindering the user experience of browsing your site, with the regulations gone, the door is open for ISPs to slow connections to websites that don’t pay enough for prioritization — and this affects the online buying experience.

Take the holiday buying season for an example. A big box retailer could pay millions of dollars to an ISP in order to guarantee that their online shoppers don’t experience any internet downtime or slowed connections during peak buying times. However, other businesses with an ecommerce store will not have that kind of holiday season budget. These smaller- to medium-sized businesses would likely see their online customers flock to bigger ecommerce stores that paid for better internet speeds. Not convinced businesses could lose customers due to website slowdowns? Research from a division of Google in 2016 found that 53% of visits are abandoned if a mobile site takes more than three seconds to load.

Essentially, ecommerce could become a “pay-to-play” scenario, in which the businesses with the deepest pockets win out in the end.

Rival ISPs could mean different online experiences for your customers.

Let’s say you decide to hand over the amount of money to appease your chosen ISP and gain better internet speed for customers and prospects who visit your website. However, while your chosen ISP’s customers will be guaranteed a fast connection, customers of a different ISP might be penalized for visiting your site with a slow connection. Even worse, a rival ISP could block their users from viewing your website altogether.

While certain providers have promised not to block or throttle (slow down) any legal content (and some companies would certainly face public backlash for such practices), internet companies have breached promises before. Back in 2009, Comcast secretly throttled the traffic of file-sharing websites. AT&T was apparently limiting customers’ access to the iPhone's FaceTime app in 2012 unless customers subscribed to certain (and more expensive) plans.

Should I start panicking?

Proponents of the FCC’s repeal of net neutrality rules say that many of these scenarios or predictions are alarmist in nature. After all, net neutrality rules as we know them didn’t go into effect until 2015, and some say the internet was pretty neutral then. That’s somewhat true — many of these possibilities are worst-case scenarios. However, many businesses (aside from ISPs) say they’re not so far-fetched.

Ultimately, your business will have to wait it out and see what the future of the internet holds for your profits. However, what you do in the meantime is up to you. If you’re not convinced the repeal of net neutrality rules will be detrimental to your business, you can simply sit back and go on with business as usual. However, if you’re concerned for how your ecommerce store and website might be affected without net neutrality rules, you can always let your voice be heard by joining business owners and consumers in signing petitions with Save the Internet coalition and Battle for the Net and writing letters to Congress.

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