Yesterday, the Federal Communications Commission (FCC) adopted network neutrality rules, taking an important step in a policy making process that has been underway since 2005. Broadly speaking, network neutrality is the idea that internet service providers (ISPs) may not hinder or discriminate against lawful content flowing through their network. In other words, ISPs cannot filter or determine what consumers see on their computer screens. Lani posted about this issue earlier this month, and I have written on the topic previously here and here.
While the final text of the order is not yet released, according to an FCC press release the order is comprised of three broad rules:
1) Transparency: Requires Internet service providers to disclose accurate information to consumers about the basic performance characteristics of their Internet access and how their network is managed.
2) No Blocking: A prohibition against blocking lawful content, applications, services and the connection of non-harmful devices to the network. Wireless service providers are prohibited from blocking access to lawful websites and applications that compete with the ISP.
3) No Unreasonable Discrimination: ISPs must create a level playing field; they may not create “pay for priority” arrangements whereby some users can pay for Internet “fast-lanes” while other users are offered slower service.
This order is sure to be challenged in the courts and several members of Congress have already vowed to introduce legislation to overturn the FCC’s actions. Groups that both support and oppose network neutrality have criticized the order. In Washington, that usually means a good balance has been struck. The upshot is that we will certainly see more debate and possibly additional action on this issue in the weeks and months to come.
Yesterday’s move by the FCC creates a good opportunity to explain how NAR arrived at its position in support of network neutrality principles. While this issue is contentious and there is no doubt that NAR members will line up on both sides, NAR considered how the issue would affect its members in the conduct of their businesses. The Business Issues Committee—the NAR public policy committee with jurisdiction over this issue– heard from experts on both sides of the issue and approved a position supporting network neutrality principles. That policy statement was then approved by the NAR Public Policy Coordinating Committee and the NAR Board of Directors. NAR committee members considered the following rationale:
Why is Net Neutrality Important to Realtors®?
Anyone who reads Agent Genius knows that the real estate business is increasingly conducted on-line. Streaming video, virtual tours and VOIP are just some of the technologies commonly used by REALTOR®s today. In the future, new technologies will no doubt require unfettered network access. For this reason NAR believes that net neutrality principles are necessary to prevent ISPs from implementing possibly discriminatory practices that could harm REALTOR®s use of the Internet to market their listings and services. Examples include: limiting the public’s access to real estate websites or charging certain websites more for the broadband speeds necessary to properly transmit or display video content.
NAR supports the FCC’s actions and believes that codifying net neutrality principles will create certainty for consumer, network operators and content providers alike.
What do you think about the action taken by the FCC yesterday? How will the new rules affect your business?
Dan Berkovitz - Miami Industrial Associate
December 22, 2010 at 11:50 am
My take is that members of congress and lobbyist for ISPs, will attack the FCC’s actions harshly because having control over information flow is better for their business and will generate more profits. I can also see how the MPAA and RIAA won’t like this either. Personally, I agree with the FCC’s actions though.
Brian Jones
December 22, 2010 at 12:07 pm
The NAR should stick to property rights and industry specific policy matters. The fact that they continue to speak out in favor of anti-business, anti-free market issues speaks volumes about what the organization has become. I wonder how the NAR would react to additional regulation on our industry limiting the the members abilities to offer lawful business model alternatives. (oh wait, it’s been made clear in the past that they support that as well).
Eric Stegemann
December 22, 2010 at 2:32 pm
Brian,
I’d ask you to step back for just a second and consider the issues at play here and how the members that recommended this policy (myself included) came to the decision. Let me tell you that I’m very public about my support of all different business models in real estate. One of my brokerages was a flat fee based company. So let me explain to you why I think this was an important issue. You have to understand that to continue freedom in a business already riddled with little to no freedoms you have many issues at play.
In most places you have 3 or less choices for broadband internet access.
1) Cable TV operators (Cable Internet)
2) Phone operators (DSL Internet)
3) Satelite Operator (Hughesnet and DirectWay)
Other than in the rural United States where you can’t get 1 and 2 option 3 is really silly because the speed is barely considered broadband and is very expensive. So let’s concentrate on 1 and 2.
My selection for broadband internet access in the places I live is limited due to government regulation and franchise agreements. Therefore once the municipality agrees to one option for each there are no more. So my choices at one home are AT&T / Time Warner and at the other AT&T and Charter Communications. That means in two residences I have the choice between three total providers for Internet access.
Let’s say for example that instead of AT&T as a common provider one of those was Comcast. Comcast over the past few years had been notorious for blocking traffic to certain sites, or severely limiting the bandwidth you got to use those sites. I don’t know about you but I’ve recently gotten rid of my cable tv service at one home in favor of Hulu and Netflix. What if Comcast had decided one of the sites they wanted to block was Netflix because they wanted to keep me as a cable subscriber? Believe me when I tell you that all of the CableTV operators were thinking of doing exactly that. Why wouldn’t they? I was a $150 a month TV subscriber before dumping it all to move to only Internet based television over my Mac Mini.
Now let me bring you into another world one of a very slippery slope. One that planted me firmly in support of Network Neutrality. This seems far fetched but I promise you that we’d have gotten to this as long as their is not free market choice for Internet providers. What if AT&T made a deal with Coldwell Banker. Coldwell Banker approaches them and says I tell you what AT&T, I want to buy the right to have anyone who searches for real estate on your service only be able to find Coldwell Banker agents. (And btw this is VERY possible and easy to do, it’s already occurring via cellphone Internet connections such as Verizon.) Now if you are an agent at an independent they just made a deal that your customers can’t even find your website on AT&T Internet! How terrible and closed market would that be?
I think that supporting Network Neutrality is in fact the key component that helps businesses, especially small ones, compete by giving us all the freedom to innovate without being stifled.
Bruce Lemieux
December 22, 2010 at 3:22 pm
So what do you do with Netflix? They gobble up 20% of all internet bandwidth on the east coast during evening hours. I don’t know the answer, but it seems illogical to allow them to swallow-up the internet so my daughter can watch re-runs of The Office on her Mac.
Eric Stegemann
December 22, 2010 at 3:35 pm
But if I’m paying $50 a month to get 10Mb down, shouldn’t I be able to use all 10Mb for whatever I want? If that means 20% of traffic is going to netflix then so be it. But if you’re paying for it why shouldn’t you use it however you want? The whole way that Internet providers make money is to get you to upgrade to the higher plans where they make more money, why? because few people who have the higher plans actually use it. Now when they are starting to use it, the providers get in a tizzy and want to control how you can use your Internet. Net Neutrality policies say they can’t do that. If you pay for 10Mb you should be able to use it for whatever you want.
Bruce Lemieux
December 22, 2010 at 4:08 pm
I hear you, but you want your 10Mb when you want it. It seems like building the pipes necessary provide everyone with their usage all at the same time – say 8 to 10PM – would be prohibitive.
Isn’t it like an interstate system? Do we want 12 lanes of asphalt both ways so that we aren’t slowed-down during rush hour traffic? Sure, who wouldn’t. However, we don’t build it since no one would ever pay for this capacity.
Figuring this out is above my paygrade. I will say that I get heartburn when I add-up my total monthly bill for data: DTV + ATT + Comcast. It’s a painful sight.
Eric Stegemann
December 22, 2010 at 4:30 pm
Bruce,
Two comments here:
1) I pay for the 10Mb when I want it which could be anytime of the day. If you can’t offer me reliable 10Mb then don’t sell it to me and make me pay for it all the other times I don’t want to use it.
2) It’s somewhat like an Interstate but somewhat not. On an Interstate you have to build more lanes to get more traffic through it. On the Internet you can develop new technology to run faster speeds on the same lines. For example, Coaxial cable can run at a maximum of around 1.5Gb and we’re stuck at 10Mb or at my other home 6? Keep in mind that we lag so far behind in terms of bandwidth from other countries, mostly because the providers don’t push technology. Instead because of the franchise agreements, and them knowing they can literally offer the same service in a market for 10 years and collect checks, they sit on their hands. In so many other countries, they have 100Mb Internet for the price we pay for 6Mb.
Providers will have to change their service offerings and I believe that companies like Comcast want to buy content providers like NBC for that exact reason. They want you to get a Comcast pipe to watch NBC programming once all TV goes online or they’ll charge your Internet provider an arm and leg to offer it through their pipe, which means the savings encountered from dumping my Satellite / Cable TV is minimized to potentially a day where in aggregate the bill you see now will be nothing if you want to have a variety of programming.
Brian Jones
December 22, 2010 at 3:59 pm
I appreciate your reply Eric. I think you’re an incredibly smart guy and enjoyed seeing you at a forum in New Orleans. However I would like to reply to some of your points.
You seem to have a beef about the lack of viable broadband access and competition in that industry. I can assure you that regulation will not lead to increased options. The reason you have so few options for all public utilities is due to these types of policies. The ability of small upstarts to offer alternatives is completely stifled by the regulations designed to protect. The existing providers will do everything in their power to influence the rules (as they have done in most every case involving gov’t regulation of anything) to ensure that they benifit them, and them only. So you’re not going to see an increase in cometition from this.
As far as them blocking access to sites and throttling speeds, sure it happens and for good reason. Go buy a GoogleTV and see what you get from Hulu. Not the same as an ISP but is that worng? If a user is hogging massive amounts of bandwidth (with is a commodity that costs money) why should they either pay more or be throttled? Why shouldn’t I be able to purchase a “fast lane” of service if I so desire? In terms of them (ISPs) actually blocking full sites and restricting to specific paid advertiser sites, it’ll never happen. Comcast tried to do that once; they were subsequently met with outrage from paying customers that were soon to become non-paying customers. Comcast understood how that would be bad for their bottom line and stop the practice. And that is how it is supposed to work. The consumer decides with their wallet if the provider is providing adequate service for the price. If not, they go somewhere else. And considering the advancement and increased availability of LTE/4G wireless service, the other options are becoming more readily available.
The two things that strike most though:
1) Broadband internet access isn’t a specific right granted to you. If you desire it, you need to live where it is available and you need to pay for it.
2) If the NAR beleives this is an issue worth fighting for because the members use the internet for business, where does it stop? We use many technologies and products to conduct our business these days. Will positions also be taken on autombile regulations, cell phones, pens, paper, computers, cameras or any other product or service that has become commonplace to our daily business lifes?
Eric Stegemann
December 22, 2010 at 4:19 pm
Brian,
Thanks for the comments!
You make some great commentary here. And I agree with pretty much everything you are saying. Ironically enough in our meetings I argued some of the exact points you did in my opposition to our discussions of broadband as a right. Some of the discussion in one of the meetings was if rural people, like telephone lines, should be subsidized to receive Internet access. I completely disagree with this point, because unlike phone service back 50 years ago which was vital to be able to call for help. Today it’s a very different environment. There is wireless technologies out there. I’ve even heard of a place in very rural Texas where a kid wanted faster Internet so he built a tower, got his neighbors to all chip in and provided Internet access wirelessly to about a 25 mile range!
But I believe net neutrality is a different issue. Consider your statement about throttling. It goes right up on the point I made to Bruce above – I’m technically already being throttled. I pay for 10Mb Internet service, and therefore the most I can download at any time (and keep in mind these are “Theoretical Maximums” which you never actually get) is 10Mb. So as a paying customer, shouldn’t I, as a person paying for 10Mb be able to do whatever I want with 10Mb? The Internet providers say no. They say that because there is such a vast difference between the people that watch netflix and those that don’t they the people watching netflix should be throttled. To which I say, instead of not providing what you agreed to, why not offer a lower plan to the people that don’t need it. Why don’t they do that? Because there are LOTS of people that never even get close to using the bandwidth maximums but pay for it and so they make a lot of money and dont’ want to suggest they go to a lower plan. Nothing could possibly be more evidenced by this then the AT&T court case a few years ago which said that a DSL provider must not force you to purchase a phone line to get DSL. Of course they were able to charge more, but they couldn’t force me to buy a phone line anymore which I was wasting $20 a month on! But AT&T never called to tell me that, of course they are not going to call the person that never uses over 1Mb like my grandmother and tell her that the 10Mb plan is too much for her. Why would they?
But forget all of that.
I think the point at which we agree upon most is that much of Net Neutrality would be solved by an open market for Internet. It would also fix other problems too, like for example that I live in the best country in the world, but my Internet is 1/10th the speed of my friends who live in France and Belgium. Why is it 2010 and I don’t have Fiber to my home when 75% of the fiber in this country is dark?
But remember what made the Internet great was that a small upstart from a man named Jeff Bezos could go from nothing to big time and no one could stop him. A company like Google could be started in the dorm room at Stanford. And a 21 year old kid could start his own brokerage and compete with the 3,300 person brokerage and build it to the largest independent in the market in 20 months because of online leads and because Coldwell Banker didn’t go make that deal with AT&T.
hermanchan.com
December 22, 2010 at 3:01 pm
thank u for taking the time to break it all down mel & eric!
Ruthmarie Hicks
December 23, 2010 at 8:04 am
The only comment I would make is that telecom companies have been salivating at the idea of being able to hike rates for specific services. We must never forget that natural monopolies DO REQUIRE regulation. If they aren’t regulated, then they can run wild and try to control the pipes to the point where everyone is paying through the nose. When there is no viable competition – you have to have some “rules of the road” that can be enforced.
I would disagree about the comments regarding rural areas. People have to make a living there too and it would be good for local economies that are severely depressed to have access to the broadband so that residents might be able to compete with those in big cities. This is no skin off my nose, since I live in a highly populated area, but such infrastructure investments done wisely would increase employment for the initial set up and help get some of these areas out of a severe multi-decade economic funk – creating yet more jobs.
Lori Bee
December 23, 2010 at 8:20 am
I know Eric’s Option #3 doesn’t affect most agents, but I can assure you that those that it does effect, it does so dramatically. Having to deal with Wild Blue satellite service for 2 years in my rural area, stiffled my ability to compete. They so limited my bandwidth that watching 2 You Tube video’s would shut me out of my service for a month. And that was the PREMIUM $90 mth service! Forget about uploading video tours! I am so happy to have my High Speed DSL at home now, I can’t tell you! But I couldn’t even purchase more bandwidth if I wanted too. It was horrible.
I do worry that as we continue to use up bandwidth, that all of these services will charge a premium for usage. Time-Warner threw out that idea, and in a sense, already does this for their business service (which I have at the office, not at the farm). But the general public threw up such an outcry at the premise, that it hasn’t happened…. yet. I look for with these new net neutrality agreements, for the ISP’s to revisit the pay for use biz model. That will definitely hurt a lot of us, in trying times.The “free to use highways” are now becoming “toll roads.” I understand it to an extent, but … argh.
Oh and I know a bit about the fiber optic cable issues too and why much of the world is better on their internet speeds & service. A lot of that can be attributed to corporate greed and corruption. Don’t even get me started on TYCOM the main company who was supposed to bring that to us years ago. http://www.fcc.gov/Bureaus/International/Orders/2000/da002762.doc
But Dennis Kozlowski was at the helm of conglomerate TYCO, that owned it and ran it into the ground. https://en.wikipedia.org/wiki/Dennis_Kozlowski The industry has never quite recovered and neither has my pocket book, as my ex & I were heavily invested. I’d love to have a minute in a room alone with Mr. Kozlowski. For all of our sakes. We all pay for that kind of corruption. In lack of service and cost. Grrr….
naplesflorida
December 23, 2010 at 8:46 am
It’s a complicated subject, I still odn’t fully grasp, but whatever I think or say won’t make a shadow of a difference in the big internet picture
Realtor Santiago
December 23, 2010 at 10:31 am
I believe that Congress acted in the best interest of the people. That is not always in the best interest of business, nor should it be. Business has one purpose and one purpose only: profit. Profit for its shareholders and for its direct owners. Business’ interests are not always in the best interest of the nation. What business has done do broadcast television is a great example. 6 conglomerates own all the TV stations in the nation. You change the channel you get the exact same stories, and the same lack of stories too. There is no diversity of opinion and the news covers mostly weather, traffic, some politics and lots of sensationalist stories. It wasn’t always that way. With newspapers being read less and less, Americans are turning to the internet to get their news and information. If they are limited from the variety of opinions they can receive via internet, which would surely happen, then how do Americans self-govern in a democracy? They don’t, and business will further mix with government in the model better known as fascism.
Ruthmarie Hicks
January 3, 2011 at 3:41 am
Interesting – I was on a purely political site today and there was a comment thread about net -neutrality. I think the term is deceptive and most people have little understanding of it. Several people were claiming it was a government power grab for control of the internet. Huh? Ensuring that there is no blocking of sites, transparency with respect to performance and neutrality with respect to users and data (no fast and slow lanes) is hardly my definition of a power grab. But a lot of republicans seem to think it is. this is particularly true of the tea party. I just don’t get it. This is such an over-reaction. The rules make sense for God’s sake.