The Federal Communications Commission has rolled back Obama-era open internet regulations in a move that could have a ripple effect through the real estate industry.
The net neutrality protections protections required broadband internet providers to offer equal web access without added fees for preferential treatment or higher speeds. The net neutrality rollback won in a 3-2 vote under party lines led by FCC Republican Commissioner Chairman Ajit Pai.
The repeal has been contested by the real estate industry, consumers and Democrat lawmakers, who sought to keep streaming and internet service provider (ISP) choice in consumers’ court.
Net neutrality is shorthand for the concept that internet users should be in control of what content they view and what applications they use on the internet. NAR supports legislative and regulatory efforts to ensure that broadband providers adhere to net neutrality practices. Net neutrality practices are essential to ensure that REALTOR® content may be freely and efficiently distributed online.
Removing these protections opens the door to tiered service from ISPs. Tier one, or the “fast lane,” would allow businesses to buy into preferential treatment and faster speeds to their websites.
Meanwhile, tier two companies (most likely small businesses who can’t afford to pay higher fees) would suffer slower internet speeds or even blocked pages. Without these protections, all of these business practices would be considered legal, as long as ISPs post their policies online or report them to the FCC.
With the rollback, the FCC is restoring the framework implemented before 2015, which featured a “light-touch” philosophy when it comes to FTC involvement.
“In particular, the FCC’s action…has restored the jurisdiction of the Federal Trade Commission (FTC) to act when broadband providers engage in anticompetitive, unfair or deceptive acts or practices,” according to an FCC statement that followed the rollback announcement. “The framework adopted by the Commission…will protect consumers at far less cost to investment than the prior rigid and wide-ranging utility rules. And restoring a favorable climate for network investment is key to closing the digital divide, spurring competition and innovation that benefits consumers.”
While the FCC maintains that this rollback will not affect how the internet is used, consumers are concerned that ISPs will take advantage by imposing added charges, obstructing their open internet rights and forcing them to sign up with ISP-specific streaming services, versus allowing them to subscribe to a competitor.
When it comes to real estate, brokers and agents are currently on a level playing field on the internet. With this repeal, high-earning brokerages may be able to pay for preferential treatment, creating an unfair advantage against small real estate businesses. This can also affect the visibility of certain MLSs, trickling down to consumers who may not want to list with a brokerage that doesn’t offer internet advantages.
Larger companies may also be able to create exclusive deals with certain companies to showcase their websites and block competitors’. Not only would this affect the consumer experience, but it could also impact marketing efforts. Independent brokerages could suffer if their marketing is hindered by slow internet speeds to their pages. Brokerages may also end up paying more for their internet if ISPs decide to go the cable route, charging higher fees for services and eventually changing to an à la carte platform that charges according to service packages (i.e., social media, streaming services, etc.)
Large real estate websites may make financial arrangements with internet service providers to ensure their websites download at faster speeds than, say your local multiple listing service provider’s download speeds.
Smaller REALTOR® firms will have a competitive disadvantage in trying to connect with buyers and sellers in this unregulated broadband sphere as they may be unable to purchase “fast lanes” or may even have their websites intentionally slowed.
Small real estate agents and brokers also depend on fast, top-quality Internet access to serve their clients. Most, if not all, brokers and agents conduct business electronically. Time is absolutely of the essence in real estate, especially in a market where a client can lose a bidding war in a matter of minutes if paperwork is not submitted quickly.
All this translates into potential buyers and sellers being unable to connect with their local REALTOR® or even unable to find real estate information in a timely manner.
Strong relationships with a REALTOR® are vital to home buyers and sellers as they move through the home buying and selling process. Repealing net neutrality may impact a consumer’s ability to connect with a Realtor by making it difficult for consumers to find a small, local REALTOR’S® information online.
Moreover, homes can move on and off market more quickly than websites can push the updated information out to the internet. When real estate consumers rely only on information found on the internet, their interests are not as well served as when they are working with their own REALTOR®; their REALTOR® provides information, advice and updates more quickly than Zillow.
The National Association of REALTORS® (NAR) has been challenging the proposed repeal since July, citing internet as critical to the success of the real estate industry, especially with new technology—such as mobile apps, drone photography and virtual reality—that requires open internet access.
“The internet as we know it today is a fair and open platform that puts everyone on a level playing field,” said NAR President Elizabeth Mendenhall. “FCC’s rollback of the Open Internet Order will mean higher costs and slower service for millions of American consumers and businesses. REALTORS® have strong concerns about what that might mean for the way consumers search for homes online and real estate is transacted.
“The last thing small businesses need today is additional costs and competitive disadvantages that put them on the defensive,” Mendenhall added. “This isn’t just an issue for Silicon Valley or large telecommunications shops; this is a main street concern that affects businesses and consumers across the country. We intend to make our voice heard on this important issue.”