What the FCC’s Vote on Net Neutrality Means for Footwear E-tailers

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Amid a flood of other news coming out of Washington this week, the Federal Communications Commission voted today to take a first step toward rolling back Obama-era restrictions on broadband internet access, often referred to as net neutrality.

Following the FCC’s vote today, which was 2-1 along party lines, the commission will seek three months of public comment on whether it should keep, modify or eliminate the net neutrality rules established in 2015.

Those earlier rules, dubbed the Title II Order, classified broadband internet more as a utility, leading to stricter regulations on internet service providers (ISPs), particularly in regard to standards of conduct promoting competition.

Essentially, Title II aimed to level the playing field so that ISPs could not give preferential treatment to certain web entities over others.

But since the rules were imposed, ISPs have balked, calling them overly heavy-handed and claiming they impede innovation and investment.

Matt Priest, president and CEO of the Footwear Distributors & Retailers of America, noted that the debate pits two industries against each other. “The lines are drawn in interesting ways because you have Amazon and a lot of the big e-commerce folks on one side, and then on the other side you have the telecom companies that are concerned about regulation,” he told FN.

Amazon.com Amazon.com Courtesy of retailer

Last month, the Internet Association, a lobbying group that represents web companies such as Google, Facebook and Amazon, met with FCC chairman Ajit Pai to defend Title II.

In a statement, Internet Association president and CEO Michael Beckerman argued, “Rolling back these rules or reducing the legal sustainability of the order will result in a worse internet for consumers and less innovation online.”

Footwear experts said it’s still too early to say how repealing Title II could impact e-commerce companies. But Jeff Van Sinderen, an analyst with B. Riley & Co., offered one prediction.

“I would think that the change will make it easier for larger brands and retailers to position themselves better for web browsing and e-commerce,” he told FN. “On the flip side, it might be a negative for some smaller brands and retailers that do not have sufficient resources to position themselves as favorably.”

Indeed, that is a concern weighing on Greats Brand, the popular direct-to-consumer sneaker startup.

Ryan Babenzien Ryan Babenzien, CEO of Greats Brand. Courtesy of brand.

Ryan Babenzien, founder and CEO of Greats, sent the following statement to FN: “We believe net neutrality is critically important not only for digitally native brands such as ourselves but for anyone that uses the internet. None of us have a crystal ball, but it’s been my experience that if you allow a company, in this case ISPs, to govern themselves fairly, there is a good chance that they will favor themselves more often than not.”

Babenzien went on to explain that if, for instance, an ISP invested in a media or commerce platform, it could favor that property’s content — or charge higher rates for access to other, non-partner sites.

While FDRA’s Priest acknowledged the need to promote innovation and opportunity in the telecom industry, he noted that e-commerce is an increasingly vital channel in the footwear industry.

“With each passing generation, the number [of consumers who shop online] changes — Gen Z particularly prefers to buy online over in-store,” he said. “So that means that we need to provide points of access to consumers and allow footwear companies, both large and small, to drive out their product and marketing in a way that is not prohibitive based on the size you are.”

Over the next three months, all parties will have the opportunity to weigh in on the fate of net neutrality. To submit comments about the topic, fill out this form on the FCC website.

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