Blog

    Why You Should Care About Net Neutrality

    Even if you can’t exactly explain it, you have heard of net neutrality. News stories have been invading TV screens about this issue since November of 2017. That was when the Chairman of the FCC, Ajit Pai, published a plan to roll back net neutrality. Officially, as of June 11, this piece of internet legislation has been rolled back. This has all sorts of implications, but we want to take a look at how it could affect property management professionals, specifically in the commercial and retail realm.

    First, what is net neutrality? As the National Association of Realtors explains, “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.” Without the net neutrality rule, there is great potential for internet providers to charge consumers more to see certain content or even block access to certain website. If these consequences come to pass, how will you as a professional real estate manager be affected?

    Tiered Internet Pricing

    One of the biggest concerns in a post net neutrality world, according to Columbia University law professor Tim Wu who coined the term, would be internet pricing that is not one size fits all. Internet service providers could begin offered various plans at different price points based on what services you can access. For example, if you just need the internet to check emails and read news articles, that would be a cheaper plan than one that allows you to using streaming services like Netflix or Hulu.

    Many telecom providers pay monthly rent to buildings for allowing them to have fiber cable in the building. If the providers are suddenly having to pay more for the back of the service they’re providing, they may work hard to reduce or refuse to pay the monthly rent previously seen as the standard in the industry. This has the potential to directly impact income for property owners.

    Additionally, FCC law requires that if a telecom provider has a contract with one of your tenants, you must let them run fiber to your building. This could result in a situation where tenants are shopping for new telecom providers because costs are going up and owners will be forced to let the telecom providers into the building at reduced or zero rental rates in an effort to keep tenants happy.

    Fewer Start-Ups

    Small businesses, especially e-commerce startup companies, could suffer from two specific consequences of net neutrality: paid prioritization and blocking. Paid prioritization means the internet would become a pay-to-play arena, where you have a fast lane of internet for those willing to pay more, and a slow lane for everyone else. For many new and small businesses, any extra overhead can be a strain. Blocking is exactly what you think it is; service providers could discriminate against certain websites, affecting what consumers can and can’t find on the web. Online visibility is crucial for new businesses so any blocking could prove detrimental.

    With such potential problems looming, it’s possible we’ll see fewer startups and small businesses come online. This could affect an already declining office building occupancy in Houston, but also could affect retail as well. And you have to consider that many real estate management companies are themselves reliant on online visibility as many depend on web traffic for leasing. If a prospective tenant searches online for available office space and your company’s listing or contact info no longer shows because you’ve been blocked or your website doesn’t meet the standards of that users internet plan, you’ve lost a potential tenant.

     

    While these issues seem smaller in nature and will take a while to develop, long term they can have significant consequences for real estate owners and managers. Some may argue none of these problems existed before net neutrality was put into effect in 2015, but the internet and how much we depend on it changes drastically every year. The true significance of the repeal of net neutrality are not yet known, but it’s something we should all keep a watchful eye on.

    This topic is currently being monitored by the IREM Houston Public Policy Committee on behalf of our members. Have an update or question? Email jmiller@iremhouston.org

     

    About the Authors: 

    Lindsay Konlande currently serves as the Association Assistant for IREM Houston. Lindsay earned her Bachelor Degree in Communication from Texas A&M and has several years of experience in marketing, public relations and copywriting.

    Stephanie Sides, CPM is a Senior Property Manager and Operations Manager for Transwestern, AMO and has been a professional in the property management industry for over a decade. As our 2018 Public Policy Committee Chair, she is passionate about local and federal government and how new and existing policies impact the industry.

    Return to list

    0 Comments

      Leave a Comment