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The Real Deal Los Angeles

How the repeal of net neutrality could affect the real estate industry

Some worry listing services, small businesses could suffer
December 18, 2017 08:25AM

Illustration by Sarah Klockars-Clauser (Wikimedia Commons)

The Federal Communications Commission’s vote last week to repeal net neutrality rules could have a detrimental effect on the real estate industry, particularly on internet-based companies and those that rely heavily on web traffic to drive business.

Net neutrality rules bar internet service providers (ISPs) from “throttling” bandwidth for some websites and services while allowing “fast lanes” for others at a premium, according to Inman. The rules were in place for two years under President Barack Obama.

For direct-to-consumer businesses such as Zillow, Compass and Streeteasy that rely heavily or completely on their internet presence, throttling bandwith could also stanch growth. Roelof Opperman, an associate with VC firm Fifth Wall Ventures, told Inman that the pared-down regulations “definitely hits innovation on the consumer end.”

If sites like Zillow slow down to the point at which consumers have a hard time using them efficiently, the losses could trickle down to the small real estate professionals who derive business from them. Those small businesses could then be forced to shell out more each month to ISPs to compete with their much-larger competitors that have the capital to pay for top-tier service or access to sites like Zillow.

Ajit Pai (FCC Commissioner)

Compass, meanwhile, derives much of its market advantage from its technology, particularly its easy-to-use smartphone app. Compass could end up having to pay ISPs much more to use the bandwidth the company relies on, hurting profits and maybe even convincing its many investors to think twice about pouring money into the venture.

Those on the other side of the debate argue that the repeal won’t have such a drastic effect on the way people use the internet because providers will only charge major bandwidth hogs like YouTube and Netflix, leaving small businesses alone. Net neutrality critics often point out that the internet was much the same under the Obama-era rules as it was in the years before them, and that repealing net neutrality only returns regulations to the status-quo. [Inman] — Dennis Lynch