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E-tailers Protest FCC Ruling on Net Neutrality

The Federal Communications Commission (FCC) has taken the first steps to approve changes to net neutrality rules, raising concerns for e-commerce companies and jeopardizing the principle that all Internet traffic is equal. The controversial plan could allow Internet providers to charge Internet companies more money for faster service.

In a 3-2 vote, the proposed changes would allow Internet providers to charge additional fees for so-called “fast lanes” that would give paying companies priority access to their users. Currently, all Internet traffic is charged at the same rate, including video streaming services like Netflix. Cable companies like Comcast, Verizon and Time Warner are vying for these changes saying they have financed the construction of Internet routes for years and now need to charge higher rates.

Online behemoths like Amazon and Etsy are opposed to the loss of net neutrality, noting that smaller companies that cannot pay the extra costs could be run out of business. By creating tiers of service, Internet providers can limit and slow down the speed of e-commerce sites potentially driving away impatient customers. The cost of running these websites might spike, too.  

The ruling strikes just as e-commerce sales continue to boom in an otherwise murky retail environment. According to the Census Bureau of the Department of Commerce, e-commerce sales in the first quarter of 2014 accounted for 6.2% of total sales. Internet market research group comScore reports that this marks the 18th consecutive quarter of positive year-over-year growth for the sector.  

 More than 100 Internet companies have signed a petition to the FCC asking that they not amend the net neutrality rules. There will be a 120-day consultation and response period after which the FCC will revise the proposal and vote on a final ruling.