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FCC Should Avoid “Bright Line Rules” in Restoring Internet Freedom Order

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Lenard and Wallsten Urge Return to Antitrust Oversight

July 17, 2017 – The Federal Communications Commission should eliminate “bright-line rules” in its Order repealing the 2015 Open Internet Order, state Lenard and Wallsten in comments filed today with the Commission. Because the original Order failed to provide evidence of harm that would justify separate rules from other industries, the Commission should return to antitrust oversight.

Lenard, Technology Policy Institute Senior Fellow and President Emeritus, and TPI President and Senior Fellow Scott Wallsten, propose that the “bright-line rules” in the 2015 OIO effectively “set the price of best-effort service to content providers at zero.” This acts as a price control, which is inefficient in a two-sided market, could cause price increases for consumers, and distort innovation. Banning paid prioritization could also make it difficult for companies differentiate products and services, hindering new entrants. In addition, a ban on paid prioritization focuses on the welfare of existing competitors in the market, as opposed to consumer welfare and efficiency.

The authors warn against the General Contact Standard in the 2015 OIO, explaining it is vaguely defined and would “likely lead to a steady stream of complaints from interested parties and continual second-guessing of providers’ business practices and pricing decisions” by the Commission. Such vague rules would establish a de facto utility-type regulatory regime.

Lenard and Wallsten identify a number of issues with arguments in the OIO, including faulty logic regarding investment incentives and a failure to identify any widespread problem that needed to be addressed.

The authors voice strong support for returning broadband internet service to Title I regulatory classification. “Returning Internet rules to those that yielded so much success prior to 2015 is sensible and will prevent us from falling into a regulatory morass of the type that crippled other network industries for decades,” Lenard and Wallsten conclude. “Competition governed by true antitrust oversight is the right way forward.”

The comments are available on the TPI website.

Contact: Amy Smorodin, 202-828-4405, asmorodin@techpolicyinstitute.org

The Technology Policy Institute

The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at http://www.techpolicyinstitute.org/.