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FCC Again Fails to Justify Network Neutrality Rules

FCC Again Fails to Justify Network Neutrality Rules

Lenard Urges Reliance on Antitrust Principles in Comments to FCC

Contact: Amy Smorodin
(202) 828-4405

July 14, 2014 – In the most recent attempt to draft network neutrality rules, the Federal Communications Commission has again failed to provide the data or analysis needed to show the proposed rules are necessary, would help consumers, or pass a cost-benefit test, states Technology Policy Institute’s Thomas Lenard in comments sent today to the FCC. In addition, the three proposed provisions are either unnecessary or potentially harmful.

In his comments regarding the Protecting and Promoting the Open Internet NPRM, Lenard, TPI President and Senior Fellow, addresses faults in the three major proposed provisions:

  • The no-blocking rule is unnecessary. Instances of blocking have been rare, minor, and quickly resolved when there were no open internet rules in place. Broadband providers have an incentive to make available as much content as possible to their subscribers in order to maximize the value of their networks. Where incentives may not be aligned, existing antitrust laws provide the appropriate remedies.
  • The transparency requirement, particularly the obligation that broadband providers publish detailed price information, may discourage price competition. Studies have shown that transparency requirements can also facilitate anticompetitive behavior among providers, to the detriment of consumers.
  • The commercially unreasonable standard may distort negotiations between parties who can appeal to the Commission if they do not like the best deal they could negotiate on their own. The standard could also require providers to continuously defend their businesses practices to the Commission, which introduces a de facto utility-type regulatory regime, even in the absence of Title II reclassification.

Lenard suggests that if the Commission does move forward with prohibiting “commercially unreasonable practices,” it should base its standard on traditional antitrust principles. This would protect consumers while giving broadband providers the flexibility to experiment with innovative pricing and business models, which would in turn promote broadband deployment and benefit consumers.

Lenard also warns against reclassifying broadband service under Title II, stating it “would represent the sharpest departure from the status quo, and would have serious adverse effects on investment and innovation in the Internet infrastructure over time.” Imposing Title II public utility regulation would ultimately undermine the Commission’s goal of extending broadband deployment.

Lenard’s comments are available on the TPI website.

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 https://techpolicyinstitute.org/.

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