FTC to Congress: Hands off Verizon and Comcast

The chairwoman of the Federal Trade Commission cautioned Congress against passing Net Neutrality legislation -- what she termed "new regulation" of the Internet -- in a speech last night, AP reports. Her comments reported on the five-month-long work of the agency's Internet Access Task Force.

The chairwoman of the Federal Trade Commission cautioned Congress against passing Net Neutrality legislation -- what she termed "new regulation" of the Internet -- in a speech last night, AP reports. Her comments reported on the five-month-long work of the agency's Internet Access Task Force.

The report takes a wait-and-see approach, the Wired blog notes. The report concludes:

Based on what we have learned through our examination of broadband connectivity issues and our experience with antitrust and consumer protection issues more generally, we recommend that policy makers proceed with caution in evaluating proposals to enact regulation in the area of broadband Internet access. The primary reason for caution is simply that we do not know what the net effects of potential conduct by broadband providers will be on all consumers, including, among other things, the prices that consumers may pay for Internet access, the quality of Internet access and other services that will be offered, and the choices of content and applications that may be available to consumers in the marketplace.

While the report takes pains to say that it can't predict what would happen if ISPs were to offer differentiated access, it takes the default position that big telco/cable ought to be able to do what they want until it appears that what they're doing is harmful to consumers. That it might be harmful is at least a possibility, the FTC concedes.

Prioritization could enable exclusive deals for priority that, if combined with inadequate delivery of non-priority data, would hinder the traditional ability of every end user to reach every content and applications provider through a single Internet access agreement.

On the other hand, the commission can envision lots and lots of ways in which prioritization would be jim-dandy. And it would be a shame for Congress, by requiring net neutrality, to cut off all the great innovation that Comcast and Verizon could soon be delivering.

Even assuming discrimination against content or applications providers took place, moreover, there remains the question – also unanswerable in the abstract – whether such discrimination would be harmful, on balance, to consumer welfare. For example, such discrimination may facilitate product differentiation, such as the provision of Internet access services designed specifically for certain population segments or other audiences with specialized preferences.

Such prioritization may provide benefits to broadband providers, content and applications providers, and end users. Prioritization may allocate resources to their highest-valued uses by, for example, allowing content and applications providers that value higher-quality transmission services, such as VoIP or online gaming providers, to pay broadband providers for such services.

Prioritization may enable broadband providers to obtain income streams from content and applications providers and other users of broadband networks besides the broadband providers’ own customers, resulting in increased investment and innovation in such networks. Prioritization may aid innovation in applications or content, such as streaming video and other real-time applications, that require higher-quality transmission to operate effectively. Prioritization may provide a dimension for both content and applications providers and broadband providers to differentiate their offerings, to the benefit of competition and consumers. Prioritization also may lower prices for less affluent end users, whose access fees could be partially subsidized by prioritization revenues, much like advertising-supported e-mail services now provide free e-mail accounts.

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