Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, June 27, 2007

FTC on Net Neutrality

Posted by D. Daniel Sokol

The FTC released its long awaited report on broadband connectivity competition.  The press release reports in part:

According to Chairman Deborah Platt Majoras, "This report recommends that policy makers proceed with caution in the evolving, dynamic industry of broadband Internet access, which generally is moving toward more not less competition. In the absence of significant market failure or demonstrated consumer harm, policy makers should be particularly hesitant to enact new regulation in this area."

As the report notes, certain conduct and business arrangements that broadband providers may pursue, including data prioritization, exclusive deals, and vertical integration into online content and applications, can benefit consumers. "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.

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"which generally is moving toward more not less competition".

This is line that the FCC has also been towing for years now as they have whittled away at the poorly written and implemented Telecoms Act of 1996. If one looks at the statistics published regularly by the FCC and actually analyzes them it's readily apparent that there is no real competition in the broadband market. Each geographical market taken on it's own is highly concentrated save for very few exceptions (perhaps San Francisco comes to mind). There may be cable, dsl and wireless but there is generally only 2-3 providers. The 3rd provider only enters if there is wireless broadband provider independent of the ILEC in the region. Otherwise, the ILEC generally controls both the DSL market and the wireless market leaving only 2 players with roughly 50/50 shares.

This would be fine if those 50/50 shares were due to superior business acumen and competition on the merits, but it's not. Most is forced consumer financed infrastructures facilitated by state granted monopolies in the telephone sector and state granted franchises in the cable business.

Speak of WiMax, powerline based or other emerging technologies is a joke at the moment. Just look at the statistics at the FCC.

Sure, if you believe the FCC and FTC in their conclusory remarks that competition is increasing, the rest follows quite easily.

Posted by: Jack S. | Jun 28, 2007 9:49:15 AM

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