“By Terrell McSweeny (@TMcSweenyFTC) a commissioner of the Federal Trade Commission and Jon Sallet (@jonsallet), the former general counsel of the Federal Communications Commission. Both are alumni of the antitrust division of the Department of Justice.”
“Since the Bush administration, both Republican and Democratic FCC chairs have emphasized that they would take action to protect the open internet, and they have done so.
An Open Internet has worked for America, creating a virtuous circle of innovation, trust, adoption, and further innovation. That circle should not be broken.
The Net Neutrality debate can seem complicated. But at its heart, the issue rests on two simple realities: First, for more than a decade, the status quo in the US has been an open internet that supports thriving innovation among websites, apps, and new digital services. Second, innovators and consumers are dependent on a few large broadband providers that serve as gatekeepers to the internet.
In 2015, the FCC adopted its Open Internet Order to guarantee that consumers aren’t blocked or manipulated when they use their broadband connections and ensure that competition from the internet isn’t artificially squelched. The two goals work hand in hand, because residential broadband connections are the pathways on which consumers travel to the modern world and through which the content and services of the internet reaches residential users.
Two years later the new majority at the FCC has announcedthat it intends to undo the 2015 order. That includes the prohibitions on blocking, throttling, and paid prioritization. But the FCC has also proposed eliminating the General Conduct rule, which protects competition.
The FCC would be mistaken to unravel a bipartisan approach that has worked. Since the Bush administration, both Republican and Democratic FCC chairs have emphasized that they would take action to protect the open internet, and they have done so. Like a police officer keeping a watchful eye at a busy intersection, the FCC’s presence has both stopped and deterred harm to consumers, competition, and innovation.
The threat to the open internet is real because competition in US broadband markets is limited, to the extent that it exists at all. About 90 million US households subscribe to the kind of broadband that runs on wires to their homes. The top four providers—two cable and two telecom—together claim three-quarters of all residential customers.
Of course, consumers can only choose among the broadband networks that reach them. Roughly 21 percent of US census blocs have no high-speed landline broadband provider, and 37 percent have only one option. This is no choice at all. For downloading data at 100 Mbps, 88 percent of the country has either no option or just one provider.
In rural America it’s much worse: More than half of rural census blocs have no choice of a high-speed broadband provider, which condemns them to slow speeds for any service they can get. Even where there are choices, the FCC has found that consumers face significant costs in switching between broadband providers. Moreover, broadband providers have the ability to target content creators selectively, making it harder for consumers to understand why they’re having trouble accessing certain content.
So it’s clear that most US consumers depend upon a few big players in order to access the internet. Therefore, the critical question is whether these companies have the incentive and ability to harm consumers and competition. That is, are they motivated to control what kinds of innovations come to consumers? And do they have the tools to do so? Both the FCC and the Department of Justice have recognized in recent proceedings that the answers are yes and yes.
Broadband providers have the power and the motivation to curb any competition that uses their networks in order to reach consumers. And we know that eliminating competition—via mergers, for example—risks consumers paying higher prices and receiving lower quality products and services. It doesn’t seem like a coincidence that the so-called new Golden Age of TV has flourished at a time when Amazon, Hulu, Netflix, and other services are producing popular, award-winning shows in direct competition with more established players.
Here’s why there’s a problem: The big broadband companies also supply video programming, which means that those firms’ revenues are directly threatened when consumers use their broadband connections to access competing video providers. The incentive for broadband companies to discriminate against online video providers will only grow stronger as the market becomes more competitive, as it has recently with the arrival of services that carry live television channels just like traditional cable operators.
When reviewing the proposed (and ultimately failed) merger of Comcast and TimeWarner Cable, economists at the Department of Justice concluded that the merged firm’s power would likely reduce competition in the video and broadband markets, leaving consumers with fewer choices, higher prices, and lower quality. And when the Department of Justice considered a proposed (and ultimately successful) merger of Charter Communications and TimeWarner Cable, it recognized the ability of cable and telephone companies to take action against new video competition and limited the new company’s ability to seek terms in programming contracts that could harm online video providers.
The 2015 Open Internet Order set forth 16 pages of economic and technological analysis to support the conclusion that “broadband providers (including mobile broadband providers) have the economic incentives and technical ability to engage in practices that pose a threat to Internet openness by harming other network providers, edge providers, and end users.”
Some argue that using traditional antitrust rules can get the same job done, and just as well. While the two of us both believe strongly in the importance of antitrust enforcement, these laws cannot duplicate the kind of prospective, industry-wide rules contained in the 2015 Open Internet Order.
Supreme Court Justice Anthony Kennedy faced precisely this argument when he wrote the majority opinion in the Supreme Court case upholding requirements that cable systems carry broadcast stations. He wrote that regulation could be preferred to antitrust because of “the considerable expense and delay inherent in antitrust litigation, and the great disparities in wealth and sophistication between [TV stations and cable systems],” as well as the burden of bringing a case, which would require “considerable expense and delay.” All of this is even more true in disputes between large broadband providers and their customers. That’s why open internet rules make sense: They let the industry know what is required while giving consumers an avenue of relief at the FCC that doesn’t require long and expensive antitrust litigation.
The economic facts are telling, but that’s not all. Consumers should be able to use their broadband connections to access the lawful content of their choosing. The FCC is reconsidering whether broadband providers should be given the new freedom to block or interfere with the ability of consumers to express their thoughts or to listen to the views they want to hear. And that threatens the kind of free speech on which America was built. In 1776, Thomas Paine didn’t need the permission of any other content creator or distributor to circulate Common Sense. But without rules prohibiting blocking, throttling, and the like, broadband providers would gain the power to limit what unpopular content flows over their networks—to the detriment of consumers and democracy. One challenger to the 2015 Open Internet Order argued exactly this to the DC Circuit: that the rules violated its right to block legal but unpopular content.
An Open Internet has worked for America, creating a virtuous circle of innovation, trust, adoption, and further innovation. That circle should not be broken.”