FTC Urges Restraint on Net Neutrality Proposals

Published September 1, 2007

Federal Trade Commission (FTC) staff in June urged policymakers to go slow on regulating broadband business models, particularly in mandating network neutrality, citing an already-high level of competition among broadband providers.

FTC Chairwoman Deborah Platt Majoras summarized the findings, telling the Associated Press that without evidence of “market failure or demonstrated consumer harm, policymakers should be particularly hesitant to enact new regulation in this area.”

Network neutrality would prevent service providers from prioritizing Internet traffic or favoring some Web content and applications over others.

While the staff noted an unfettered market for Web content management, applications prioritization, and quality of service presents the potential for antitrust abuse, it also recognized such a market has just as much potential to yield great benefits for consumers.

“It is not possible to know in the abstract whether allowing content and applications providers to pay broadband providers for prioritized data transmission will be beneficial or harmful to consumers,” FTC staff wrote in the executive summary of the 170-page report, Broadband Connectivity Competition Policy.

‘Proceed with Caution’

“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 report said.

The report continued, “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.”

The report noted competition is increasing. “There is evidence that the broadband Internet access industry is moving in the direction of more, not less, competition, including fast growth [and] declining prices for higher-quality service.”

The FTC report details staff findings and conclusions from a two-day workshop in February. (See “FTC Workshop Sharpens Net Neutrality Debate,” IT&T News, May 2007.) During that workshop, many net neutrality advocates conceded some degree of prioritization and quality of service (QoS) tiering will be required as Internet services evolve.

Major Progress Achieved

Their concession represented major progress in the debate. Up to then, net neutrality proponents insisted there would never be any role for management and prioritization in the transport layer–the part of the information supply chain where service provider operations fall.

Alan Davidson, Washington policy counsel for Google, which has been lobbying heavily for network neutrality rules, conceded at the workshop not all network management is anti-competitive. Prioritization and charging businesses or consumers for more bandwidth is not a problem, he said, nor is providing server-based Web site caching services or creating dedicated IP channels for television service.

All of these are common methods currently used by Internet content and applications providers to boost quality and performance.

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.

For more information …

Federal Trade Commission Staff, Broadband Connectivity Competition Policy, June 2007: http://www.policybot.org/article.cfm?artId=21801