The agency released a report, titled ‘Broadband Connectivity Competition Policy,’ that recommends US policy makers be cautious in setting rules around broadband Internet access, which generally is moving toward more – not less – competition, said FTC chair Deborah Majoras, in a statement.
She pointed to an absence of significant market failure or demonstrated consumer harm, and said lawmakers should be particularly hesitant to enact new regulation in this area.
Members of Congress last year failed to get net neutrality legislation passed. Whether the US needs such laws, which would prevent broadband network owners from charging for prioritized content and services over their own pipes, has become a mainstream issue in the country, with high-profile companies and celebrities weighing in.
Net neutrality proponents, including Microsoft, Google, Yahoo, Amazon and eBay, say these laws are required to avoid a two-tiered Internet, whereby a fast lane would handle priority paid-for content and a sluggish lane would handle everything else.
Broadband operators, such as AT&T and Verizon, counter that they need to recoup investments in their networks. They also point to existing legislation that gives the Federal Communications Commission the power to fine any operator who unlawfully blocks content on their network.
With consumer protection laws already in place, this is no time for government to raise prices with heavy net neutrality regulation, said Mike McCurry, co-chairman of Hands Off the Internet coalition, a nonprofit coalition of companies, including Alcatel-Lucent, AT&T and 3M.
But net neutrality supporters say non-prioritized content is more likely to be denigrated than blocked, and that denigration is more difficult to police. Operators’ response is that it would not serve their best interests to denigrate content. Furthermore, net neutrality laws would stymie the advent and fast delivery of high-bandwidth services such as video and VoIP, operators say.
Verizon hailed the report. The FTC report confirms that there is no problem to fix, said Tom Tauke, Verizon executive VP for public affairs, policy and communications. Proposals to impose new regulation actually threaten further advancements in broadband Internet connections. That hurts consumers by denying them new and better services.
However, Derek Turner, research director of Free Press, said, on behalf of the pro-net neutrality SavetheInternet.com Coalition, said the phone and cable companies have a tremendous incentive to favor their own applications and content at the expense of their competitors. In fact, that’s exactly what their top executives have announced they plan to do.
The FTC report warned that Industry-wide regulatory schemes – particularly those imposing general, one-size-fits-all restraints on business conduct – may well have adverse effects on consumer welfare, despite the good intentions of their proponents. It goes on to say even if net neutrality laws don’t adversely affect consumer welfare, it may, in the long term, reduce product and service innovation.
Further, such regulatory schemes inevitably will have unintended consequences, some of which may not be known until far into the future, said the FTC report. Once a regulatory regime is in place, moreover, it may be difficult or impossible to undo its effects.
Our View
It is telling that when AT&T last year bought BellSouth, in an $86bn mega-deal, the FCC forced AT&T to agree to maintain net neutrality for two years. At the time, it was considered a key concession for AT&T. The FCC, whose chairman Kevin Martin has categorically opposed net neutrality legislation, clearly sees the potential for exploitation by operators in the absence of net neutrality laws. But it, like the FTC, is it controlled by Republicans, which tend to favor a hands-off approach to regulation.
As the US broadband market becomes increasingly dominated by fewer operators, and given that 99.6% of all consumers receive their broadband connection from either an incumbent phone or cable company, the issue of regulatory oversight of its gatekeepers requires, at the very least, more public debate.
