The Internet doesn't need more regulation

Two cases on data roaming and net neutrality deal with similar economic issues: Will more regulation improve the market for Internet-based communications?

Last Thursday, the D.C. Court of Appeals heard oral arguments on whether to uphold the Federal Communications Commission’s so-called “data roaming” rules, which would impose new open-access regulations on wireless broadband companies. The issues at bar—including whether imposing such a requirement on an Internet carrier amounts to “common carrier” regulation—are similar to the issues the court will face when it rules on the FCC’s net neutrality regulations next year. The economic issues in the two cases are also closely related: Simply put, will more regulation improve the market for Internet-based communications?

The case for a heavier government hand is grounded in the idea that the U.S. market for broadband services is insufficiently competitive. As a result, critics say, the United States is lagging behind the rest of the world, and broadband Internet Service Providers (ISPs) have incentives to discriminate against their competitors. But the facts don’t support either argument.

According to the National Telecommunications and Information Administration (NTIA), nearly nine out of ten U.S. households have a choice of fast broadband connections from at least two wireline broadband providers. Consumers clearly know they have choices: According to the FCC, one out of six switch companies every year, and 37 percent switch every three years. The numbers are even higher for wireless: Somewhere between a fifth and a third of all subscribers switch carriers every year. For context, that means consumers switch carriers about twice as often as they switch operating systems (e.g. from iPhone to Android or Windows).

The full text of this article is available at The American.

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