AEIdeas

The public policy blog of the American Enterprise Institute

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Discussion: (7 comments)

  1. Totally figures. If a democrat puts this much effort into something, it HAS to benefit someone/some group they are in bed with. To put such a name as ‘net neutrality’ on it only adds insult to injury. Libs all think ‘the people’ are stupid. Time to (re) educate them.

  2. SeattleSam

    I thought George Stigler got a Nobel long ago for demonstrating that regulators exist to serve the interests of those they regulate?

    1. Jeff Eisenach

      Thanks for this comment. Yes, Stigler did win the Nobel (1982) in part for his work on public choice. (It was awarded “for his seminal studies of industrial structures, functioning of markets and causes and effects of public regulation.”) Coase’s (1991) Nobel was “for his discovery and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy.” But Coase’s 1959 article in The Journal of Law and Economics (“The Federal Communications Commission”) preceded Stigler’s 1971 Bell Journal article (“The Theory of Economic Regulation”) by more than a decade.

  3. While I am leery of government interference in private enterprise, I’m not really buying the argument in the case of ISPs because, at least in the cable business, the nature of the industry is that they exist as quasi-monopolies, with geographical areas carved up between them. Obviously there are infrastructural reasons why this is so. But absent regulation, what is the incentive for my cable company not to throttle downloads from competing content middlemen such as Apple and Amazon in order to encourage me to use the ISP’s higher-priced and inferior services instead?

    Furthermore, to argue that removing net neutrality obligations will leave content providers worse off but consumers better off is nonsensical. I suppose you could call me “better off” if I have a cheaper cable bill but fewer content options because providers have found that creating and distributing content isn’t as profitable as it once was. But by that logic, as a consumer I’d be better off if cable disappeared altogether and I went back to the 3-channel universe of free TV.

    1. Jeff Eisenach

      Thanks for this comment. I understand your point. Two responses: First, I’m not suggesting ISPs should be allowed to engage in anticompetitive conduct, just that their conduct ought to be scrutinized on a case by case basis under the antitrust laws rather than banned outright, because a ban almost surely results in stopping a lot of beneficial conduct. Second, as for the effects of net neutrality regulation on consumers, the findings I cited are from Nick Economides, who is a Net Neutrality supporter. And really, what is the basis for thinking that forcing ISPs to subidize online content providers would, on net, benefit consumers?

      1. The problem with relying on antitrust laws is that developing common law takes a hell of a long time and, particularly after Matsushita and Twombly, SCOTUS has all but neutered antitrust as an easily available means of enforcing such laws. This is particularly troublesome when a plaintiff would almost certainly require discovery to develop a case (i.e. it would be exceptionally difficult for one to determine their ISP was throttling their access alone); discovery which under Twombly would be nearly impossible to force without some sort of fairly strong factual groundwork to support your claim. I don’t think we need any sort of strong regulation of the net (look how the FCC has screwed up TV) but enforcing network neutrality and keeping it minimal and reasonable would keep the net open and continue the status quo established by dial ups’ common carriage regime.

        What’s quite troubling is that while broadband providers now exist as quasi monopolies or duopolies, DSL is seen as a rather quickly dying technology, meaning that in a few years your only means of accessing broadband may very well be through a single provider, the cable company. Even Verizon has noted it has no intention of going national with its fiber optics to the X initiatives. American broadband speeds are god awful compared to countries with fractions of our GDP and much of that is chalked up to the fact that their governments force those that own the cable and fiber optics to sell access to other cable providers, creating a robustly competitive market in broadband provision. That is what we had in dial up (i.e. why you could choose from dozens of ISPs), unfortunately the Bush era FCC made sure that regime wouldn’t apply to broadband and now were stuck in this inherently anti-competitive black hole where consumers cannot rely on the free market to ensure nondiscrimination (or fast broadband speeds), in effect relying on companies that have much in common with natural monopolies.

  4. John Thompson

    this removal is net neutrality is taking things back to the concept of termination rate as content providers will be now paying to terminate content of carrier networks while on the other hand the FCC is arguing for eliminating termination rate regime by 2016 in favour of “bill and keep” settlement regime. Wouldn’t bill and keep tacitly be eliminating net neutrality in the long run as no settlements will accrue between content providers ISP carriers or between ISPs and ISp for that matter? Unless, of course “Bill and Keep” is made to not include content and application providers terminating on ISPs

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