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Monday, Sep. 10, 2007 at 12:05 PM
By Nate Anderson | Published: September 06, 2007 - 03:53PM CT
The Department of Justice's Antitrust Division has two words for all the network neutrality backers who believe that a bit of government regulation could go a long way towards keeping the Internet open: trust us. In comments just filed with the Federal Communications Commission, the top lawyers from the Antitrust Division called preemptive network neutrality regulations a bad idea, instead arguing for a free market system in which the DoJ would step in to correct any antitrust violations after they occur.
The filing is the DoJ's response to the FCC's continuing inquiry into "broadband industry practices." The FCC is trying to determine if some kind of network neutrality regulations might be necessary, and if so, what form they should take. The DoJ has no doubts, saying, "The FCC should be highly skeptical of calls to substitute special economic regulation of the Internet for free and open competition enforced by the antitrust laws."
The arguments in the paper are surprisingly lacking in depth, though one assumes that the Antitrust Division has a least some expertise in this area after examining several major telecom mergers over the last few years. Much of the filing is taken up with pointing out the incredible awesomeness of the free market, which makes possible "the kinds and quality of goods and services that consumers desire.” (How's that working out, xMac true believers?)
The basic arguments that relate directly to net neutrality are twofold. One, the DoJ points out that there have so far been few real violations of the neutrality principle in the US. When egregious examples have come to light (rural telco Madison River was smacked down by the FCC when it began blocking VoIP calls), they have been handled quickly. Rather than lay down a "prophylactic" system of regulations, the DoJ believes it would be better to leave the market unregulated and deal with problems as they come up.
The second major argument is that network operators need to massively expand their capacity and consumers will be stuck paying the bill if network neutrality is enacted. "Several studies have noted," says the DoJ, "that prohibiting broadband providers from charging content providers directly would lead consumers shouldering a disproportionate share of the costs necessary to upgrade network infrastructure."
Left unexplained is exactly how a network infrastructure has been paid for over the last 15 years as Internet traffic as exploded. Here's a hint: it hasn't been done by forcing every website to pay every major network operator if said website wants to reach customers a little faster. It also hasn't been done by sticking consumers with the bill in its entirety, as the DoJ filing appears to indicate. Content providers do pay for access to the network; they pay vast sums of cash for bandwidth, in fact, and that money filters out to the ISPs that carry their traffic through peering and carriage arrangements.
The US Post Office example also rears its ugly head. "No one challenges the benefits to society of these differentiated products; nor does anyone seriously propose that the United States Postal Service be banned from charging different fees for next-day delivery van for bulk mailers," says the DoJ. It's not quite clear how this is supposed to apply to the network neutrality debate. No one is seriously proposing that ISPs not be able to sell different speed and bandwidth tiers, either (ISPs already do this, of course, without complaint from anyone).
The report does makes a solid point about the “ambiguity of what conduct needs to be prohibited." With many different definitions of network neutrality, debaters sometimes sound like they're talking right past one another.
The filing has already attracted scrutiny from groups like Public Knowledge, which attacked the DoJ in a statement today. "The filing is filled with mischaracterizations of what Net Neutrality will preserve for consumers," said Gigi Sohn, president of the group. "Most blatantly, the DoJ failed to recognize that Net Neutrality is a protection for consumers and for Internet companies against discrimination by telephone and cable companies. Net Neutrality would not restrict the types of services that telephone and cable companies could offer; such a policy would make certain that those companies had to do so in a nondiscriminatory fashion as the law originally intended."
Companies and consumers both currently pay to access the Internet; the money comes from both ends of the connection. And both groups are paying for complete access to the "cloud." If network operators attempt to go after extra revenues from web operators, it would create a huge group of people "inside the cloud" that want to be paid. Instead of setting up a hot new web site, paying for plenty of bandwidth, and launching your business to the public, web site operators would need to pay not only their hosting provider but also Comcast, AT&T, Verizon, and a gazillion other networks that sit between them and their potential customers. Getting on the information superhighway thus becomes only the first stop on a very long toll road.
And, of course, let’s not forget that the most US consumers have only two choices (if they're lucky): cable and DSL. "Voting with your dollar" can be tricky or even impossible in many areas. Regulation may not be called for, but the DoJ report seems rather light on solid arguments to support that claim.
Filed under: FCC, Net neutrality, DoJ, Internet, Law
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