"I'm a fan of George Gilder, the bubble bursting notwithstanding," Ethernet co­inventor Bob Metcalfe (a member of Technology Review's board of directors) told me after his San Diego keynote speech, "Toward Terabit Ethernet." Metcalfe had told his audience not only that optical networks would soon deliver 40- and 100-gigabit-per-second Ethernet--standards bodies are now hammering out the technical specifications--but also that 1,000-gigabyte-per-second Ethernet, which Metcalfe dubbed "terabit Ethernet," would emerge around 2015. Why, I asked, did Metcalfe believe this? "Last night, Gilder spoke to 300 of us at an executive forum about his 'Exaflood' paper, in which he predicts a zettabyte of U.S. Internet traffic by the year 2015," Metcalfe said. "Since I admire Gilder, I extrapolated from his prediction."

An exabyte is 1018 bytes of data; a zettabyte is 1021 bytes. Metcalfe pointed to video, new mobile, and embedded systems as the factors driving this rising data flood: "Video is becoming the Internet's dominant traffic, and that's before high definition comes fully online. Mobile Internet just passed a billion new cell phones per year. Then totally new sources of traffic exist, like the 10 billion embedded microcontrollers now shipped annually."

Did Metcalfe believe that the existing infrastructure--built in the boom years, when great excesses of fiber-optic cable were laid down--could support terabit Ethernet? "That dark fiber laid down then is being lit up, and some routes are now full," he said. "That's the principal pressure to go to 40 and 100 gigabits per second. It seems we can reach those speeds with basically the same fibers, lasers, photodetectors, and 1,500-nanometer wavelengths we have, mostly by means of modulation improvement. But it's doubtful we'll wring another factor of 10 beyond that." Thus, the backbone networks would need to be overhauled and new technologies implemented.

In today's world, bandwidth demand is similar to what processing demand was 20 years ago. You just can't get enough speed, no matter how hard you try. Even when you have enough speed on your own end, some other bottleneck is killing you.

This comes to mind as, over the past few months, I've noticed how many YouTube videos essentially come to a grinding halt halfway through playback and display that little spinning timer. Why don't they just put the word "buffering" on the screen?

All too often, it's not the speed of my connection that's at issue--it's the speed of the connection at the other end. It may not even be the connection speed itself; it may simply be the site's ability to deliver content at full speed under heavy demand.

This concerns me, since I'm an advocate of IPTV and other technologies that need lots of speed to work. We seldom consider the fact that if something becomes hyper-popular (like YouTube), user demand on the system is enormous and can easily break the system from the demand side....

Read On

The bottleneck is rapidly moving back to where it has long resided: at the last mile, where passive optical networks, such as VZ's Fios, are increasingly necessary. For IPTV, content delivery networks (CDN) from Akamai and its increasing throng of video rivals using a variety of ingenious delivery algorithms will eclipse the cumbersome BitTorrent mesh model, which shuffles video files through underused personal computers across the network.

Sara Kyle, Tre Hargett and Ron Jones of the Tennessee Regulatory Authority say they review the data required of telephone companies, even if their review has little or nothing to do with the purpose for which the data was originally required.

This information is particularly useful in evaluating competition levels in Tennessee; further, such information may be necessary in fulfilling our Commission's responsibilities should we decide that a state universal service fund is necessary.

The state commissioners think they have a chance to persuade FCC commissioners Robert M. McDowell and Deborah Taylor Tate to reject the AT&T petition along with one or both of the commission's two Democrats.

The question McDowell and Tate ought to be asking is whether it is the role of the feds to collect information primarily for the use of the states? The states can do that for themselves.

Of course it rankles state officials when change is forced upon them. They perceive and resent the regrettable implication that they cannot be trusted to know what's right. So it’s not surprising they're beseeching McDowell and Tate to let them prune the rules thicket. According to the Arizona Corporation Commission,

[T]he Bell Operating Companies (“BOCs”) in particular are using the forbearance process to achieve wholesale changes to FCC rules and regulations when in fact these changes should be going through the rulemaking process … the type of changes sought in these petitions should be first addressed by the Separations Joint Board and then through the rulemaking process with widespread industry participation …

Perhaps the FCC’s cost allocation rules could be simplified to reflect the reduced uses of separations results. However, wholesale abandonment of the existing rules through the forbearance power is not justified. The Separations Joint Board is currently considering the same separations reform issues raised by this forbearance petition. In 2006, the Commission asked the Joint Board to examine numerous separations questions that affect the obligations of petitioners in this proceeding. The scope of that proceeding is quite broad, including “whether there is a continued need to prescribe separations rules” for price cap incumbent LECs.

Regulators presumably like their jobs. They want to regulate. One of the principle reasons Congress created the forbearance procedure is because it was skeptical that regulators would have any enthusiasm for deregulation.

McDowell and Tate shouldn't fall for this. There's a big picture here, which is we need a strong forbearance process. If the FCC establishes a pattern of rejecting forbearance petitions on picky and technical grounds we could wind up with a forbearance process in theory only, not in practice.

I noted that the data derived from the legacy accounting procedures simply isn’t used anymore to regulate revenue or set prices. That’s true, by the way.

This week a group which calls itself the Ad Hoc Telecommunications Users Committee filed a letter (in which it didn’t identify its members) claiming:

As we explained at the debate, the data produced by the cost allocations at issue have been used by the Commission and private parties in the past (CALLS), are being used by the Commission and private parties in the present (272 Sunset Nonstructural Safeguards, Separations reform and theSpecial Access Rulemaking) and will in all likelihood be used by the Commission and private parties in the future (Special Access Rulemaking, Inter-Carrier Compensation Reform and monitoring the efficacy of the Price Caps formula).

Well, like I said, the commission doesn’t use the data to regulate revenue or set prices, but competitors apparently do use the data to argue that incumbent telephone companies can “afford” to charge lower wholesale prices.

The FCC doesn’t seriously consider these arguments, mostly, because it recognizes that the accounting rules became political long ago and lead to arbitrary conclusions.

What Ad Hoc’s argument shows is the legacy accounting rules have become an unintended device for protecting smaller, possibly inefficient, rivals. But remember, if we ensure that inefficient rivals can be profitable we are requiring that consumers pay higher prices than they would have to in a competitive market.

The rivals want to argue that AT&T shouldn’t be allowed to earn more than legally prescribed rate of return for a legally protected monopoly. In other words, the minimum profit necessary for a company which faces no competition and no risk whatsoever. But AT&T isn’t a monopoly anymore . It faces competition from cable, wireless, satellite, municipally-backed WiFi and power companies. Unwise investments by AT&T can fail. And that’s good.

That’s why the traditional rate-of-return margin afforded to a monopoly is irrelevant. Investors are going to want AT&T to be able to return a profit which corresponds to the profit their investment can make somewhere else.

The argument the CLECs make here is that regulation is needed to protect smaller and possibly inefficient firms from bankruptcy, because without them there would be fewer firms to compete to lower prices for consumers.

But this is not a fair argument because it ignores cable, wireless, satellite, municipally-backed WiFi and power companies. According to Noll and Owen, in The Political Economy of Deregulation (1983),

True competition – the kind that is in the interests of consumers – exists when a firm that tries to charge excessive prices, that offers a poor quality of service, or that has a high price because it is inefficient finds that other firms expand or enter by offering lower prices or better service. The number of companies in an industry is a poor measure of true competition. Better measures take account of structural conditions affecting the incentives to compete or cooperate and the number of firms that could relatively easily enter if the incumbents did not charge competitive prices.

Check out this argument made by Ad Hoc in its letter to the FCC:

AT&T claims (without documentation) to spend $11 million to comply with the subject rules. We explained that $11 million is thousandths of percent of AT&T’s 2007 revenues of $118 billion, and that given 2007 revenues AT&T’s earns $11 million in about forty five minutes.

Stanford Law Professor Lawrence Lessig, who got a chance to lecture a captive Federal Communications Commission during a special public hearing on broadband network management this week, began the lesson quoting from remarks Gerald R. Faulhaber, Professor Emeritus of Business and Public Policy at Wharton, made at Stanford on Dec. 1, 2000 when he was chief economist at the FCC.

I think Prof. Lessig is a gifted and well-intentioned scholar and educator. And Prof. Faulhaber framed the issues well, so it's understandable why Lessig quoted him.

But Faulhaber wasn't on Lessig's page.

A transcript of Faulhaber’s full remarks, available on the Stanford Web site, indicates that Faulhaber was merely summarizing arguments made by others and was actually quite skeptical of the “open access” proposal (an ancestor of net neutrality) that was being discussed.

Lessig Thursday credited Faulhaber with observing in 2000 that the “end-to-end” principle (e2e) equals perfect competition:

where does the e2e argument figure into this?

if I translate this into planet economics, that e2e in engineering is the equivalent of the perfect competitive market that economists know and love.

Now, where does the e2e argument figure into this? Well, the e2e advocates are essentially arguing, if I translate this into planet economics, that e2e in engineering is the equivalent of the perfect competitive market that economists know and love.

But in fact that’s not the way the real world works. It’s neither the economist nirvana of perfect competition nor is it the engineers’ nirvana of e2e. It doesn’t work that way.

First, we notice that customers actually don’t behave as we would wish them to. They keep insisting on things like “I’d rather buy a bundle. I’d rather buy it from one person. I’d rather not have to worry about solving complexity; I’d rather somebody else solve complexity for me,” all of which present enormous profit opportunities for businesses and opportunities to change the technology. And at one level this is what consumers want and this is how it’s going to evolve.

I’ll give you an example, I’ll give you two examples. The first is, and the most obvious, is you should read Dave Clark’s and Marjorie Blumenthal’s paper, which was supposed to be required reading, which will show you that the principles of e2e tend to get violated essentially when, at least in some of the cases that he mentions, customer demand is pushing them to be there. The couple of issues he raised, one is operating in an untrustworthy world, more demanding aps, less sophisticated users.

One of these we seen and we all sort of pooh-poohed, us, you know, cool Internet guys, is the rise of AOL; right? As they put it, somewhat understating the case, “We’re for the people” — “We’re the ISP for the people who go to Jiffy Lube, not the ISP for the people that change their own oil.” And we all pooh-pooh this and we call them “newbies,” and their market share is huge. There’s a market demand for all those nasty things they’re doing. And consumers like it. If we think they’re newbies, tough. So e2e may very well be violated for reasons which are really lower cost or higher value to customers.

Before we allow it to change the burden should be on those who would change its architecture … show me that innovation won’t be harmed from this change. Show me investment won’t be choked. Show me competition will continue. And until you show me that don’t allow [network architecture] to change.

According to Huber, Kellogg and Thorne (Federal Telecommunications Law [1999], 823-830),

[The] initial division of the Bell System turned out to be the easy part. It immediately was clear that the Decree’s restrictions on the divested local companies were impractical, unnecessarily broad, or simply exceptionally onerous, and a steady stream of requests for relief ensued …. Waivers were filed faster than they were processed, leading to growing backlogs before the Department of Justice and Judge Greene: by 1994, the average age of waivers pending before the DOJ and Judge Greene was two and a half years. This breakdown of Judge Greene’s oversight of the telecommunications industry was of serious concern to legislators when they drafted the 1996 Act.

One of the reasons Faulhaber cited for his opposition to open access is the problem of government failure, which Lessig also skipped:

Let me address one thing at the last. Now, we’ve heard something about regulation and that regulators need to step in and fix this problem of open access, and e2e is the touchstone for this. Now, I refer — the notion here is regulators will come in and fix it. And I would refer to this as the high school civics view of regulation. And since engineers really — oh, yeah, right — since engineers usually don’t actually get to see how regulation is done, more or less like Bismark sausages, you can be excused for not understanding what this means. But lawyers who actually often take the same view really should — they see how it’s made — understand what’s going to happen.

So we all sort of think what’s going to happen is a sensible rule gets made, and everybody says “Oh, yeah, that’s very sensible.” It’s never the way it works. It’s not like it — mostly it doesn’t work this way. It never works that way; okay? It’s what you got to understand.

First of all, of course, if you put a regulation in, the reason you put a regulation in is ‘cause you’re making somebody do something they otherwise wouldn’t want to do. So they’re going to object to that. So the first thing that happens is, you know, fifty lobbyists appear in my office, and they’re all over the FCC like a cheap suit. So what you actually started is, you put into place, you know, you’ve put into training this long process of regulatory judicial and legislative hearings, filings, NOIs, MPRMs, years of essentially the FCC or somebody else sitting in the middle of commercial disputes.

There's big difference.

A pro-business conservative supports anything business wants to do.

A free market conservative favors a free marketplace where consumers rule and where businesses can succeed or fail without government interference.

We need the latter.

Who will John McCain pick as his vice-presidential running mate? My guess is Joseph Lieberman. I don't know if Lieberman would choose to run on a Republican ticket but I think he would be a perfect choice for VP and could be a perfect VP.

The accounting rules at issue were designed to restrain telephone prices when AT&T was a monopoly entitled to recover its costs plus a reasonable profit. Rate-of-return or cost-plus regulation, as it was known, was a complete failure. It gave companies like AT&T an incentive to inflate, misallocate and manipulate costs. The companies responded, according to critics, by gold-plating their operations.

AT&T hasn’t been subject to rate-of-return regulation at the FCC or in any of the states in which it operates for 10 years. And no one is proposing to bring it back.

The FCC and the states now merely set maximum prices AT&T can charge (“price caps”), which is why the rules cited in the petition are no longer necessary. The data derived from the legacy accounting procedures simply isn’t used anymore to regulate revenue or set prices.

There are one and perhaps two reasons why the rules have survived.

First is that AT&T’s competitors, who aren’t subject to a similar requirement, have assumed the information AT&T has to file might be useful to them.

Second, the rules continue to provide employment for accountants.

In 1999, Congress was determined to eliminate many if not all of the rules until, at the last minute, the complaints of these two groups were heard.

Now it's the FCC's turn.

Regulation which is unnecessary to protect consumers and which imposes costs and madates detailed disclosure on some competitors but not others is almost always wrong. The justification for these rules has evaporated. Eliminating the rate-of-return accounting rules is at least 10 years overdue.

Also, don't we have a better use for bureaucrats who administer unnecessary rules like these? For example, just yesterday the FCC asked Congress for $25 million to conduct new audits and investigations for the purpose of preventing and remedying waste, fraud and abuse in the Universal Service Fund.

The forbearance process, which I discussed here, has recently come under some criticism from regulatory enthusiasts who claim it deprives the FCC of the right to set its own agenda (which is code for the right to bury and never vote on proposals for meaningful regulatory reform). The rate-of-return accounting rules are a good example why we need the forbearance process.

(Note: The AT&T petition was filed Jan.25, 2007, and if the FCC stored the entire document in a single place I would have included a hyperlink. But they didn't. The document is divided into multiple files which aren't linked to one another. Brilliant. To see the files, go to: http://fjallfoss.fcc.gov/prod/ecfs/comsrch_v2.cgi and search for documents filed on behalf of AT&T on the date above.)

Whitt said in response that Haney had misread his company's comments from last summer. “We consistently have argued that the open access license conditions adopted by the FCC would inject much-needed competition into the wireless apps and handset sectors, but would not by themselves lead to new wireless networks,” he said Monday. “Only if the commission had adopted the interconnection and resale license conditions we also had suggested -- which the agency ultimately did not do -- would we have seen the potential for new facilities-based competition.”

Another way to look at this is if there wasn’t any potential for new facilities-based wireless competition without the interconnection and resale license conditions Google wanted, why would Google have submitted bids for the spectrum which it might have won and had to pay for?

I do agree that prior to the FCC's adoption of two of the four open platform principles Google proposed the company consistently premised its commitment to participate in the auction on the FCC adopting all four principles. I also agree Google was clear that it believed all four principles were necessary to promote competition.

Then it participated in the auction anyway.

This case may reveal how some regulators and some legislators are shrewd, have their own ideas about how to get what they want and even think they know what’s in the best interest of corporations like Google.

It makes sense, as Whitt told Communications Daily, that the interconnection and resale license conditions would seem necessary to a hypothetical competitor who is a network provider. But in its Jul. 9th letter (and in the statement to Communications Daily) Google characterizes all four principles as being relevant to whether a new entrant would bid for the spectrum. For example:

Should the Commission not adopt the four open platforms requirements listed above, we believe it is doubtful that even the most determined and committed new entrant will be able to outbid an equally determined and committed incumbent wireless carrier, or consequently pave the way for second order competition.

Google was presenting an all-or-nothing-offer. But in Washington all-or-nothing-deals are rare. Google must have known this. Google got half of what it asked for (the typical return on investment here). And half a loaf seemed to be enough in view of the fact Google participated in the auction.

If in its prior conduct Google was saying only that it intended to ensure that the reserve price was met but it had no interest in owning the spectrum itself, that wasn’t particularly clear.

Reasonable people might differ, but I think if Google never intended to win the spectrum (unless there was no way around it), and it was merely advancing its hypothesis that the four open platform conditions would summon forth hypothetical new entrants that wasn’t especially clear at the time, either. Nor would it have seemed convincing to many people. Google’s proposal wouldn’t have acquired much momentum. The excitement was around the possibility Google would become the competitor. Google’s previous Jul. 9th letter to the FCC said “Google remains keenly interested in participating in the auction” and its subsequent behavior continued to highlight that interest.

Lawmakers who think spectrum is a valuable public resource for which the taxpayers should be compensated need to wake up for a minute. FCC rulemaking could render the remaining assets worthless, distort wireless competition and contribute to the unfortunate perception of the FCC as a candy store.

Google has made it clear that it plans to weigh in at the FCC as it determines how to re-auction the D-block from the recent 700 MHz auction, and that it wants to open the white spaces between channels 2 and 51 on the TV dial for unlicensed broadband services.

Anna-Maria Kovacs, a regulatory analyst, reported that in the recent 700 MHz auction AT&T Mobility paid an average price of $3.15 per POP in the B-block while Verizon Wireless paid 77 cents per POP in the C-block which was subject to special rules advocated by Google.

Now comes an admission that Google’s main goal was not to win C-block licenses in the auction but to jack up the price just enough so the reserve could be met, according to the New York Times.

“Our primary goal was to trigger the openness conditions,” said Richard Whitt, Google’s Washington telecommunications and media counsel.

Chairman Martin has articulated the critical issues at stake in this proceeding:

The most important step we can take to provide affordable broadband to all Americans is to facilitate the deployment of a third “pipe” into the home. We need a real third broadband competitor….The upcoming auction presents the single most important opportunity for us to achieve this goal. Depending on how we structure the upcoming auction, we will either enable the emergence of a third broadband pipe – one that would be available to rural as well as urban American – or we will miss our biggest opportunity. Such a status quo outcome certainly would not sit well with consumer groups that have been strongly urging us to adopt rules that facilitate the ability of a “third pipe” to develop.

Further, Chairman Martin has observed that Google and other members of the Coalition for 4G in America are “the only parties that have promised to try to provide a national, wireless broadband alternative.”

As Chairman Martin recognizes, the actual method of providing a broadband alternative is through a “real third broadband competitor.” This means that the would-be new entrants should not be aligned with either an incumbent wireline carrier or incumbent wireless carrier. Those carriers, quite rationally, seek to extend and protect their legacy business models, and in particular not take any actions that would jeopardize existing and future revenue streams. For this reason, the appropriate public policy stance is not simply to facilitate an additional spectrum-based broadband platform, but rather to facilitate independent broadband platforms.

Obviously, the idea that an open access requirement would facilitate a third “pipe” was naïve on the part of pliant regulators.

We now have a block of spectrum owned by an incumbent with an open access requirement which aligns nicely with Google’s business model. Yet it’s fairly obvious that the open access requirement contributed to a substantial loss for the Treasury.

The admission by Google’s counsel that winning the spectrum wasn’t the company’s goal and that Google submitted bids for the purpose of spiking the auction price casts doubt on the company’s motivation and veracity in view of Google’s previous representations to the FCC.

It may be that "everyone" attempts to "influence" the regulatory process when they can get away with it, but that doesn't make it right.

And James Gattuso, noting that Comcast and BitTorrent were already working with one another on a solution to their network problems “long before this story broke,” correctly chided me for overlooking how public opinion is also a credible deterrent. James is right, particularly when there is a competitive market. And like it or not, the broadband market is competitive.

A “duopoly,” you say?

Allow me to quote Cornell Professor Alfred E. Kahn (formerly chairman of the New York Public Service Commission, chairman of the Civil Aeronautics Board under President Jimmy Carter and a father of airline deregulation) from testimony before the Federal Trade Commission last year:

There is no consensus among economists about the likely sufficiency of competition under duopoly—in the present instance, between landline telephone and cable companies in the offer of broadband access to the Internet—although evidence of active competition between the two, such as is actually occurring, might provide sufficient basis for deregulation, particularly in light of the aforementioned rapidity of technological change. By the same token, the presence of an actively competing wireless provider or providers—would, in the mind of most, justify—indeed demand—de- or non-regulation. Wireless voice service is one of the great success stories in telecommunications over the last few decades. I understand that the prospects for wireless data in the near future are excellent. Any analysis of future competition in Internet access must consider the possibility—or likelihood—that the cable and telephone duopoly will be joined by three or four wireless suppliers in the near future.

I realize mobile wireless broadband access isn’t yet identical in terms of price and speed. But we all know it’s heading in that direction. The point is, if landline telephone and cable companies who offer of broadband access to the Internet abuse their market dominance they will merely accelerate the growth of mobile wireless broadband services. The correct measure of competition isn’t what we have today but what we will or could have tomorrow.

Call it what you will: The threat of regulation, public opinion, enlightened self-interest or simply the desire to be a good corporate citizen – Despite the absence of regulation Comcast is rolling out DOCSIS 3.0 beginning in the Minneapolis and St. Paul region – providing up to 50 mbps downloads and 5 mbps uploads; Comcast expects to deliver even faster speeds of up to 100 Mbps to its customers over the next two years with the capability of delivering higher speeds of 160 Mbps or more in the future.

Rather than slow traffic by certain types of applications -- such as file-sharing software or companies like BitTorrent -- Comcast will slow traffic for those users who consume the most bandwidth, said Comcast's [Chief Technology Officer, Tony] Warner. Comcast hopes to be able to switch to a new policy based on this model as soon as the end of the year, he added. The company's push to add additional data capacity to its network also will play a role, he said. Comcast will start with lab tests to determine if the model is feasible.

Setting aside whether the pursuit of profit is a good thing or not, what this episode actually proves is that the Federal Communications Commission has done its job, the threat of regulation is a credible deterrent to prevent unreasonable discrimination by broadband service providers and we don't need a new regulatory framework with the unintended consequences which regulation always entails.

If we want innovation, more choices and ultimately lower prices we have to be prepared to allow broadband service providers to experiment and to succeed or fail in the market. Regulator always discourages all three.

We also need an enforcement backstop, of course. But it doesn't have to be formalistic and inflexible.

Aside from FCC authority under the Communications Act of 1934 as amended, the professional staff of the Federal Trade Commission has concluded that antitrust law is "well-equipped to analyze potential conduct and business arrangements involving broadband Internet access."

Here at the Tech Policy Summit in Hollywood, one panelist claimed during a breakout session that antitrust enforecement in this area is impaired as a result of the Supreme Court's decision in Verizon v. Trinko (2004). But it isn't so.

In that case, the plaintiff was trying to convert an alleged breach of the Communications Act into an antitrust claim under §2 of the Sherman Act. In other words, the plaintiff was trying to expand the application of antitrust jurisprudence. The Court ruled that the Telecommunications Act of 1996 neither expanded nor limited the antitrust laws.

The 1996 Act has no effect upon the application of traditional antitrust principles. Its saving clause--which provides that "nothing in this Act ... shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws," 47 U. S. C. §152--preserves claims that satisfy established antitrust standards, but does not create new claims that go beyond those standards.

The bottom line is that we have three federal agencies, which include the Antitrust Division of the Department of Justice in addition to the two previously mentioned, who have the jurisdiction, expertise and some actual experience to intervene if broadband providers unreasonably discriminate.

Groups like Public Knowledge have done a great job and can declare victory now.

In the macro world, something like this could make a mag lev train a lot more viable and cost effective or saving a significant amount of the 6.1% of the power the U.S. generates but loses across the transmission lines (worth around $19.5B per year).

The full paper can be found here (subscription required).

Of course they’re a long way from doing anything useful with this little molecule (assuming it does what they claim at all) but I’m always interested in discoveries today that can turn an industry on its head tomorrow.

Raise the rates enough and the deficit will grow even if spending is cut. Then spending will have to be further retrenched, ultimately reaching the point where the country will not be able to defend itself.

In general, around the world, the countries with low or declining tax rates increase their government spending more than countries with high or rising tax rates. That's because the low tax countries grow six times faster than the high tax countries do.

What matters is not the deficit, but the rate of economic growth, which depends on low tax rates, secure property rights, open trade, and stable money.

If broadband providers turn the Internet into a “world where those who pay can play, but those who don’t are simply out of luck,” current antitrust law can solve the problem says House Judiciary Chairman John Conyers, Jr. (D-MI).

I believe that antitrust law is the most appropriate way to deal with this problem – and antitrust law is not regulation. It exists to correct distortions of the free market, where monopolies or cartels have cornered the market, and competition is not being allowed to work. The antitrust laws can help maintain a free and open Internet.

The Federal Trade Commission staff have expressed the same opinion as Conyers:

The competitive issues raised in the debate over network neutrality regulation are not new to antitrust law, which is well-equipped to analyze potential conduct and business arrangements involving broadband Internet access.

[N]either telephone companies nor cable companies, when providing broadband services, are required to adhere to the more stringent regulatory regime for telecommunications services found under Title II (common carrier) of the 1934 Act. However, classification as an information service does not free the service from regulation. The FCC continues to have regulatory authority over information services under its Title I, ancillary jurisdiction. (footnotes omitted)

But if there’s a risk broadband providers could do something bad does that mean Congress should prohibit everything? Not according to Conyers.

[W]hen it comes to the Internet, we should always proceed cautiously. Unless we have clearly documented the existence of a significant problem that needs regulating, I do not believe Congress should regulate. And even in those instances, we should tread lightly.

A survey by the Japan Internet Providers Association shows 40% of Japanese ISPs perform network management, according to Yomiuri Shimbun, and the trend is growing.

Of the 276 respondents, 69 companies said they restricted information flow through their lines. A total of 106 companies, including those that rent lines from infrastructure owners, impose such restrictions. Twenty-nine companies said they were planning to take similar measures.

Hat tip: Ken Robinson