ICLE & TechFreedom Joint Comments on Competition Policy and the Role of the FCC

ICLE and TechFreedom filed joint comments in response to questions from the House Committee on Energy and Commerce relating to its third white paper, “Competition Policy and the Role of the Federal Communications Commission,” in its series of white papers addressing the need for a rewrite of the Communications Act to address modern communications markets.

Our comments focus on the disconnect between the formalism of the current Telecommunications Act and the sort of effects-based analysis that modern competition policy demands:

There is, however, a fairly simple (philosophically, at least) solution: Adopt effects- based competition principles from antitrust to adjudicate disputes arising within the purview of the FCC, and reject the formalistic presumptions and resulting regulatory apparatus of the Communications Act. Such a framework is the best way, perhaps the only way, for Congress to give the FCC both the flexibility needed to keep up with technological change and the analytical rigor needed to ensure that the FCC’s interventions actually do more to help consumers than to harm them.

Whereas the 1996 Act, particularly in Title II, adopts formalistic presumptions and imposes specific regulatory outcomes, even in the face of ever-increasing uncertainty and technological change, an effects-based approach would generally employ ex post analysis of conduct and a broad assessment of its economic consequences to determine the propriety of various actions. Instead of foreclosing or mandating specific conduct, it allows innovation, technological development and changes in consumer preferences to guide conduct, intervening only where actual competitive harms develop (or, in a few cases, are substantially likely to develop in the future).

Such an approach stands in stark contrast to the 1996 Act, which, as Bob Crandall has described it,

is not deregulation but a vast new regulatory program designed to mold and shape competition through mandatory wholesale leasing of pieces of an incredibly complicated network at prices that are based on regulators’ imperfect understanding of costs.

We also address the problem that Net Neutrality presents for sensible competition policy reform at the FCC:

Net Neutrality is, in some ways, borne out of the same realization that animates our comments here: The rise of broadband and the delivery of Everything over IP have so disrupted the existing regulatory regime that competition concerns can no longer be adequately addressed by the existing regulations. But where Net Neutrality falters is in its embrace of both the vertical structural assumptions of the Act, as well as its affinity for the Act’s outdated, ex ante, prescriptive approach. Moreover, Net Neutrality is itself inherently non-neutral, in that it begins with the assumption (discussed above and enshrined in the Act) that innovation and competition in complementary markets should always trump network innovation and competition. As a result, instead of arguing for an ex post assessment of competitive effects arising out of the uncertain and always-evolving relationship between broadband networks and edge providers, Net Neutrality advocates essentially adopt the apparatus of Title II as their competition policy lodestar.

The Comments are available here:

ICLE/TechFreedom Comments on Competition Policy and the Role of the FCC