What are you looking for?

Showing 9 of 105 Results in Net Neutrality

Recipes for Mischief – Viacom versus YouTube, Al Franken on privacy and anti-trust, net neutrality, and more

Popular Media WATCH: Video

https://www.youtube.com/watch?v=07RWvFoJJqI

Continue reading
Antitrust & Consumer Protection

I Will be Participating Today on the Live Webcast “This Week in Law”

Popular Media Today at 11AM PT I will be participating on the live webcast “This Week in Law” along with TechFreedom Senior Adjunct Fellow Larry Downes. Denise . . .

Today at 11AM PT I will be participating on the live webcast “This Week in Law” along with TechFreedom Senior Adjunct Fellow Larry Downes. Denise Howell will be hosting and we will also be joined by fellow participant Evan Brown. This week we will be discussing various topics in tech policy including Senator Al Franken’s lambast of Facebook and Google, the newly opened antitrust investigation of Motorola Mobility by the European Commission, and the continued problem of spectrum crunch.

This Week in Law is recorded live every Friday at 11:00am PT/2:00pm ET and covers topics primarily in law, technology, and public policy. You do not have to register, just follow this link at 11:00am PT/2:00pm ET to watch.

Filed under: antitrust, general, net neutrality, politics, privacy

Continue reading
Antitrust & Consumer Protection

Hovenkamp’s Cases and Materials on Innovation and Competition Policy

Popular Media Herb Hovenkamp has posted his new casebook on Innovation and Competition Policy to SSRN, where one can download the chapters individually.  This is a very . . .

Herb Hovenkamp has posted his new casebook on Innovation and Competition Policy to SSRN, where one can download the chapters individually.  This is a very nice development for students; and the book seems perfectly fit for a course on Innovation and Competition Policy — for which it was designed — but also appropriate for a variety of similarly-themed seminar courses.

Professor Hovenkamp describes the aims of the book here:

This is not an “IP/antitrust” casebook.  There are already excellent books in that field.  Only about half of the principal cases printed in this book are antitrust decisions.  I use this book to present issues of innovation and competition policy to students in a broader context, examining not only antitrust but also the intellectual property laws and including shorter examination of several other topics, such as telecommunications, net neutrality, and competition issues raised by the DMCA.  Brief attention is also given to the industrial organization literature on innovation.

This casebook begins with a chapter on patent scope and its implications for innovation, with brief coverage of the Schumpeter-Arrow literature and the problem of sequential innovation.  Then it looks in some detail at the problem of complementary relationships, addressed in antitrust mainly through the law of tying arrangements.  After that is a chapter on remedies issues, followed by chapters on the patent system, copyright, practices that restrain innovation, and intellectual property misuse.  Another chapter covers exclusionary practices and another a wide variety of collaborative arrangements, including pooling, standard setting, blanket licenses, and the like.  The final chapter focuses on vertical restraints and the post-sale (exhaustion) doctrine.

I hope to keep this book up to date on a regular basis and welcome any suggestions for revision or inclusion.  My overall goal, however, is to hold the book somewhere in the range of its current length.

 

Filed under: antitrust

Continue reading
Antitrust & Consumer Protection

The Spectrum Argument Lives, Debunking Letter-Gate, and Why the DOJ Is Still Wrong to Try to Stop the AT&T/T-Mobile Merger

Popular Media Milton Mueller responded to my post Wednesday on the DOJ’s decision to halt the AT&T/T-Mobile merger by asserting that there was no evidence the merger would lead to “anything . . .

Milton Mueller responded to my post Wednesday on the DOJ’s decision to halt the AT&T/T-Mobile merger by asserting that there was no evidence the merger would lead to “anything innovative and progressive” and claiming “[t]he spectrum argument fell apart months ago, as factual inquiries revealed that AT&T had more spectrum than Verizon and the mistakenly posted lawyer’s letter revealed that it would be much less expensive to expand its capacity than to acquire T-Mobile.”  With respect to Milton, I think he’s been suckered by the “big is bad” crowd at Public Knowledge and Free Press.  But he’s hardly alone and these claims — claims that may well have under-girded the DOJ’s decision to step in to some extent — merit thorough refutation.

Read the full piece here

Continue reading
Antitrust & Consumer Protection

The Law and Economics of Network Neutrality

Scholarship Abstract The Federal Communications Commission’s Network Neutrality Order regulates how broadband networks explain their services to customers, mandates that subscribers be permitted to deploy whatever . . .

Abstract

The Federal Communications Commission’s Network Neutrality Order regulates how broadband networks explain their services to customers, mandates that subscribers be permitted to deploy whatever computers, mobile devices, or applications they like for use with the network access service they purchase, imposes a prohibition upon unreasonable discrimination in network management such that Internet Service Provider efforts to maintain service quality (e.g. mitigation congestion) or to price and package their services do not burden rival applications.

This paper offers legal and economic critique of the new Network Neutrality policy and particularly the no blocking and no discrimination rules. While we argue the FCC‘s rules are likely to be declared beyond the scope of the agency’s charter, we focus upon the economic impact of net neutrality regulations. It is beyond paradoxical that the FCC argues that it is imposing new regulations so as to preserve the Internet’s current economic structure; that structure has developed in an unregulated environment where firms are free to experiment with business models – and vertical integration – at will. We demonstrate that Network Neutrality goes far further than existing law, categorically prohibiting various forms of economic integration in a manner equivalent to antitrust’s per se rule, properly reserved for conduct that is so likely to cause competitive harm that the marginal benefit of a fact-intensive analysis cannot be justified. Economic analysis demonstrates that Network Neutrality cannot be justified upon consumer welfare grounds. Further, the Commission’s attempt to justify its new policy simply ignores compelling evidence that “open access” regulations have distorted broadband build-out in the United States, visibly reducing subscriber growth when imposed and visibly increasing subscriber growth when repealed. On the other, the FCC manages to cite just one study – not of the broadband market – to support its claims of widespread foreclosure threats. This empirical study, upon closer scrutiny than the Commission appears to have given it, actually shows no evidence of anti-competitive foreclosure. This fatal analytical flaw constitutes a smoking gun in the FCC’s economic analysis of net neutrality.

Continue reading
Antitrust & Consumer Protection

Maureen Ohlhausen to FTC

Popular Media Congratulations to Maureen Ohlhausen on the announcement that President Obama intends to nominate her to replace William Kovacic on the Federal Trade Commission.  This is . . .

Congratulations to Maureen Ohlhausen on the announcement that President Obama intends to nominate her to replace William Kovacic on the Federal Trade Commission.  This is an excellent appointment.  The Washington Post observes:

Ohlhausen comes from Wilkinson Barker Knauer law firm, where she is a partner in the firm’s privacy, data protection and cyber security practice. Before going to the firm, she was a policy counsel at trade group Business Software Alliance.

She is also an FTC veteran. Ohlhausen served as a director in the Office of Policy Planning from 2004 to 2008 where she worked on issues related to e-commerce and advertising. She worked on an Internet access task force that explored net neutrality debates and the competition in the broadband industry.

Maureen is also a George Mason alum, and occasional adjunct professor, which is great news for the school in its own right.  I’ve had the pleasure of working with Maureen at the Commission.  She is thoughtful, understands competition law and consumer protection at a high-level, has deep institutional knowledge of markets high-tech markets, and is an excellent addition to the Commission.

Congratulations!

Filed under: antitrust, federal trade commission

Continue reading
Antitrust & Consumer Protection

Net Neutrality, the MetroPCS Complaint, and Low-Income Consumers

Popular Media I blogged a bit about the MetroPCS net neutrality complaint a few weeks ago.  The complaint, you may recall, targeted the MetroPCS menu of packages . . .

I blogged a bit about the MetroPCS net neutrality complaint a few weeks ago.  The complaint, you may recall, targeted the MetroPCS menu of packages and pricing offered to its consumers.  The idea that MetroPCS, about one-tenth the size of Verizon, has market power is nonsense.  As my colleague Tom Hazlett explains, restrictions on MetroPCS in the name of net neutrality are likely to harm consumers, not help them:

Indeed, low-cost prepaid plans of MetroPCS are popular with users who want to avoid long-term contracts and are price sensitive. Half its customers are ‘cord cutters’, subscribers whose only phone is wireless and usage is intense. Voice minutes per month average about 2,000, more than double that of larger carriers.  The $40 plan is cheap because it’s inexpensively delivered using 2G technology.   It is not broadband (topping out, in third party reviews, at just 100 kbps), and has software and capacity issues. In general, voice over internet is not supported by the handsets and video streaming is not available on the network. The carrier deals with those limitations in three ways.

First, the $40 per month price tag extends a fat discount. Unlimited everything can cost $120 on faster networks. Second, it has also deployed new 4G technology, offering both a $40 tier similar to the 2G product (no video streaming), but also a pumped up version with video streaming, VoIP and everything else – without data caps – for $60 a month. Of course, this network has far larger capacity and is much zippier (reliable at 700 kbps).  PC World rated the full-blown 4G service “dirt cheap”.
Third, to upgrade the cheaper-than-dirt 2G experience, MetroPCS got Google – owner of YouTube – to compress their videos for delivery over the older network. This allowed the mobile carrier to extend unlimited wildly popular YouTube content to its lowest tier subscribers.  Busted! Favouring YouTube is said to violate neutrality. …

So much for the “consumer welfare” case for net neutrality in practice.  Of course, the FCC mandate is one of “public interest,” and not just consumer welfare.  So — perhaps another case can be made to defend the MetroPCS complaint?   Malkia Cyril from the Center for Media Justice offers just such a case in a recent blog post.  The problem with MetroPCS satisfying consumer demand for low-cost prepaid plans? Cyril argues that the “Lowering the price for partial Internet service while calling it “unlimited access” is a fraudulent gimmick that Metro PCS hopes will confuse low-income consumers into buying its phones,” and that it is “un-American to give low-income communities substandard Internet service that creates barriers to economic opportunity and democratic engagement.”

Cyril is wrong that competition for low-price plans makes low-income consumers worse off.  The claim is the same one that is often made in defense of restricting the access to low-income individuals to other products (and especially consumer credit) because their purchasing decisions cannot be trusted, i.e. the revealed preferences of those 8 million consumers should be substituted for by the Federal Communications Commission in this case.  This is precisely the type of claim for which a little bit of economic analysis can go a long way in shedding some light.

David Honig, co-founder of the liberal Minority Media & Telecommunications Council, makes the relevant points (HT: Hazlett):

One of the wireless carriers is offering three packages, all of VOIP-enabled (so they can get services like Skype) with free access to any lawful website, and all of them clearly labeled:

• Plan A: $40, with no multimedia streaming (that is, no movie downloads such as Netflix, porn, etc.)

• Plan B: $50, with metered multimedia streaming.

• Plan C: $60, with unlimited multimedia streaming.

Could you decide which of these three packages meets your needs?

Or is all this just too confusing? Cyril thinks so.

She writes that Plan A “will confuse low-income consumers” into buying this carrier’s cell phones because they won’t be able to figure out that “if you want the WHOLE Internet, you just have to pay more.”

Well, actually you don’t have to pay more. The most expensive option — Plan C — costs $40 less than the least expensive offering of any of the other carriers. And if you later discover you don’t like Plan A, you can upgrade to Plan B or Plan C with no penalty, or you can pay the $100 it would cost to get service similar to Plan C from competing carriers. And you can do that immediately, since none of these plans has an early termination fee. What’s wrong with paying less for the particular services you want?

Cyril is making a common mistake among us lefties when it comes to low income people — she is being paternalistic. Those poor poor people. They can’t think for themselves, so the government has to make decisions for them. In this case, Cyril argues, the FCC should outlaw Plan A (and maybe Plan B) and require every carrier to offer only full-menu service like Plan C. All this in the name of “net neutrality.”

If I’ve learned anything from my 45 years working with low income folks, it’s this: they’re intelligent and they’re resourceful. They have to be in order to survive. They don’t appreciate condescension or sloganeering in their name. And they have sense enough to know whether they’d rather use an extra $20 a month for movie downloads or for movie tickets — and would rather get discounts for services they do not want or need. …

What the FCC doesn’t need to do is increase costs for those who can least afford it. As long as there’s full transparency, low income people ought to be able to choose Plan A, B or C. Low income people — the underserved — don’t need the FCC to decide, for them, how they can spend their money.

Well put.

This relates to an important economic point that the proponents of these types of regulation often miss, including in the context of lawyer licensing, but also with respect to the hundreds of state and local regulations impacting hundreds of industries that create barriers to entry in the provision of medical services, dental services, hairdressing, etc.  The introduction of lower quality products provides greater choice and significant economic value.   The fact that not all consumers demand (or can afford) premium brands and services does not mean that consumers are exploited.   Recall Milton Friedman’s statement that lawyer licensing is very much like requiring consumers desiring an automobile to purchase a Cadillac.  In this case, low-income consumers would bear the brunt of a restriction against the type of plan offered by MetroPCS.

There is a longstanding debate over the differences between the FCC’s “public interest” standard and the “consumer welfare” standard used in traditional antitrust analysis.  Sometimes, the two appear to conflict.  Sometimes, as is the case here, with the benefit of economics it is clear the two standards converge.  Here’s hoping the FCC doesn’t take the bait.

Filed under: antitrust, behavioral economics, economics, net neutrality

Continue reading
Antitrust & Consumer Protection

Net neutrality and Trinko

Popular Media Commentators who see Trinko as an impediment to the claim that antitrust law can take care of harmful platform access problems (and thus that prospective rate . . .

Commentators who see Trinko as an impediment to the claim that antitrust law can take care of harmful platform access problems (and thus that prospective rate regulation (i.e., net neutrality) is not necessary), commit an important error in making their claim–and it is a similar error committed by those who advocate for search neutrality regulation, as well.  In both cases, proponents are advocating for a particular remedy to an undemonstrated problem, rather than attempting to assess whether there is really a problem in the first place.  In the net neutrality context, it may be true that Trinko would prevent the application of antitrust laws to mandate neutral access as envisioned by Free Press, et al.  But that is not the same as saying Trinko precludes the application of antitrust laws.  In fact, there is nothing in Trinko that would prevent regulators and courts from assessing the anticompetitive consequences of particular network management decisions undertaken by a dominant network provider.  This is where the concerns do and should lie–not with an aesthetic preference for a particular form of regulation putatively justified as a response to this concern.  Indeed, “net neutrality” as an antitrust remedy, to the extent that it emanates from essential facilities arguments, is and should be precluded by Trinko.

But the Court seems to me to be pretty clear in Trinko that an antitrust case can be made, even against a firm regulated under the Telecommunications Act:

Section 601(b)(1) of the 1996 Act is an antitrust-specific saving clause providing that “nothing in this Act or the amendments made by this Act shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws.”  This bars a finding of implied immunity. As the FCC has put the point, the saving clause preserves those “claims that satisfy established antitrust standards.”

But just as the 1996 Act preserves claims that satisfy existing antitrust standards, it does not create new claims that go beyond existing antitrust standards; that would be equally inconsistent with the saving clause’s mandate that nothing in the Act “modify, impair, or supersede the applicability” of the antitrust laws.

There is no problem assessing run of the mill anticompetitive conduct using “established antitrust standards.”  But that doesn’t mean that a net neutrality remedy can be constructed from such a case, nor does it mean that precisely the same issues that proponents of net neutrality seek to resolve with net neutrality are necessarily cognizable anticompetitive concerns.

For example, as Josh noted the other day, quoting Tom Hazlett, proponents of net neutrality seem to think that it should apply indiscriminately against even firms with no monopoly power (and thus no ability to inflict consumer harm in the traditional antitrust sense).  Trinko (along with a vast quantity of other antitrust precedent) would prevent the application of antitrust laws to reach this conduct–and thus, indeed, antitrust and net neutrality as imagined by its proponents are not coextensive.  I think this is very much to the good.  But, again, nothing in Trinko or elsewhere in the antitrust laws would prohibit an antitrust case against a dominant firm engaged in anticompetitive conduct just because it was also regulated by the FCC.

Critics point to language like this in Trinko to support their contrary claim:

One factor of particular importance is the existence of a regulatory structure designed to deter and remedy anticompetitive harm. Where such a structure exists, the additional benefit to competition provided by antitrust enforcement will tend to be small, and it will be less plausible that the antitrust laws contemplate such additional scrutiny.

But I don’t think that helps them at all.  What the Court is saying is not that one regulatory scheme precludes the other, but rather that if a regulatory scheme mandates conduct that makes the actuality of anticompetitive harm less likely, then the application of necessarily-imperfect antitrust law is likely to do more harm than good.  Thus the Court notes that

The regulatory framework that exists in this case demonstrates how, in certain circumstances, “regulation significantly diminishes the likelihood of major antitrust harm.”

But this does not say that regulation precludes the application of antitrust law.  Nor does it preclude the possibility that antitrust harm can still exist; nor does it suggest that any given regulatory regime reduces the likelihood of any given anticompetitive harm–and if net neutrality proponents could show that the regulatory regime did not in fact diminish the likelihood of antitrust harm, nothing in Trinko would suggest that antitrust should not apply.

So let’s get out there and repeal that FCC net neutrality order and let antitrust deal with any problems that might arise.

Filed under: antitrust, essential facilities, exclusionary conduct, monopolization, net neutrality, technology Tagged: Competition law, FCC, Federal Communications Commission, Free Press, Monopoly, net neutrality, Network neutrality, regulation, Telecommunications Act

Continue reading
Antitrust & Consumer Protection

Welcome to Net Neutrality

Popular Media Recently, I’ve been blogging about the difference between so-called “bias” in vertically integrated economic relationships and consumer harm (e.g., here and here).  The two are . . .

Recently, I’ve been blogging about the difference between so-called “bias” in vertically integrated economic relationships and consumer harm (e.g., here and here).  The two are different.  Indeed, vertical integration and contractual arrangements are generally pro-consumer and efficient.   Many of the same arguments surrounded the net neutrality debate with critics largely skeptical that the legislation was not needed (antitrust could be used when such contractual arrangements actually generated competitive harm) and would chill pro-competitive behavior.

In January, the Federal Communications Commission has now received its first complaint under the Order against MetroPCS.  So, is the complaint about a monopolist Internet Service Provider (ISP) employing vertical contracts to exclude rivals and harm consumers?  You be the judge.  My colleague Tom Hazlett describes the situation in his (always) excellent Financial Times column:

MetroPCS, hit with its first formal complaint, is an upstart wireless network offering low prices and short-term contracts. As part of their $40 a month “all you can eat” voice, text and data plan, they slipped in a bonus: free, unlimited YouTube videos, customised to run fast and clear.  Activist groups, led by Free Press, went ballistic. Their petition to the FCC declared that the mobile provider was favouring YouTube over other video sites, creating just the sort of “walled garden” that would destroy the internet. “The new service plans offered by MetroPCS give a preview of the future in a world without adequate protections for mobile broadband users,” they wrote.

The complaint performs a great public service, revealing just how net neutrality would “adequately protect mobile broadband users”. In fact, MetroPCS advances the interests of consumers by supporting enhanced access to the applications most popular with users.  Such arrangements do not sabotage internet development, but drive it.

But what about the possibility of consumer harm so prominent in the Net Neutrality Order? As Hazlett explains, not only is such a competitive threat unlikely, but the regulatory restrictions imposed by the Order will impede competition and hurt consumers (in this case, especially targeting the price sensitive customers).  Indeed, the crux of the complaint surrounds an effort by MetroPCS and Google to offer consumers additional choices.  Read on:

MetroPCS possesses no market power. With 8m customers, it is the country’s fifth largest mobile operator, less than one-tenth the size of Verizon. Under no theory could it force customers to patronise certain websites. It couldn’t extract monopoly cash if it tried to.

Indeed, low-cost prepaid plans of MetroPCS are popular with users who want to avoid long-term contracts and are price sensitive. Half its customers are ‘cord cutters’, subscribers whose only phone is wireless and usage is intense. Voice minutes per month average about 2,000, more than double that of larger carriers.
The $40 plan is cheap because it’s inexpensively delivered using 2G technology. It is not broadband (topping out, in third party reviews, at just 100 kbps), and has software and capacity issues. In general, voice over internet is not supported by the handsets and video streaming is not available on the network. The carrier deals with those limitations in three ways.

First, the $40 per month price tag extends a fat discount. Unlimited everything can cost $120 on faster networks. Second, it has also deployed new 4G technology, offering both a $40 tier similar to the 2G product (no video streaming), but also a pumped up version with video streaming, VoIP and everything else – without data caps – for $60 a month. Of course, this network has far larger capacity and is much zippier (reliable at 700 kbps).  PC World rated the full-blown 4G service “dirt cheap”.
Third, to upgrade the cheaper-than-dirt 2G experience, MetroPCS got Google – owner of YouTube – to compress their videos for delivery over the older network. This allowed the mobile carrier to extend unlimited wildly popular YouTube content to its lowest tier subscribers.  Busted! Favouring YouTube is said to violate neutrality. …

The FCC has already erred. Innovators such as MetroPCS and Google should need no
defence in supplying customers’ superior choices. Neither consumers nor the internet are “protected” by rules hostile to co-operative efforts – even if money were to pass between firms – that expand outputs and lower prices. If the FCC is to take such ill-targeted attacks on competitive rivalry seriously, it will do far more to deter the open internet than to preserve it.

Not an auspicious beginning for the Net Neutrality regime — or consumers.

Filed under: antitrust, economics, error costs, exclusionary conduct, google, net neutrality, regulation, technology Tagged: antitrust, economics, FCC, google, Hazlett, net neutrality

Continue reading
Antitrust & Consumer Protection