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Last week ICLE filed comments responding to the Telecom Regulatory Authority of India’s Consultation Paper on Differential Pricing for Data Services. Our comments explain why banning “zero-rating” and . . .
Last week ICLE filed comments responding to the Telecom Regulatory Authority of India’s Consultation Paper on Differential Pricing for Data Services.
Our comments explain why banning “zero-rating” and other “differential pricing” business models in India would be a costly mistake for the country. As we note in our comments:
The approach taken in this Consultation to the the question of competition and consumer harm risks putting the cart before the horse. Before special rules are crafted to attempt to address perceived threats to consumer welfare, existing and effective rules of general applicability can and should be employed to address actual harms: most significantly, the well-developed principles of competition law that have been in force in India since the enactment of the Competition Act in 2003.
Importantly, competition laws are typically employed to address actual harms on a case-by-case basis, generally eschewing per se condemnation of business arrangements (like vertical integration) that impair competition only in limited circumstances. The error costs of over-enforcement of TRAI’s principles of transparency and nondiscrimination. likely threaten more harm than do the risks of underenforcement. In the face of rapidly accelerating technological changes — which will continue to present new and unanticipated possibilities for different tariff models — an effects-based approach under the competition laws that conducts an ex post analysis of conduct would be far more prudent. Instead of foreclosing or mandating specific conduct, such an approach would permit and foster experimentation, innovation and technological development, intervening only where actual competitive harms develop.
TRAI has a commendable history of “light touch” regulation of tariffs, reflecting the Authority’s understanding that proper regulation leaves room for market players to adapt technology and to tailor their services to evolving consumer demand. There is nothing new or unique about internet companies that would justify breaking from this approach — in fact there is much to be gained in continuing to allow differentiation as internet platforms discover better ways to enhance consumer welfare.
We’ve discussed non-neutral pricing and related issues extensively in the past — see, among many others:
Our full comments to the TRAI are available here.
Yesterday, the International Center for Law & Economics, together with Professor Gus Hurwitz, Nebraska College of Law, and nine other scholars of law and economics, filed an amicus . . .
Yesterday, the International Center for Law & Economics, together with Professor Gus Hurwitz, Nebraska College of Law, and nine other scholars of law and economics, filed an amicus brief in the DC Circuit explaining why the court should vacate the FCC’s 2015 Open Internet Order.
If the 2010 Order was a limited incursion into neighboring territory, the 2015 Order represents the outright colonization of a foreign land, extending FCC control over the Internet far beyond what the Telecommunications Act authorizes.” said Geoffrey Manne, Executive Director of the International Center for Law & Economics. The Commission asserts vast powers ” powers that Congress never gave it ” not just over broadband but also over the very ˜edge’ providers it claims to be protecting. The court should be very skeptical of the FCC’s claims to pervasive powers over the Internet.
Last year, the Supreme Court blocked a similar attempt by the EPA to ˜modernize’ old legislation in a way that gave it expansive new powers, said Gus Hurwitz, Assistant Professor of Law, Nebraska College of Law. In its landmark UARG decision, the Court made clear that it won’t allow regulatory agencies to rewrite legislation in an effort to retrofit their statutes to their preferred regulatory regimes. But that’s exactly what the FCC did here: Invoking Title II, admitting that it was unworkable for the Internet, and then trying to ˜tailor’ the statute to avoid its worst excesses. That the FCC felt the need for such sweeping forbearance should have indicated to it that it had ˜taken an interpretive wrong turn’ in understanding the statute Congress gave it.
Internet regulation is a question of ˜vast economic and political significance,’ yet the FCC didn’t even bother to weigh the costs and benefits of its rule, said Ben Sperry, Associate Director of the International Center for Law & Economics. FCC Chairman Tom Wheeler never misses an opportunity to talk about the the Internet as ˜the most important network known to Man.’ So why did he and the previous FCC Chairman ignore requests from other commissioners for serious, independent economic analysis of the supposed problem and the best way to address it? Why did the FCC rush to adopt a plan that had the effect of blocking the Federal Trade Commission from applying its consumer protection laws to the Internet? For all the FCC’s talk about protecting consumers, it appears that its real agenda may be simply expanding its own power.
Joining ICLE on the brief are:
Read the brief here, and a summary here.
Read more of ICLE’s work on net neutrality and Title II, including:
Today, the Federal Communications Commission released new net neutrality rules in a 400-page order that prompted lengthy, detailed dissents from Commissioners Pai and O’Rielly. ICLE’s . . .
Today, the Federal Communications Commission released new net neutrality rules in a 400-page order that prompted lengthy, detailed dissents from Commissioners Pai and O’Rielly. ICLE’s Geoffrey Manne and TechFreedom’s Berin Szoka respond:
This order represents the triumph of political forces over sound policymaking, said TechFreedom President Berin Szoka. It effectively destroys nearly 18 years of bipartisan consensus. It’s a radical break even from the FCC’s proposed rules. In fact, the entire rulemaking may founder in court simply because Wheeler refused to issue a further NPRM to adequately develop the record. Politicization of the process may also cost the FCC the deference agencies usually enjoy when they’ve followed normal processes.
Essentially, the FCC is saying, ˜just trust us,’ said ICLE Executive Director Geoffrey Manne. But the Order is brimming with reasons not to. Perhaps the Order’s most astonishing admission is that the FCC intends to use its newly asserted authority under Title II not only to ensure, as it claims throughout in the Order, the ability to protect an open Internet, but also to saddle broadband providers and other services with whatever other regulations in Title II the FCC deems appropriate. This sly caveat, buried deep in the Order, nullifies the FCC’s fevered assurances that it will preserve the light touch approach begun under President Clinton.
The FCC is effectively, and illegally, rewriting the Communications Act, argued Szoka. The Order mentions ˜tailoring’ in one form or another 77 times, but doesn’t reference even once the Supreme Court’s decision last year holding that such radical tailoring is a job for Congress, not regulators. The Order allows the FCC to go much, much further than it has gone today ” but also to do the opposite. We’re now just one presidential election away from Republicans using the FCC’s new standard of ˜forbearance without evidence’ to gut not just net neutrality rules, but the entire Act. To say that opening the door to such political ping-pong brings ˜certainty’ makes a mockery of the word. The only way to restore sanity at the FCC is for Congress to finally update the Communications Act.
The FCC has never gotten far enough in court to face the significant Constitutional arguments against its power grab, concluded Manne. But the Order reveals the weakness of the FCC’s First Amendment arguments. The FCC justifies its expansive interpretation of Sections 201 and 202 by claiming that broader rules will ˜remove ambiguity.’ But such an approach is decidedly not ˜no more burdensome than necessary,’ as First Amendment review requires. In fact, the FCC admits that its claimed authority grants the agency the nearly unfettered discretion to issue future rules. That is does so while disclaiming any need to justify such future rules under Title II today portends a dire future for free expression on the Internet as the FCC embarks on this regulatory slippery slope.
We can be reached for comment at [email protected]. See more of our work on net neutrality and Title II, including:
About The International Center for Law and Economics:
The International Center for Law and Economics is a non-profit, non-partisan research center aimed at fostering rigorous policy analysis and evidence-based regulation.
About TechFreedom:
TechFreedom is a non-profit, non-partisan technology policy think tank. We work to chart a path forward for policymakers towards a bright future where technology enhances freedom, and freedom enhances technology.
The FCC is considering a new Open Internet Order that could harm consumers by invoking Title II and banning paid prioritization. While the vast majority . . .
The FCC is considering a new Open Internet Order that could harm consumers by invoking Title II and banning paid prioritization. While the vast majority of business arrangements between Internet and edge providers are pro-consumer, it is possible that a few harmful agreements may arise. But these cases should be judged on their merits. Instead, the FCC stands ready to adopt a proposal that would ban paid priority altogether, even though many such agreements would benefit consumers.
Today, 32 academics and scholars with expertise in law, business, economics, and public policy sent a letter to the Federal Trade Commission (FTC) ” the nation’s chief agency for competition advocacy ” urging it to caution the FCC against Title II and a blanket ban on paid prioritization.
It’s sadly ironic that those advocating rigid net neutrality rules talk about permissionless innovation, yet want to ban paid prioritization ” a type of commercial agreement that essentially doesn’t even exist yet, said Geoffrey Manne, Executive Director of the International Center for Law & Economics, which organized the letter. What has really kept the Internet ˜free’ and ˜open’ has been focusing government on demonstrated problems, while remaining humble enough to admit that regulators don’t know what the future might, or should, look like. Net neutrality concerns over paid prioritization arrangements should be addressed if and when such deals actually occur”and only if they result in actual harm. The FTC should urge the FCC to adopt a case-by-case approach (like antitrust’s rule of reason) guided by economics, not hysterics and political pressure.
The letter calls on the FTC to endorse such an approach and to urge the FCC to adopt it in any Open Internet rules the Commission may issue. The FTC regularly files comments with other government bodies as part of its competition advocacy program, and we believe this contentious issue begs for its expert guidance.
Read the full letter here.
On Tuesday, October 14, Geoffrey Manne appeared on a panel discussion sponsored by PEN America, a non-profit group that defends the freedom of writers and editors. Mr. . . .
On Tuesday, October 14, Geoffrey Manne appeared on a panel discussion sponsored by PEN America, a non-profit group that defends the freedom of writers and editors. Mr. Manne appeared alongside noted ‘Net Neutrality’ proponent Tim Wu, and argued that common carrier regulation will impede innovation:
Proponents of net neutrality argue that the relatively level playing field of the Internet has been a major factor in its success and growth, providing a platform for new companies to take off. They argue that stronger regulation is necessary to control what Mr. Wu described as monopolistic pricing of broadband access. “Most of us are being overcharged, paying first world prices for third world services,” Mr. Sifry said. “I definitely take issue with the characterization of much of this,” said Mr. Manne. The parties that advocate for more regulation of carriers include rich and powerful Internet companies, he said, arguing “there is no reason to think they are advocates for the little guy. The problem with common carrier regulation is that it locks the Internet into a kind of status quo. It will actually impede innovation.” A non-neutral Internet favors the rise of new pricing models, according to Mr. Manne. Already, there are some cases in which mobile carriers wave data charges when customers use their phones to access particular apps, panelists noted. In poor areas, that may be better than no access at all, according to Mr. Manne. “I would choose a closed system over no system. That may be the choice,” he said.
Proponents of net neutrality argue that the relatively level playing field of the Internet has been a major factor in its success and growth, providing a platform for new companies to take off. They argue that stronger regulation is necessary to control what Mr. Wu described as monopolistic pricing of broadband access. “Most of us are being overcharged, paying first world prices for third world services,” Mr. Sifry said.
“I definitely take issue with the characterization of much of this,” said Mr. Manne. The parties that advocate for more regulation of carriers include rich and powerful Internet companies, he said, arguing “there is no reason to think they are advocates for the little guy. The problem with common carrier regulation is that it locks the Internet into a kind of status quo. It will actually impede innovation.”
A non-neutral Internet favors the rise of new pricing models, according to Mr. Manne. Already, there are some cases in which mobile carriers wave data charges when customers use their phones to access particular apps, panelists noted. In poor areas, that may be better than no access at all, according to Mr. Manne. “I would choose a closed system over no system. That may be the choice,” he said.
Click here to read the full Wall Street Journal article.
The International Center for Law & Economics (ICLE) and TechFreedom filed two joint comments with the FCC today, explaining why the FCC has no sound . . .
The International Center for Law & Economics (ICLE) and TechFreedom filed two joint comments with the FCC today, explaining why the FCC has no sound legal basis for micromanaging the Internet and why net neutrality regulation would actually prove counter-productive for consumers.
The Policy Comments are available here, and the Legal Comments are here. See the Truth on the Market blog post, Net Neutrality Regulation Is Bad for Consumers and Probably Illegal, for a distillation of many of the key points made in the comments.
New regulation is unnecessary. An open Internet and the idea that companies can make special deals for faster access are not mutually exclusive, said Geoffrey Manne, Executive Director of ICLE. If the Internet really is ˜open,’ shouldn’t all companies be free to experiment with new technologies, business models and partnerships?
The media frenzy around this issue assumes that no one, apart from broadband companies, could possibly question the need for more regulation, said Berin Szoka, President of TechFreedom. In fact, increased regulation of the Internet will incite endless litigation, which will slow both investment and innovation, thus harming consumers and edge providers.
Title II would be a disaster. The FCC has proposed re-interpreting the Communications Act to classify broadband ISPs under Title II as common carriers. But reinterpretation might unintentionally ensnare edge providers, weighing them down with onerous regulations. So-called reclassification risks catching other Internet services in the crossfire, explained Szoka. The FCC can’t easily forbear from Title II’s most onerous rules because the agency has set a high bar for justifying forbearance. Rationalizing a changed approach would be legally and politically difficult. The FCC would have to simultaneously find the broadband market competitive enough to forbear, yet fragile enough to require net neutrality rules. It would take years to sort out this mess ” essentially hitting the pause button on better broadband.
Section 706 is not a viable option. In 2010, the FCC claimed Section 706 as an independent grant of authority to regulate any form of “communications” not directly barred by the Act, provided only that the Commission assert that regulation would somehow promote broadband. This is an absurd interpretation, said Szoka. This could allow the FCC to essentially invent a new Communications Act as it goes, regulating not just broadband, but edge companies like Google and Facebook, too, and not just neutrality but copyright, cybersecurity and more. The courts will eventually strike down this theory.
A better approach. The best policy would be to maintain the ˜Hands off the Net’ approach that has otherwise prevailed for 20 years, said Manne. That means a general presumption that innovative business models and other forms of ˜prioritization’ are legal. Innovation could thrive, and regulators could still keep a watchful eye, intervening only where there is clear evidence of actual harm, not just abstract fears. If the FCC thinks it can justify regulating the Internet, it should ask Congress to grant such authority through legislation, added Szoka. A new communications act is long overdue anyway. The FCC could also convene a multistakeholder process to produce a code enforceable by the Federal Trade Commission, he continued, noting that the White House has endorsed such processes for setting Internet policy in general.
Manne concluded: The FCC should focus on doing what Section 706 actually commands: clearing barriers to broadband deployment. Unleashing more investment and competition, not writing more regulation, is the best way to keep the Internet open, innovative and free.
For some of our other work on net neutrality, see:
Understanding Net(flix) Neutrality, an op-ed by Geoffrey Manne in the Detroit News on Netflix’s strategy to confuse interconnection costs with neutrality issues.
The Feds Lost on Net Neutrality, But Won Control of the Internet, an op-ed by Berin Szoka and Geoffrey Manne in Wired.com.
That startup investors’ letter on net neutrality is a revealing look at what the debate is really about, a post by Geoffrey Manne in Truth on the Market.
Bipartisan Consensus: Rewrite of ˜96 Telecom Act is Long Overdue, a post on TF’s blog highlighting the key points from TechFreedom and ICLE’s joint comments on updating the Communications Act.
The Net Neutrality Comments are available here:
ICLE/TF Net Neutrality Policy Comments
TF/ICLE Net Neutrality Legal Comments
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 . . .
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
” Monday is a big day for advocates of Network Neutrality, as the DC District Court will finally hear oral arguments in Verizon v. FCC. . . .
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Monday is a big day for advocates of Network Neutrality, as the DC District Court will finally hear oral arguments in Verizon v. FCC. Later that afternoon, Professor Manne, the Executive Director of the International Center for Law & Economics, will lead a conference call hosted by the Federalist Society on the case. Much like the joint ICLE and TechFreedom event earlier in the day, Prof. Manne will recap that morning’s D.C. Circuit arguments, assess how the court might decide the case, and discuss what options might be available to the FCC as well as antitrust agencies to address net neutrality concerns.
To sign up for the call or learn more visit the Federalist Society.
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Monday is a big day for advocates of Network Neutrality, as the DC District Court will finally hear oral arguments in Verizon v. FCC. Later . . .
