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Free Lunch Podcast Episode 33 – Net Neutrality and Federalism

Presentations & Interviews Despite the Federal Communication Commission’s decision in December 2017 to eliminate the common carrier regulations for Internet services — the so-called net neutrality rules the FCC created in 2015 — the net neutrality debate rages on. Gus Hurwitz, Brent Skorup, and Geoffrey Manne discuss this new front in regulation, federalism, and grassroots activism.

Despite the Federal Communication Commission’s decision in December 2017 to eliminate the common carrier regulations for Internet services — the so-called net neutrality rules the FCC created in 2015 — the net neutrality debate rages on. The Trump FCC preempted states’ authority to regulate the Internet, yet governors in six states have attempted to enforce net neutrality principles via executive order and three states have passed “baby net neutrality bills.” Several more state bills are pending. Can state agencies regulate Internet services? What are the legal and practical impediments? What are the consequences of businesses operating under inconsistent regulations amongst the states and at the federal level? Gus Hurwitz, Brent Skorup, and Geoffrey Manne discuss this new front in regulation, federalism, and grassroots activism.

The full episode is embedded below.

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Telecommunications & Regulated Utilities

Geoffrey Manne on Kavanaugh’s Data Regulations Position in CNBC Interview

In a CNBC interview on Supreme Court nominee Brett Kavanaugh’s position on data regulation, Geoffrey Manne explains that it might have more to do with . . .

In a CNBC interview on Supreme Court nominee Brett Kavanaugh’s position on data regulation, Geoffrey Manne explains that it might have more to do with brand definition than the data itself:

Kavanaugh, who clerked for Kennedy, “would be likely, on these issues, to either replicate Kennedy or even steer further towards a First Amendment that’s more likely to degrade regulatory systems,” Bambauer said.

However, not everybody thinks that Kavanaugh’s position on data as speech is so clear. Geoffrey Manne, executive director of the International Center for Law & Economics, said that Kavanaugh’s position in the net neutrality case has more to do with the providers’ right to define their brand than the data itself.

The “editorial control” Kavanaugh references, according to Manne, is about ISPs deciding what content they provide customers. “It doesn’t have anything to do with the bits themselves,” he said.

Kavanaugh cited another reason, though, for opposing net neutrality. He said that the FCC’s initiation of the rule without authorization from Congress also rendered it unlawful. That position, according to Manne, is what could possibly pit Kavanaugh against regulations of data from the FCC and other agencies.

Click here to read the full article at cnbc.com

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ICLE Letter to Senate Judiciary re T-Mobile-Sprint Merger

Written Testimonies & Filings We are a group of eight scholars of antitrust law and economics affiliated with the International Center for Law & Economics, a nonprofit, nonpartisan policy research center based in Portland, OR. Without taking a position on the merits of the proposed T-Mobile/Sprint merger, this letter provides a brief explication of our views on some of the important economic issues involved in the transaction’s antitrust review.

Summary

Dear Senators Grassley, Feinstein, Lee, and Klobuchar,

We are a group of eight scholars of antitrust law and economics affiliated with the International Center for Law & Economics, a nonprofit, nonpartisan policy research center based in Portland, OR. Without taking a position on the merits of the proposed T-Mobile/Sprint merger, this letter provides a brief explication of our views on some of the important economic issues involved in the transaction’s antitrust review.

At the highest level, and as discussed in more detail below, we believe that an appropriate concern for consumer welfare in the regulatory review of the transaction demands that the Federal Communications Commission (“FCC”) and the Department of Justice (“DOJ”) account for the dynamic, fast-moving nature of competition in the markets affected by the merger. Above all, this means that the agencies should shun the mechanical application of obsolete market-share and concentration presumptions that could wrongly condemn the merger.

Modern antitrust principles, sound economics, and the public interest dictate that an analysis of the proposed merger incorporate these foundational precepts:

  1. The resolute avoidance of a presumption of illegality based upon purely static market shares and measures of industry concentration;
  2. The rigorous consideration of the effect of the merger on the dynamic competition that has long characterized the telecommunications industry; and
  3. The careful assessment of the long-term benefits of the deal to consumers and the economy as a whole.

These principles are particularly appropriate here given the clear importance to the parties’ decision to merge of their interest in launching a competitive, national 5G network. If successful, the deal could create a combined T-Mobile and Sprint that is a stronger competitor to AT&T and Verizon, which, in turn, could spur increased investment competition in the market. Realizing those objectives — which could result in enormous benefit to consumers and enhance competition in the wireless communications and broadband markets — will take time, and the process will entail business model disruption, corporate reorganization, experimentation, and significant investment.

It is crucial to ensuring that the claimed consumer benefits of this process can be realized that the proposed merger not be thwarted by regulators inappropriately focused on short-term, static effects.

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Antitrust & Consumer Protection

Q&A With Gus Hurwitz in Pacific Standard on Senate CRA Resolution Vote To Undo the FCC’s RIF Order

ICLE Scholar Professor Gus Hurwitz was interviewed in Pacific Standard about Wednesday’s Senate CRA resolution vote to undo the FCC’s Restoring Internet Freedom Order: On . . .

ICLE Scholar Professor Gus Hurwitz was interviewed in Pacific Standard about Wednesday’s Senate CRA resolution vote to undo the FCC’s Restoring Internet Freedom Order:

On Wednesday, Senate Democrats, joined by three Republicans and two Independents, voted to retain the 2015 net neutrality rules, according to Reuters. The vote is part of a legislative challenge to the new FCC regulations, made possible by the Congressional Review Act, which allows Congress to contest rules made by federal agencies. For Congress to prevent the net neutrality rule rollback, the House of Representatives will now have to pass the same resolution. The Republican-controlled House is unlikely to vote like the Senate on this issue, if they hold a vote at all. Additionally, a number of companies and 21 state attorneys general have brought legal challenges against the rule changes.

The FCC voted to repeal net neutrality in December. Why has it taken so long to go into effect?

After any piece of regulation gets voted on and adopted by a federal agency, it needs to go through a regulatory process, and it needs to be finalized and published in the Federal Register. And that process always takes a couple of months to get it to [the Office of Management and Budget] for a review, before it can be published in the Federal Register. And then it doesn’t go into effect for another month or so after it’s been published in the Federal Register.

The thing that some folks have recognized and raised a little fuss about—though I think it’s really a tempest in a teapot—is some of the elements of the 2017 order could have gone immediately into effect, but the order said that they weren’t going to go into effect until the rest of the order (that did need to go through this longer process) went into effect. The reclassification, which is a declaratory order—that can be implemented immediately. But the new transparency rule needs to go through the OMB and Federal Register process.

Click here to read the full Pacific Standard interview. 

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The net neutrality CRA may be the most tedious piece of political theater ever

TOTM At this point, only the most masochistic and cynical among DC’s policy elite actually desire for the net neutrality conflict to continue. And yet, despite claims that . . .

At this point, only the most masochistic and cynical among DC’s policy elite actually desire for the net neutrality conflict to continue. And yet, despite claims that net neutrality principles are critical to protecting consumers, passage of the current Congressional Review Act (“CRA”) disapproval resolution in Congress would undermine consumer protection and promise only to drag out the fight even longer.

Read the full piece here.

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Telecommunications & Regulated Utilities

Closing the Rural Digital Divide Requires Understanding the Rural Digital Divide

TOTM I had the pleasure last month of hosting the first of a new annual roundtable discussion series on closing the rural digital divide through the University of Nebraska’s Space, Cyber, and Telecom Law Program. The purpose of the roundtable was to convene a diverse group of stakeholders for a discussion of the on-the-ground reality of closing the rural digital divide.

I had the pleasure last month of hosting the first of a new annual roundtable discussion series on closing the rural digital divide through the University of Nebraska’s Space, Cyber, and Telecom Law Program. The purpose of the roundtable was to convene a diverse group of stakeholders — from farmers to federal regulators; from small municipal ISPs to billion dollar app developers — for a discussion of the on-the-ground reality of closing the rural digital divide.

Read the full piece here.

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Innovation & the New Economy

The Real Reason Foundem Foundered

ICLE White Paper A pair of recent, long-form articles in the New York Times Magazine and Wired UK — the latest in a virtual journalistic cottage industry of such articles — chronicle the downfall of British price comparison site and stalwart Google provocateur, Foundem, and attribute its demise to anticompetitive behavior on the part of Google.

Summary

A pair of recent, long-form articles in the New York Times Magazine and Wired UK — the latest in a virtual journalistic cottage industry of such articles — chronicle the downfall of British price comparison site and stalwart Google provocateur, Foundem, and attribute its demise to anticompetitive behavior on the part of Google.

Unfortunately, the media’s hagiographies of Foundem and its founders, Shivaun and Adam Raff, approach the antitrust question as if it were imbued with the simple morality of a David vs. Goliath tale. The reality is far more complicated. In fact, these articles misunderstand and misstate the critical economic, business, and legal realities of Google Search, of Foundem’s claims of harm, and of the relationship between the two.

Was Foundem’s failure really the result of anticompetitive “gatekeeping” on Google’s part? Or could it simply be a pedestrian tale of yet another tech start-up that failed because its founders didn’t appreciate that a successful business is built on more than just a good idea?

While the import of the Foundem story has been misconstrued by journalists and EU regulators, it is useful in illuminating what may actually be the fundamental question regarding the antitrust fortunes of the platform economy:

What, if anything, does a successful platform “owe” to the companies that make themselves dependent upon it?

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Antitrust & Consumer Protection

Net Neutrality Paranoia

TOTM The paranoid style is endemic across the political spectrum, for sure, but lately in the policy realm haunted by the shambling zombie known as “net neutrality,” the pro-Title II set are taking the rhetoric up a notch. This time the problem is, apparently, that the FCC is not repealing Title II classification fast enough, which surely must mean … nefarious things?

The paranoid style is endemic across the political spectrum, for sure, but lately in the policy realm haunted by the shambling zombie known as “net neutrality,” the pro-Title II set are taking the rhetoric up a notch. This time the problem is, apparently, that the FCC is not repealing Title II classification fast enough, which surely must mean … nefarious things? Actually, the truth is probably much simpler: the Commission has many priorities and is just trying to move along its docket items by the numbers in order to avoid the relentless criticism that it’s just trying to favor ISPs.

Read the full piece here.

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Telecommunications & Regulated Utilities

Hunting the Big Five: Twenty-First Century Antitrust in Historical Perspective

Scholarship Abstract Voices along the whole of the political spectrum are calling for heightened scrutiny of American information-technology companies, especially the Big Five of Amazon, Apple, . . .

Abstract

Voices along the whole of the political spectrum are calling for heightened scrutiny of American information-technology companies, especially the Big Five of Amazon, Apple, Facebook, Google, and Microsoft. One of the principal themes of this uprising is that present-day antitrust policy, forged in the rusty era of steel, oil, and cars, is now obsolete. We are in the age of information, which ipso facto calls for new rules. A second animating theme is that the antitrust thinking of the Chicago School, which came to prominence in the last quarter of the last century, must be completely overthrown. Proponents of this new antitrust ground their arguments by returning to the historical roots of American antitrust policy. My contention, however, is that the new antitrust gets this history wrong. It both misconceives the nature of the competitive process and deliberately refuses to confront the political economy of antitrust. In so doing, it adopts some of the worst traits of the Chicago School it criticizes while manifesting few of that school’s many virtues.

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Antitrust & Consumer Protection