The Federal Trade Commission (FTC) has authority over deceptive trade practices. Perhaps some lessons from its jurisdiction could be applied to what appears to be a bait-and-switch operation from the Federal Communications Commission (FCC).
Amy Schatz at the Wall Street Journal had the story on Friday that FCC Chairman Kevin Martin wants to approve the AT&T merger with BellSouth without any conditions. And, by the way, the Commission wants to open a Notice of Inquiry (NoI) on Net Neutrality. There is a link between these two, and it's not pretty. In fact, depending on how it's gamed out, it could be fairly deceptive and destructive.
The argument is that the FCC doesn't need to put any conditions on the merger because of the pending NoI on Net Neutrality. We've never been big fans of the Net Neutrality “conditions” put on any of the other mergers. They basically require the merging companies to abide by the insufficient and unenforceable policy principles the FCC issued as part of the decision a year ago taking broadband out from under common carrier regulation. At a minimum, those conditions on the merger kept the issue alive during the merger discussions and serve the minimal purpose of keeping the issue alive going forward to remind the telephone companies the issue hasn't gone away and won't go away. It would be nice if there were some real Net Neutrality conditions attached to one of the mergers. Under this FCC, the chances of that happening are slim.
However, it would be inexcusable for the FCC to punt on Net Neutrality conditions for the AT&T/BellSouth merger on the grounds that the Commission is separately going to conduct a proceeding on the issue. The irony alert for the notice is, of course, that the telecom legislation Martin has endorsed would prohibit him from doing such a rulemaking. But we digress.
On the surface, a Notice of Inquiry for Net Neutrality might appear on the surface to be a good idea. It would allow the public to voice concerns while giving the Commission a chance to explore the issue in a public forum.
Beneath the surface, the NoI is a terrible idea that will spell the end, at least in the immediate future, for the FCC doing anything on Net Neutrality. The likely scenario is that the FCC will pass on dealing with Net Neutrality through the merger, saying it will examine it through the NoI. Then the FCC, after an appropriate time, will conclude that there's nothing in the record of the NoI indicating there's a problem, but that the Commission should “monitor” the situation. That's the bait and switch — taking the Net Neutrality out of the merger in favor of putting it into a Notice of Inquiry, then ditching it using the NoI.
A Notice of Inquiry is a preliminary step in the FCC decision-making process. Those type of notices frame the question – is the subject of the inquiry something about which the Commission should be interested? It's one step back from a Notice of Proposed Rulemaking, in which the FCC has already concluded there's some sort of problem that needs to be addressed, and puts forward solutions for comment. It will likely adopted whatever's proposed, but that's the nature of the process.
In the case of the NoI, it's easy to see how it will play out. The telephone companies and cable companies will tell the FCC there's no problem with Net Neutrality. Those of us who favor re-instating the non-discrimination law of the last 71 years that the FCC eliminated last year will argue that there might not be a current problem because discrimination was illegal, because the telephone and cable companies are on their best behavior while trying to obtain streamlined video franchising from Congress and because the FCC's principles don't protect consumers from the telephone and cable companies giving priority to the services in which they have a financial interest (even more than they do now with Internet telephony).
None of our arguments will matter, and the FCC will say there's no need for a proposed rulemaking. Even if the telephone and cable companies do start openly discriminating in favor of some services, the current FCC is unlikely to do anything about it. More study will be needed.
If the FTC wants to jump into the Net Neutrality issue by examining the lack of competitiveness in broadband, that's fine. It's a shame the FTC can't use its expertise to instruct the FCC on playing it straight with the public.