I am still recovering from the two-day marathon that was the FTC Broadband Connectivity Competition Policy Workshop, which brought advocates, academics, technologists and economists from around the country to discuss and debate net neutrality. You can listen or watch the entire workshop here. Needless to say, there was the usual hyperbole (one cyber policy listserv announced a drinking game where you drink a shot every time Cisco Tech Policy guru Bob Pepper uses the words “socialism” or “socialistic” or” socializing” to describe what net neutrality would do to the Internet), as well as the usual attempts by anti-NN folks to change the debate to whether Google discriminates in its search results. I spoke on one of the early panels, entitled “What is the Debate over 'Network Neutrality' About?” You can read my prepared statement here.
But there were some pleasant surprises. NN proponents most feared the economists' panel, entitled the “Discrimination, Blockage and Vertical Integration Panel,” which appeared to be stacked, four to one, by NN opponents. But the first three speakers, Joseph Farrell of Berkeley (who we expected would be supportive), Greg Rosston of the Stanford Institute for Economic Policy Research and my USC colleague Simon Wilkie all recognized the very real danger of broadband providers leveraging their market power to the disadvantage of competitive content and service providers, and while they might not go as far as some NN proponents in having the FCC regulate, recognized that mere antitrust enforcement would not be enough to protect service providers and consumers.
Several of the panelists seemed to suggest that NN supporters were mistaken in focusing on “discrimination,” since in their opinion, not all discrimination is bad. The real cause for concern, in their opinion, is what is known as the “terminating monopoly” problem. Since the vast majority of consumers subscribe to only one broadband access provider, there is only one way to deliver traffic to that consumer. Broadband providers can exploit this monopoly to favor or degrade the delivery of traffic from particular sources according to whether they have paid fees to the provider. This terminating monopoly is exacerbated by the high switching costs that inevitably result if one wants to change broadband providers. There is a good discussion of terminating monopolies in this paper (pdf)by four professors from MIT and Carnegie Mellon. So maybe NN proponents need to hone our message a bit – when you want government to act, monopoly sounds much more urgent than duopoly or discrimination.
What will happen next at the FTC? After the comment period closes in two weeks, the Internet Access Task Force will issue its report. We hope that they ramp up investigations of anticompetitive conduct resulting from the terminating monopoly and require simple and serious service disclosure by broadband providers. Neither of these things is sufficient to protect service providers and consumers, but with an FCC that will not act and the long road that must be traversed before net neutrality become law, they would be a very good start.