FTC Chairman Addresses Issue of Net Neutrality

Federal Trade Commission Chairman Deborah Platt Majoras today told a meeting of the Progress & Freedom Foundation that she has formed an Internet Access Task Force to examine issues being raised by converging technologies and regulatory developments, and to educate and inform the enforcement, advocacy and education initiatives of the Commission. “I also have asked the Internet Access Task Force to address what is likely the most hotly debated issue in communications, so-called ‘network neutrality,’” she said.

“The FTC’s Internet Access Task Force is looking carefully at the issues raised by calls for network neutrality laws. . . . I urge caution in proceeding on the issue. I . . . question the starting assumption that government regulation, rather than the market itself under existing laws, will provide the best solution to a problem,” Majoras said.

Majoras said there are points that should be considered before enactment of legislation to regulate the Internet, since regulation will have impact “for years to come.”

“The FTC frequently is asked to weigh in on proposed legislation and policies, and we virtually always assert the principle that, absent clear evidence of market failure or consumer harm, policymakers should not enact blanket prohibitions of particular forms of business conduct or business models or place requirements on how business is conducted.”

No industry-wide regulatory scheme should be imposed without a cost-benefit analysis and consideration of whether another, less broad approach could be a better way to address potential harm, the speech says. “Broad regulatory mandates that employ a ‘one size fits all’ philosophy, without regard to specific facts, always have unintended consequences, some of which may be harmful and some of which may not be known until far into the future. . . .We should look at whether any net neutrality or similar legislation could have the effect of entrenching existing broadband platforms and market positions, as well as adversely affecting the levels and areas of future innovation and investment in this industry. The end result could be a diminution, rather than an increase, in competition, to the detriment of consumers,” she continued.

Majoras said that competition generally leads to the best results for consumers, that free markets breed innovation, creativity, and entrepreneurship, and that markets – particularly dynamic markets – are usually self-correcting. “I ask myself whether consumers will stand for an Internet that suddenly imposes restrictions on their ability to freely explore the Internet or does not provide for the choices they want. And I further ask why network providers would not continue to compete for consumers’ dollars by offering more choices, not fewer. We make a mistake when we think about market scenarios simply as dealings between and among companies; let us not forget who reigns supreme: the consumer.”

The speech points out that three federal agencies, the FTC, DOJ and FCC play a role in protecting competition in the market. “We should not forget that we already have in place an existing law enforcement and regulatory structure. Before adding to it, we should determine that the current scheme is insufficient to address potential issues as they may arise in this area.”

“While I am sounding cautionary notes about new legislation, let me make clear that if broadband providers engage in anticompetitive conduct, we will not hesitate to act using our existing authority. But I have to say, thus far, proponents of net neutrality regulation have not come to us to explain where the market is failing or what anticompetitive conduct we should challenge; we are open to hearing from them,” she said.

Majoras also said the FTC will host a conference with “an array of experts from around the world to inform us about what they see as emerging trends, applications, products, services, and issues over the next ten years.” A preliminary agenda for the hearings, named “Protecting Consumers in the Next Tech-Ade,”is being released today. Copies of the agenda can be found at http://www.ftc.gov/bcp/workshops/techade/tech-ade_agenda_preliminary.pdf

The FTC’s Bureau of Competition, in conjunction with the Bureau of Economics, seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580, Electronic Mail: antitrust@ftc.gov; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published “Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws,” which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.