Mixed reaction to FTC net neutrality report

A recent report from the Federal Trade Commission said policy makers should proceed with caution in the evolving industry of broadband Internet access, which generally is moving toward more, not less, competition.

The FTC’s Internet Access Task Force report, “Broadband Connectivity Competition Policy,” was released June 27. It looked at network neutrality regulation and identified guiding principles for policy makers to consider.

“In the absence of significant market failure or demonstrated consumer harm, policy makers should be particularly hesitant to enact new regulation in this area,” said FTC chairman Deborah Platt Majoras, in a statement.

Not all groups agree with this position.

The Electronic Retailing Association, for example, said the report leans toward anti-net neutrality, claiming there is no urgent need for a government mandate requiring all Web users and Web sites be guaranteed equal broadband service at a fair price.

“There are still many potential problems that haven’t been addressed,” said Barbara Tulipane, president/CEO of ERA. “The larger broadband service providers have the ability and have stated a willingness to discriminate by speeding access to sites where providers may have a relationship and potentially deny access to other sites.”

Further, Tulipane said the level of broadband connectivity is inadequate in the United States.

“The fact that current download speeds in the US are a fraction of what they are in the rest of the world and that American consumers and businesses pay the highest rates doesn’t suggest that the broadband marketplace is healthy or competitive,” she said.

“Under these conditions, without a net neutrality policy in place, the future Internet will look a lot more like cable than the open network we enjoy today,” Tulipane said. We ask that the FTC keep an eye on this distressing matter.”

The ERA said many anti-competitive characteristics in the broadband market have the potential to threaten consumer protections by controlling received content.

“While the ERA agrees with the report’s conclusion that more competition is needed in the broadband marketplace, the association urges the FTC to adopt a more progressive strategy on the issue of net neutrality until a truly competitive marketplace emerges,” Tulipane said.

Stephanie Hendricks, director of public affairs at the Direct Marketing Association, said that the association remains “neutral on net neutrality.” She said that the issue is so broad and impacts its members in so many different ways that it doesn’t have a position on the subject.

The report notes that certain business arrangements that broadband providers may pursue if net neutrality regulation is not passed, including data prioritization, exclusive deals and vertical integration into online content and applications, can benefit consumers.

“The primary reason for caution is simply that we do not know what the net effects of potential conduct by broadband providers will be on all consumers, including, among other things, the prices that consumers may pay for Internet access, the quality of Internet access and other services that will be offered, and the choices of content and applications that may be available to consumers in the marketplace,” the report said.

Noting that three federal agencies – the Federal Communications Commission, the Department of Justice, and the FTC – have jurisdiction to address broadband Internet access, the report explains that the FTC, for its part, will continue to devote substantial resources to maintaining competition and protecting consumers in the broadband area.

In addition to vigorously enforcing the antitrust and consumer protection laws, the FTC will expend considerable efforts on consumer education, industry guidance and competition advocacy in the area of broadband Internet access.

The report also includes background information on the technical functioning of the Internet and the legal and regulatory developments that have led to the current debate over network neutrality regulation.

The report provides an overview of the arguments for and against such regulation; analyzes the consumer welfare effects of certain potential conduct by broadband providers, including data discrimination and prioritization; explores the application of the antitrust and consumer protection laws to such conduct; and identifies various proposals for broadband Internet access that have been put forth to date.

The report is the second publicly released work from the Task Force, which is headed by Maureen K. Ohlhausen, director of the office of policy planning at the FTC.

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