The Law and Economics of Internet Access #

Innovation and Sec 230

• Develop and offer content without fear of legal liability
• “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”
• Innovation: want to make it likely that we’ll have access to more awesome content.

Net neutrality and Title II FCC public utility regulation

• Private carrier vs contract carrier vs common carrier
• Governments and ISPs should treat all data equally.
• Examples: blocking/filtering content, intentionally increasing or decreasing up/download speeds for certain users/content.

Common carrier designation

• June 2015 Federal Communications Commission ruling requires treating broadband providers as a telecom, and so a common carrier (like a public utility) under 1923 Communications Act.
• Was reversed by FCC vote under the new chairman, Ajit Pai, on December 14 2017
• This vote returned ISPs to oversight of the FTC
• This was upheld in Federal Court in 2018, but that decision also allowed states to pass their own Net Neutrality laws. 20+ Peurto Rico and DC have.
• These are being challenged by the US Dept. of Justice

Title II FCC common carrier designation

• The economic rationale; high fixed cost (initial investment to build out), low marginal cost (to serve each subsequent subscriber).
• Leads to monopoly power and calls for public utility style regulation.
• The “Bell Doctrine”

The Bell Doctrine

• Only the “edge” segment of delivery is subject to monopoly power, so heavily regulated there.
• Ma Bell: devices/equipment, long distance service (deregulated market); only local transmission was heavily regulated
• Electricity: plant generation, transmission lines (less regulated or deregulated); local distribution (heavily regulated)
• Broadband: devices/equipment, websites/apps (mostly unregulated); ISPs (FCC regulation)

Technology and Access Neutrality #

Net Neutrality

• Governments and ISPs should treat all data equally
• Examples: rules converning blocking/filtering content, intentionally increasing or decreasing up/download speeds for certain users/content, zero-rating.

Is FCC regulation necessary for access to awesome content?

• Case study: the internet of the 90s
• Early 90s bought access to content centers where they only got access to content, users and sites who were associated with the center (e.g. CompuServe or AOL)
• Why did that change?

ISP competition

• FTC had oversight of ISP abuses of market power from 2005-2015, policing anti-competitive practices.
• In most areas, there are at least two wireline competitors
• Plus, additional competition from wireless/5G.
• Market is at least a duopoly with the threat of new entry and innovation.
• A contestable enough market?

Does FCC regulation make it more likely that we’ll have a better access to awesome content?

• FCC is a media (content) regulator.
• FCC open internet rules expressly allowed ISPs to filter and block content.
• Effect of FCC regulations on build-out investment in areas currently underserved.
• Effect of regulations on other forms of competition: ICPs and the example of Netflix. Netflix opposed zero-rating in the US, but doesn’t in Australia (because they were newer in Australia it gives them a way to compete for users).
• Other regulator effects: who’s in a better position to thrive in a heavily regulated market? Large corporations/firms love a heavily regulated market.

Compliance costs and cronyism #

GRAHAM: So would you work with us in terms of what regulations you think are necessary in your industry?

ZUCKERBERG: Absolutely.

GRAHAM: Okay. Would you submit to us some proposed regulations?

ZUCKERBERG: Yes. And I’ll have my team follow up with you so, that way, we can have this discussion across the different categories where I think that this discussion needs to happen.

GRAHAM: Look forward to it.