First, I argue that the FCC must resist falling into the rhetorical trap set by many participants in the debate who attempt to frame the policy debate narrowly in terms of antitrust and regulatory economics. A myopic focus on antitrust and regulatory economics misses other important dimensions at stake in the debate. Essentially, this perspective views the Internet as a mere supply chain of markets. It fails to appreciate that the Internet is a mixed commercial, public, and social infrastructure that supports an incredible variety of market and nonmarket systems and user activities that yield private, public, and social goods. Too many participants in the debate (on both sides) accept the premise that competition would alleviate concerns about discrimination or prioritization by network providers. It would not, as I discuss below.
Second, I offer a particular nondiscrimination rule that differs somewhat from the one articulated by the Commission in the Notice of Proposed Rulemaking. The FCC should prohibit broadband Internet access service providers from discriminating based on the identity of the user or use in the handling of packets. Under this approach, user may be defined as sender or receiver; use may be defined as application or content type; handling may be defined as all transport and related services associated with delivery of packets. This simple nondiscrimination rule may seem overly strong in that it appears to rule out a significant range of activities that some might label “reasonable network management.” But as I discuss below, this rule is not overly restrictive; rather, it strikes an appropriate balance. It primarily rules out certain fine-grained forms of price or quality discrimination, does not rule out other forms of price discrimination that are not based on user/use identity, such as typical second-degree price discrimination, and does not rule out efficient methods for managing congestion, such as traditional usage-sensitive or congestion pricing. This rule maintains a general-purpose, mixed infrastructure and best preserves the Internet’s openness.
At one point, I note that “Opponents of FCC action often use powerful rhetoric to suggest that FCC action
would constitute radical intrusion by government into markets that would otherwise be free.” Of course, I dispute the opponents’ position. The Economist piece does as well. In fact, that piece ends with the following:
The FCC’s current plan — to ask last-mile providers to subsidise rural service, and to ensure equal treatment of packets of information — is a mild intervention by global standards. America’s modern-day common carriers should count themselves lucky.