FTC cool on network neutrality

Stephen Withers
Friday, 29 June 2007 10:40

IT Policy - Regulation

The US Federal Trade Commission has recommended the government takes a cautious approach to any proposed regulation that would impose network neutrality rules.

"This report recommends that policy makers proceed with caution in the evolving, dynamic industry of broadband Internet access, which generally is moving toward more – not less – competition," said chairman Deborah Platt Majoras. "In the absence of significant market failure or demonstrated consumer harm, policy makers should be particularly hesitant to enact new regulation in this area."

The FTC's position could be summarised as 'we don't know if there's going to be a problem, we don't know whether regulations will cause any problems, so let's wait for any problems to arise before we regulate.'

On one hand, proponents of network neutrality are concerned that the absence of regulation could allow carriers to choke off content providers that decline to pay an additional toll, and that there is no guarantee that regular traffic would receive adequate service. 

Opponents generally point to the desirability of ensuring that time-critical packets (eg, those carrying VoIP or videoconferencing data) are given necessary priority, and that carriers have sufficient financial incentive to invest in their networks to keep pace with increasing traffic.

Bizarrely - for an organisation that's supposed to be about maintaining competition and protecting consumers - the FTC seems inclined towards exclusive arrangements between content providers and carriers. Such arrangements are extremely anti-competitive, as they force users to select from a more limited range of choices.

The FTC report includes a description of the Australian pay TV market which is sadly out of date. While the original setup was two main operators with mainly exclusive content, the number two player has been reduced to being a reseller of the market leader (which had sport stitched up) and so competition is now virtually non-existent.

If Internet-oriented content providers are allowed to do exclusive deals with large carriers and ISPs (or, as is happening in Australia, major carriers set themselves up with exclusive content deals with sporting and other bodies), competition is inherently reduced.

Australian shoppers are already suffering from a restriction of choice as the two big supermarket chains bulk up their house brand ranges at the expense of independent manufacturers. Where they once saw half a dozen competing brands on the shelf, now it's usually a couple of 'own labels' (one budget, one premium) and one or two other brands. Just because we allow this in one market, that doesn't mean it would be a good thing for the Internet.

Imagine if you had to choose between ISPs not on the basis of price, bandwidth and reliability, but whether they are able to give you access to the sites you want. What if picking the ISP that lets you use Google means you can't get to Facebook? Or if the only carrier in your area that lets you use MSN happens to block all Vonage traffic? Not an attractive prospect, is it?