July 16, 2007

Public Interest Reply Comment on Broadband Industry Practices

  • Jerry Brito

    Former Senior Research Fellow
  • Jerry Ellig

    Research Professor, George Washington University Regulatory Studies Center
Key materials
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The Proceeding

The Federal Communications Commission issued a Notice of Inquiry seeking public comment on "Broadband Industry Practices."  The purpose is to assess the case for and against different forms of "net neutrality" policies intended to prevent broadband providers from treating different types of traffic differently.  In this reply comment, we assess whether other major commenters have provided sufficient evidence to justify net neutrality regulation. 

Our Findings

  • The FCC's Notice of Inquiry sought information about specific industry practices that might be evidence of market failure or other systemic problems that would justify regulation.
  • Commenters offered no empirical evidence that network owners currently engage in specific business practices stemming from market failure sufficient to justify industry-wide regulation.
  • No commenter made a definitive case that market failure is likely to occur in the future. At best, some commenters suggested problems that could happen, without demonstrating how likely they are.
  • These results are consistent with the recently-released Federal Trade Commission staff report on net neutrality, which noted that network owners face conflicting incentives to discriminate in ways that would harm consumers and expressed skepticism about the need for new regulation.

By the Numbers

  • Close to 10,000 comments were submitted in the docket for this NOI. All but 143 were brief letters from citizens, many of which were generated at the behest of advocacy groups.
  • Only 66 of the remaining 143 comments are longer than two pages.
  • Twenty of these comments advocate some form of new regulation. None of these 20 offers any significant empirical evidence to suggest that there currently exists a market failure or other systemic problem justifying regulatory intervention.

Conclusions

  • More than a possibility of market failure or other problem must be demonstrated before we can be confident that regulation will do more good than harm.
  • Either the FCC's Internet Policy Statement has been sufficient to curb abuses, or such abuses were unlikely to begin with.