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FTC Boss Claims Authority Over Net Neutrality

Aug 21, 2006  •  Post A Comment

Federal Trade Commission Chairman Deborah Platt Majoras in a speech in Aspen, Colo., today asserted broad authority to regulate net neutrality and said the agency has started examining the issue and will step in if regulation is warranted.

In comments that have the potential to free up video franchising legislation that has been held up by a Senate debate over whether Congress should force the Federal Communications Commission to impose net neutrality, Ms. Majoras asserted that the FTC already can act and questioned a need for any new law.

“Let me make clear that if broadband providers engage in anticompetitive conduct, we will not hesitate to act using our existing authority,” she said, while expressing significant doubts that any activity so far justifies regulation. “Dangers lie in legislating without clear evidence demonstrating the problem we wish to solve.”

Part of the net neutrality debate has been about whether consumers would be protected if Internet providers building a new, higher-speed highway discriminate by creating two lanes: a fast lane reserved for favored content partners willing to pay a toll and a slower lane for everything else. The debate has focused on what could happen now that the FCC has elected not to regulate the area.

Ms. Majoras told attendees of the Progress & Freedom Foundation conference that while phone and cable companies are exempt from FTC regulation for “common carrier” services, the FTC can regulate their non-common carrier services including their activities as Internet providers.

She said the regulatory needs are uncertain, but she has formed an Internet Access Task Force to study the issues stemming from converging technologies and set a Nov. 6-9 workshop to hear testimony.

Ms. Majoras said she asked the task force to specifically examine net neutrality, but said the cost of regulation should be weighed versus the benefit.

“I urge caution in proceeding on this issue,” she said. “I start by admitting my surprise at how quickly so many of our nation’s successful firms have jumped in to urge the government to regulate. … When fear of marketplace disadvantage arises, there is tendency to quickly turn to government to seek protection of help. I do not dispute the sincerity of concerns. I too support a highly competitive Internet environment. I just question the starting assumption that government regulation, rather than the market itself, will provide the best solution.

Representatives of consumer groups welcomed the FTC’s involvement, though somewhat warily.

“We certainly look forward to the analysis of an agency that exists to protect competition of the broadband market in which 98 percent of customers receive their service from either the telephone company or the cable company, if they have that choice at all,” said Gigi B. Sohn, president of Public Knowledge, one of the consumer groups urging net neutrality.

Andy Schwartzman, who heads the Media Access Project, a public interest law firm, said the FTC essentially created net neutrality when it conditioned Time Warner’s merger with AOL on “open access.”

“There is little doubt that the AOL/Time Warner consent decree, which has essentially mandated what we now call net neutrality, has provided lower rates and competitive choices to Time Warner cable customers for five years. Nor did it harm Time Warner’s profitability. Whatever problems the company has had have not been attributable to this requirement,” he said.

The cable franchising bill that has been on hold would make it easier for phone companies to offer cable TV without going city by city for franchises.