Introduction and Summary
These comments express the views of Randolph May, President of the Free State Foundation, and Seth Cooper, Senior Fellow and Director-Policy Studies. The Free State Foundation is an independent, nonpartisan, non-profit free market-oriented think tank focusing heavily on communications and Internet law and policy.
Within the realm of that communications and Internet law and policy work, the Free State Foundation has focused on, and devoted scholarly resources to, researching and writing about public policy-related issues involving broadband Internet services. It is with this expertise and experience in mind that we offer these comments on "Competition and Consumer Protection Issues in U.S. Broadband Markets."
Network convergence is a widely recognized reality of the broadband marketplace, and deployment of 5G and gigabit broadband networks will accelerate competition among competing platforms. However, competition policy lags behind technological developments, and that risks perpetuating an outdated analytical outlook that misses the benefits of innovation and intermodal competition being enjoyed by consumers, both now and in the future. To align with market realities and future developments, the Commission should apply relevant market definitions that encompass all broadband Internet access platforms, regardless of their differing delivery technologies. And it should apply a forward-looking analysis that factors in the market's technological dynamism.
Delivery of Internet Protocol-based video, voice, and data services through different technologies and the advanced capabilities of next-generation networks increasingly will result in consumers having choices among competing platforms, place downward pressure on prices, and establish a disincentive for anticompetitive conduct by providers.
When assessing competition conditions and potential consumer harm regarding broadband Internet access services, wireless/wireline substitution renders separate product markets for
"mobile telephony/broadband services" and "wireline broadband services" too narrow.
The Commission's assessments should define the relevant product market to encompass all broadband Internet access platforms providing comparable goods or services, regardless of the differing technologies by which they are delivered.
Furthermore, the Commission's case-by-case evaluations of alleged anticompetitive conduct by broadband service providers should be informed by economic analysis and antitrust precedents. In order to determine whether particular market practices are anticompetitive, the Commission's analysis should be keyed to whether or not there is market power in the relevant market, and it should also weigh the benefits of the evaluated conduct against its costs.
Although the existence of market power generally is a necessary precondition for a finding of anticompetitive conduct, to date no evidence of market power in the broadband markets has been shown. And cross-platform competition among wireless and wireline service providers renders the existence of market power for broadband Internet services unlikely. Furthermore, providers also are less likely to act in an anticompetitive manner in dynamic markets, like the broadband Internet market, in which the introduction of new goods and services may thwart a provider's attempt to engage in such conduct.
Moreover, the ability of broadband market participants to compete and innovate is hindered by restrictive regulations. Legacy telephone and cable regulations reduce providers' financial resources for investment in next-generation broadband networks. Federal agency delays in clearing spectrum for licensed use and lengthy local government processes and excessive fees for infrastructure siting and equipment modification also hinder deployment of broadband services. Potential state "net neutrality" regulation of broadband Internet services, if not prohibited, also will inhibit investment and innovation by broadband service providers. In assessing the competitive conditions of the broadband marketplace, the Commission should call attention to the counterproductive nature of such regulations.
A PDF of the complete FSF comments, with footnotes, is