Net Neutrality and Regulatory Reform

by on November 7, 2011 · 6 comments

The Senate might vote this week on Sen. Hutchison’s resolution of disapproval for the FCC’s net neutrality rules.  If ever there was a regulation that showed why independent regulatory agencies ought to be required to conduct solid regulatory analysis before writing a regulation, net neutrality is it.

For more than three decades, executive orders have required executive branch agencies to prepare a Regulatory Impact Analysis accompanying major regulations.  One of the first things the agency is supposed to do is identify the market failure, government failure, or other systemic problem the regulation is supposed to solve. The agency ought to demonstrate a problem actually exists to show that a regulation is actually necessary.

But the net neutrality rules have virtually no analysis of a systemic problem that actually exists, and no data demonstrating that the problem is real.  Instead, the FCC’s order outlines the incentives Internet providers might face to treat some traffic differently from other traffic, in a discussion heavily freighted with “could’s” and “may’s”.  Then it offers up just four familiar anecdotes that have been used repeatedly to support the claim that non-neutrality is a significant threat  (all four fit in paragraph 35 of the order).  The FCC asserts without support that Internet providers have incentives to do these things even if they lack market power, and indeed in a footnote it dispenses with the need to consider market power: “Because broadband providers have the ability to act as gatekeepers even in the absence of market power with respect to end users, we need not conduct a market power analysis.” (footnote 87)

Thus far, no administration of either party has sought to apply Regulatory Impact Analysis requirements to independent agencies. If administrations won’t, Congress should.


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  • the great gatsby

    I would assume that the existence of companies like Sandvine (which uses deep packet inspection techniques to determine whether to throttle your bandwidth or not) contracting with Comcast indicates  the reality of the problem.

    Of course, the marketplace has insufficient ISPs (you can either have Optimum or Optimum), which is why the cable companies and telcos get away with subpar service vis a vis other industrialized nations.  If the consumer only gets a choice of 1 carrier to buy internet from, that provider can certainly abuse their privilege.

    I believe the real question becomes whether we treat our internet providers like utility companies, given the reality that expensive infrastructure makes competition and an open marketplace prohibitively expensive.  In an age where access to data frequently equals access to employment offers and eduction opportunities, I think it would be of benefit to our society to look up this service as such.   

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