Antitrust, not Net Neutrality, Should Govern Online Video Competition

by on June 13, 2012 · 7 comments

The Wall Street Journal reports that “The Justice Department is conducting a wide-ranging antitrust investigation into whether cable companies are acting improperly to quash nascent competition from online video.”  In particular, the DOJ is concerned that data caps may discourage consumers from switching to online video providers like Hulu and Netflix.  The following statement can be attributed to Berin Szoka, President of TechFreedom:

It’s hard to see how tiered broadband pricing keeps users tethered to their cable service. Even watching ten hours of Hulu or Netflix a day wouldn’t exceed Comcast’s 300 GB basic data tier. And Comcast customers can buy additional blocks of 50 GB for just $10/month—enough for nearly two more hours a day of streamed video. Such tiers provide a much-needed incentive for online content providers to economize on bandwidth. They also allow ISPs to offer fairer broadband pricing, charging light users less than heavy users. Consumers might have been better off if cable companies could have simply charged online video providers for wholesale bandwidth use, but the FCC’s net neutrality rules bar that.

Counting cable content against caps might seem more fair, but it’s not necessarily something the law should mandate. Discriminating against a competitor isn’t a problem under antitrust law unless, on net, it harms consumers. Would consumers really be better off if their cable viewing reduced the amount of data available for streaming competing online video services? As long as the basic tier’s cap is high enough, few users will ever exceed it anyway—leaving consumers free to experiment with alternatives to cable subscriptions, just as cable providers are experimenting with new ways of offering cable content on multiple devices at no extra charge.

We’ve been saying for years that net neutrality concerns are best addressed through antitrust principles. Those who think current antitrust mechanisms work too slowly should dust off the Digital Age Communications Act, a compromise proposal offered by The Progress & Freedom Foundation in 2005.  DACA allows the FCC to make rules to address widespread problems if it can prove harm to consumer welfare. With the D.C. Circuit poised to rule that FCC currently has no legal authority to regulate net neutrality, DACA may soon be revived as the obvious legislative vehicle for addressing concerns about online competition.

Szoka is available for comment at

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