Net Neutrality Could Harm Competition, says report
George S. Ford and Michael Stern of the Phoenix Center released a report today entitled Sabotaging Content Competition: Do Proposed Net Neutrality Regulations Promote Exclusion?. The economic analysis concludes that network neutrality regulations would increase, not decrease incentives for broadband service providers to employ exclusionary tactics that could harm competition.
“The justification for net neutrality regulation is that absent a bright-line, non-discrimination rule, network providers will employ exclusionary tactics to harm competition in the content and application sector. Yet, as we show here, the proposed net neutrality rules of both the FCC and Congress, and encouraged by Van Schewick (2007) and Chettiar and Holladay (2010), can actually promote such exclusionary behavior. That is, the incentive to monopolize is greater under net neutrality.
“The policy implications of this analysis are numerous, but can be summarized at a very high level as follows: the analytical foundation for net neutrality remains in its infancy and the concept needs more time to evolve. Since even the advocates of net neutrality regulation admit that there exists a “de facto net neutrality regime” today, there seems to be little reason for a headlong rush into bright-line regulatory rules when so little is known about the issue (as shown clearly here). The rules proposed byboth the FCC and Congress create incentives that may not even exist absent the regulation, and increase whatever incentives do exist for BSPs to behave badly in the content market.
“Most troubling about the proposed rules is that net neutrality, it now appears, has become little more than a quibble over profits between providers, a far cry from the origins of the concept wherein the focus was on the freedom to distribute and consume information without undue interference. A return to first principles may be in order.”
