Despite private-sector broadband investment exceeding $70 billion per year since 2013, the digital divide remains. Over 20 million households have access to, but are not connected via, a fixed broadband connection. This is a classic market failure. Without some government intervention, there will be an under-consumption of broadband. But what kind of intervention is called for?
That Facebook can’t stay out of the headlines is not just a crisis for Facebook. It’s also a crisis for the Federal Trade Commission—indeed, it’s a “credibility-check moment.” Every day that passes in which the consent order is not enforced against Facebook adds to speculation that something is deeply broken at the agency. Moreover, the tech firms want the FTC to be named as their sole regulator, pre-empting stronger action by states and their attorneys general to protect privacy.
[Commentary] The Supreme Court heard oral arguments in a pivotal antitrust case involving American Express (“AmEx”). The decision could have a profound impact on the way platform-based companies such as Google and AmEx will be treated under the law. Some of the Court's questioning was truly impressive, showing knowledge of both economics and the inner workings of credit card markets. Other questions? Not so much. Before pointing out the uneconomic utterances, let’s quickly review the case. Credit card companies make money two ways.
[Commentary] So long as the Federal Communications Commission is run by majority rule, members of the first faction will never achieve lasting protections to their liking; the pendulum will continue to swing with changes in the White House. The solution is obvious: Congress needs to give the FCC (or the Net Tribunal) a clear mandate to define appropriate ISP and tech platform behavior and to police it. Until that day comes, we will have more heart-pounding installments of the net neutrality saga than Star Wars.
[Hal Singer is principal at Economists Incorporated]
[Commentary] When it comes to using your data from Web browsing and app usage, the Federal Trade Commission has been the regulatory cop on the beat. Determined to be relevant in the digital economy, the Federal Communications Commission created its own, radically different set of privacy regulations targeting just Internet service providers. By requiring an Internet service provider’s customers to give permission for their data to be used, the FCC’s new privacy rules subject ISPs to a different and more restrictive set of regulations than their online advertising rivals.
If and when the FCC’s new privacy rules are overruled, the statute that empowers the agency to police privacy abuses by ISPs will still apply. And nothing prevents the FCC from designing a different (and more symmetric) regulatory standard. Repeal of the FCC’s new rules will simply restore the regulatory environment that existed for more than 18 months between its reclassification decision and its privacy rules. Given the myriad layers of protections and regulatory options, the notion that repeal would leave the ISPs without any privacy regulator is patently false.
[Hal Singer is a principal at Economists Incorporated and a senior fellow at the Progressive Policy Institute.]
[Commentary] The changing of administrations offers a fresh chance for Washington to rethink network neutrality. While it’s easy to find faults with the prior regime, it is hard to articulate an alternative that would satisfy more than a narrow constituency. The replacement to Title II must balance the dual objectives of stimulating investment at the core and the edges of the Internet. With ironclad protections that ban new business models, investment at the core can be discouraged. Indeed, the imposition of Title II in early 2015 has been associated with ISP investment declines in recent studies by PPI and by USTelecom. Too little protection, including a naive reliance on antitrust enforcement, could threaten investment at the edge.
With this delicate balance in mind, an ideal regulatory regime for the Internet would embody three principles:
It would reject ex ante prohibitions of new business arrangements on the Internet, and instead embrace case-by-case review of allegations of discriminatory or exclusionary conduct;
It would reject asymmetric regulation of core and edge providers, and instead establish a forum for adjudicating complaints against any dominant platform provider, including Internet intermediaries and mobile operating systems; and
It would fill gaps in antitrust laws that leave upstart edge providers vulnerable.
[Hal Singer is a senior fellow at the George Washington University Institute of Public Policy]