more on Two notes on Network Neutrality

[David Farber <dave () farber net>]

Begin forwarded message:

From: Gerry Faulhaber <gerry-faulhaber () mchsi com>
Date: November 1, 2006 9:36:37 AM EST
To: dave () farber net
Subject: Re: [IP] more on Two notes on Network Neutrality

[for IP]
Actually, slow-rolling DSL to DLECs is a particularly apt analogy.   
The FCC required the resale of DSL at regulated rates.  However, the  
complexity of the relationship between ILECs and reselling DLECs  
demanded a level of monitoring that was far beyond the ability of any  
regulatory agency to enforce compliance, and as a result the ILECs  
could forestall something they didn't want: mandated direct  
competitors.  There is a growing consensus that the mandated resale  
of both DSL and wireline has been a failure: we gave the FCC a  
virtually impossible job to do.  Not that they didn't try, but the  
Telecom Act of 96 was virtually unimplementable (I wrote a paper  
about this a few years ago: "Policy Induced Competition: the  
Telecommunications Experiments," in Information Economics and Policy,  
at http://rider.wharton.upenn.edu/~faulhabe/732/Policy-Induced% 
20Competition.pdf) . If we enact network neutrality legislation/ 
regulation, the complexity of enforcement (due to complexity of  
monitoring) will again be far from the capabilities of any regulatory  
agency, and for exactly the same reasons that mandated resale of DSL  
lines didn't work.  So we get a raft of new regulations (in the name  
of competition) that will also not work; what a great idea!

Net neutrality is a different story; with the exception of wireline  
telephone/VoIP, the BB ISPs are not really in the applications  
provider business, so they have no direct competitors (again, save  
VoIP).  Their profit optimal strategy is to maximize the value that  
customers get from their service, the better to raise prices.  You  
don't get people to pay you more by giving them worse service; you  
get more $$$ by providing a better service.  Does this mean we don't  
have to watch the telcos/cable guys like a hawk in the VoIP space?   
Of course not.  But the proper tool to protect against  
anticompetitive actions is not regulation (the DLEC case proves  
that's a loser; why do we want to do it again?) but antitrust, and in  
particular private antitrust suits.  If you've got a beef as an  
applicaton provider against an ISP, well, take 'em to court.  It is,  
after all, the American Way.  Since we already have antitrust laws to  
protect against anticompetitive behavior, we don't need a whole bunch  
of new regulations (that won't work) to solve this problem.  Use the  
tools we have; if you think your blood is on the floor because of  
anticompetitive conduct by an ISP, then prove it in court, based on  
the facts.

And I repeat the challenge: other than Madison River, show me  
anticompetitive conduct by the BB ISPs that would be fixed by NN  
regulation.

Professor Gerald Faulhaber

----- Original Message ----- From: "David Farber" <dave () farber net>
To: <ip () v2 listbox com>
Sent: Wednesday, November 01, 2006 8:42 AM
Subject: [IP] more on Two notes on Network Neutrality


> Begin forwarded message:
>
> From: "Mike O'Dell" <mo () ccr org>
> Date: October 31, 2006 11:31:35 PM EST
> To: dave () farber net
> Subject: Re: [IP] Two notes on Network Neutrality
>
>
>
> David Farber wrote:
> > A note from Lauren and a note from Faulhaber (a co-author of a  
> > memo  with me and others)
>
> Lauren may be ranting, but that doesn't make him wrong.
>
> the DSL CLECs were methodically slow-rolled out of existence
> by aggressive predatory tactics by the RBOCs.  we saw that
> first-hand every day trying to install and support DSL customers.
>
> for someone to suggest that the broadband service business is just  
> peachy,
> and that industry-destroying anti-competitive behavior in the space  
> hasn't happened
> before and is unlikely to happen again, especially given its   
> unchallenged
> success at eliminating competition, is patently absurd.
>
> -mo
>
>
>
>
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