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Think Tank Calls For FCC Neutrality

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Think Tank Calls For FCC Neutrality

On Monday morning, FCC Chairman Julius Genachowski is expected to announce new “network neutrality” rules governing Internet providers, including wireless companies. Technology policy analysts at the Competitive Enterprise Institute sharply criticized the FCC’s anticipated rulemaking.

FCC Neutrality is a superior alternative to “Net Neutrality,” argues Wayne Crews, CEI Vice President for Policy:

·      FCC bureaucrats should abstain from choosing business models. Agencies should not pick sides between content and infrastructure providers in disputes over pricing, access, service and other terms. When government dictates business models, it fuels artificial conflicts between content and infrastructure firms by driving a wedge between what are otherwise complementary, harmonious, and often synergistic visions.

·      “Net Neutrality” is an anti-competitive, pro-bureaucratic construction. The so-called "principle" of regulated non-discrimination is an incoherent abhorrence. It advances the aims of regulators and transitory special interests, not consumers. Worse, the expansion of neutrality rules endangers wireless networks that have yet to be created. Neutrality policies set the healthy functions of infrastructure and content innovation against one another, spurring harmful tensions and distorting what would otherwise be the complementary growth of both sectors. Sparring behemoths like Google, Apple, and AT&T can take care of themselves. If anything, their skirmishes spur investment, making consumers better off.

·      The FCC has no Congressional authorization to impose neutrality rules. In fact, net neutrality is so misguided that it might be worth Congress stepping in to prevent its application until it gets answers, particularly regarding how FCC acknowledges the role of “discrimination” in infrastructure and bandwidth creation, consumer welfare, and cybersecurity.

Regulating wireless industry practices is unnecessary and is more likely to harm consumers than help them, argues Ryan Radia, CEI Information Policy Analyst:

·      Wireless industry players are disciplined by intense competition. Virtually all U.S. consumers can select from four competing national carriers and dozens of regional carriers. Carriers are investing tens of billions of dollars annually to upgrade their networks to offer faster speeds and better coverage. In the next few years, several carriers are set to launch Long-Term Evolution networks, also known as “4G,” which promise vastly increased speeds and capacities. Price competition among wireless carriers is also cutthroat, as evidenced most recently by Sprint’s “Any Mobile” announcement.

·      Open and closed handsets coexist already. Open source handsets that run Google’s Android operating system can be purchased today by AT&T, T-Mobile and Sprint subscribers. Verizon Wireless is expected to launch one or more Android-based devices this fall. Android device owners can download and install apps from any source, with no “gatekeeper” or mandatory developer approval process.

·      Consumer attitudes toward “openness” are diverse and ever-changing. According to a recent Zogby International survey, many consumers are not especially concerned about whether their phone is open or not, but instead prefer handsets that are affordably priced and offer good coverage. On the flip side, some tech-savvy consumers care deeply about open applications and content. Competing wireless carriers, not FCC regulators, are best positioned to meet the evolving preferences of various wireless market segments.

· Regulating wireless networks and handsets would cause the industry to retreat, slowing innovation. Banning today’s business models, which enable firms to both make money and attract consumers, will cause firms to cut investment and take fewer risks. The result is stagnation, which the DSL marketplace experienced in the mid 2000s due to FCC “openness” regulations.

For more telecom policy analysis, visit CEI's Tech & Telecom page.

To contact CEI's technology team, please email rradia@cei.org.

The Competitive Enterprise Institute is a 501(c)(3) nonprofit, nonpartisan public interest organization that studies the intersection of risk, regulation, and markets.