The Federal Communications Commission plan to repeal net neutrality rules depends partly on the argument that antitrust rules can protect consumers and websites from bad behavior by Internet service providers.

"I think that antitrust and consumer protection authorities stand at the vanguard to make sure that consumers and competition are protected," FCC Chairman Ajit Pai said in a recent interview with NPR.

Pai's Notice of Proposed Rulemaking that proposes overturning the rules seeks comment on whether "the existence of antitrust regulations aimed at curbing various forms of anticompetitive conduct" makes the current net neutrality rules unnecessary.

But even a prominent opponent of the current net neutrality rules that Pai wants to overturn says that antitrust isn't robust enough to protect consumers and websites from ISPs. This anti-antitrust argument comes from economist Hal Singer, who opposed the FCC's 2015 decision under then-Chairman Tom Wheeler to impose net neutrality rules by reclassifying ISPs as common carriers under Title II of the Communications Act.

Pai has repeatedly said that Singer's research on alleged network investment declines proves that the net neutrality rules have been harmful. Singer has derisively called the current net neutrality framework, "the Wheeler tax." But on the question of whether antitrust rules can protect consumers from net neutrality violations, Pai and Singer do not agree.

Antitrust won’t stop paid prioritization

Singer's new paper is titled "Paid prioritization and zero-rating: Why antitrust cannot reach the part of net neutrality everyone is concerned about." It was published this month in an American Bar Association journal, Antitrust Source. It was "peer-reviewed by one economist and two lawyers chosen by Antitrust Source," Singer told Ars.

When contacted by Ars today, Pai's office declined comment on Singer's analysis.

Singer begins by describing a hypothetical Internet service provider giving preferential treatment to an online service:

Consider a hypothetical case in which an ISP offers preferential treatment for an online content supplier's packets for a fee, but declines to make the same terms available to other content providers. To make the matter concrete, assume the preferred content supplier offers telemedicine service, a real-time application that performs better with enhanced quality of service from the ISP. For wireless providers, preferential treatment could, for example, take the form of the ISP's not counting the content provider's packets against the customer's data cap (known as "zero rating"). To an economist, the precise nature of the preference afforded the content provider is not critical, so long as preference of some kind is provided for a fee. What matters from a competition perspective is that as a result of the pay-for-preference arrangement, the favored content provider operates at a competitive advantage vis-à-vis its content rivals with respect to quality of service. Because the offer of preference is, by assumption here, not extended to all comers, the arrangement is discriminatory, plain and simple.

Singer doesn't oppose paid prioritization if it's offered by ISPs to all websites and online services (also known as "edge providers") on a non-discriminatory basis. He argues that instead of banning paid prioritization altogether, the FCC should stop discriminatory versions of paid prioritization on a case-by-case basis.

But antitrust won't do that, he argued. The aforementioned hypothetical arrangement is discriminatory, "[b]ut does it amount to an antitrust offense?" Singer wrote. "This essay answers that question in the negative: Unlike traditional discriminatory-refusal-to-deal (DRTD) cases in antitrust, there is no effort by the ISP in my hypothetical to disadvantage a horizontal rival. Even if an edge provider could structure its antitrust complaint as a DRTD, private litigants who are denied the paid arrangement are unlikely to pursue antitrust cases where the only potential harm to competition is an innovation loss (in the form of less investment/innovation by edge providers in future periods)."

“Free from legal constraints”

Singer lists several roadblocks to stopping discriminatory paid prioritization via antitrust. "Monopolists are generally free from legal constraints to choose their suppliers and engage in price discrimination under the antitrust laws," he wrote.

Antitrust laws are designed to protect competition, but "competition is not the only value that net neutrality aims to address: end-to-end neutrality or non-discrimination is a principle that many believe is worth protecting on its own," he wrote.

"Moreover, antitrust litigation imposes significant costs on private litigants, and it does not provide timely relief; if the net neutrality concern is a loss to edge innovation, a slow-paced antitrust court is not the right venue," he also wrote.

A company filing an antitrust claim in Singer's hypothetical would have to show "evidence of exit by rival telemedicine firms" and prove that this resulted in a loss of innovation. But individual companies aren't likely to bring cases "based solely on such a difficult-to-prove antitrust harm." Federal agencies can pursue such cases, but they rarely do so. One prominent example is the United States vs. Microsoft case in which Microsoft was found to have violated antitrust laws with actions that harmed Netscape.

"Even antitrust agencies shy away from bringing harm-to-innovation cases," Singer wrote. "Although the DC Circuit determined that Microsoft had liability without the Department of Justice having to demonstrate that the nascent threats would have developed into full-fledged competitors, the antitrust laws have evolved in a manner that makes it difficult to address discriminatory behavior that may adversely affect innovation. Increasingly, the agencies and courts defer to the business judgments of platform providers. While the Microsoft court suggests a balancing of harm and benefits, the agencies tend to stand down upon the showing of any plausible justification."

Singer also points out that antitrust hasn't stopped Google from giving its own Web properties more prominent placement in search results.

The notion that antitrust can protect net neutrality is also disputed by Terrell McSweeny, a Democrat who serves on the Federal Trade Commission. McSweeny is an attorney who served as chief counsel for competition policy at the US Department of Justice’s antitrust division prior to becoming an FTC commissioner in 2014.

"There can be a lot of harmful discrimination or harm to innovation that isn’t always an antitrust violation," she told Ars in April. "Antitrust case-law in this area is challenging."

Point, counterpoint

Singer faced pushback from former FTC Commissioner Joshua Wright, a Republican and law professor who directs an antitrust institute at George Mason University. Wright's argument in favor of using antitrust to police net neutrality cites the Microsoft case as well as the FTC's case against Intel in 2009 and cases against pharmaceutical companies.

"The FTC has pursued several conduct cases where the theory of harm was decreased innovation," Wright wrote, using the Intel case as an example:

Intel manipulated CPU industry standards to advance their own products and prevented competitors from introducing a competing product—in short harming CPU innovation. The FTC alleged that "the loss of price and innovation competition in the relevant markets will continue to have an adverse effect on competition and hence consumers." Further, the FTC alleged that there were no offsetting pro-competitive efficiencies and sought to enjoin Intel. This case is a clear example that under existing antitrust laws the FTC alleged harm to innovation based upon vertical agreements.

Additionally, "harm to innovation is a consideration that the [Justice Department's] Antitrust Division consistently considers in merger enforcement," he wrote.

Singer countered Wright's argument in a blog post, saying that Wright did not address a key problem of antitrust—that enforcement moves too slowly to save companies harmed by ISPs.

"While the Department of Justice arguably prevailed over Microsoft, it was unable to do so fast enough to save Netscape, the innovative browser company that was run over by Microsoft’s unlawful support of Explorer, its rival," Singer wrote. The speed of decision-making is still critical for online services that need non-discriminatory access to broadband networks.

The Intel case is Wright's best counterexample, according to Singer, but "Wright fail[ed] to note that the FTC pulled the plug by settling," providing no court precedent for future plaintiffs.

"That the FTC/DOJ have not litigated a major Section 2 case since Microsoft, certainly not one involving platform technologies, is remarkable," Singer wrote, referring to the Sherman Act section on monopolizing trade. "Until the FTC demonstrates a track record and the willingness to bring Section 2 cases, Wright’s arguments are nothing more than hollow promises."