The FTC Says It's Totally Cool With Anti-Competitive Internet Fast Lanes

from the with-friends-like-these dept

As we've noted for a while, the FCC's attack on net neutrality did much more than just kill net neutrality. It also gutted much of the FCC's authority over broadband providers entirely, making it harder than ever for the agency to police the behavior of historically anti-competitive giants like Comcast NBC Universal and AT&T Time Warner. What authority the government now has to oversee one of the more broken sectors in American industry got shoveled instead to the FTC, an agency critics say lacks the authority or resources to police broadband. That's the entire reason ISP lobbyists pushed for the plan.

Yet throughout the repeal, broadband providers and FCC head Ajit Pai stated that people didn't need to worry because if ISPs did anything wrong, the FTC and antitrust enforcement would stand as a last line of defense. But any expectations that modern, eroded antitrust authority would protect consumers and competitors were quickly ruined by the recent AT&T and Time Warner legal face plant, widely mocked as one of the more clueless rulings in tech policy history.

And last week, Trump FTC boss Joseph Simons made it abundantly clear that the FTC isn't likely going to be helping much either. Again throughout the repeal efforts, folks like FCC Commissioner Brendan Carr penned editorials like this one, insisting that post net neutrality, agencies like the FTC would be quick to crack down on anti-competitive ISP actions like "paid prioritization," which lets a company buy an competitive advantage from an ISP:

"Reversing the FCC’s Title II decision will return the FTC to its role as a steady cop on the beat and empower it to take enforcement action against any ISP that engages in unfair or deceptive practices,” Carr wrote. “Federal antitrust laws will apply.” Carr added that if ISPs “reached agreements to act in a non-neutral manner by unfairly blocking, throttling, or discriminating against traffic, those agreements would be per se unlawful ."

Again, the argument being made is that you didn't need net neutrality or strong FCC oversight of ISPs, because antitrust and the FTC would thwart any anti-competitive shenanigans. But in a speech at the National Press Club last week, FTC boss Simons clearly stated that blocking, throttling, or paid prioritization would not be per se antitrust violations. He also said he sees such anticompetitive arrangements the same way as he sees... happy hour:

"Paid prioritization is a type of price discrimination, which is ubiquitous in the economy. For example, think about when you walk into grocery store. Some customers get lower prices because they cut out coupons. Others might get a seniors discount. Others might get 2% off with their credit card. Yet others get discounts because they have a loyalty card with that supermarket. Those of us who go to the afternoon movie matinees will generally pay less, and those of us willing to show up at a restaurant before 6 pm might get the benefit of a lower priced menu. And of course, let’s not forget Happy Hour discounts."

Except none of these examples are remotely the same thing as paid prioritization. Under paid prioritization, ESPN could buy a network latency and speed advantage over an up and coming streaming sports outfit, ensuring that ESPN traffic reached users more quickly and more efficiently. Given the lack of competition in broadband, neither users or impacted companies have a way (choice) to route around that behavior. Nobody has ever argued against discounts , in broadband, they've argued against incumbent ISPs erecting arbitrary tolls and tilting the playing field, something a truly objective FTC would actually care about.

Of course I've been noting how this is the telecom industry's plan all along, something that has been overlooked during the myopic focus on net neutrality alone. The telecom lobby convinced the FCC to effectively self-immolate, driving any remaining authority to an FTC that lacks either the willpower or authority to actually do the job. As a result, oversight and accountability is going to fall into the cracks, which was the industry's entire goal all along.

For now ISPs are trying (though occasionally failing) to avoid anti-competitive behavior so they don't add any ammunition to the giant lawsuit against the FTC, a ruling for which should arrive any day now. But if that lawsuit goes the industry's way, you can expect significantly more anti-competitive behavior moving forward, given they know (by design) that the government has been effectively defanged. And while that's great news if you're an AT&T or Comcast executive, that's not going to be good news if you're a consumer or one of countless small and mid-sized businesses that rely on some degree of internet neutrality to compete.

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Filed Under: broadband, fcc, ftc, net neutrality, title ii, zero rating