FCC neutrality rule may leave consumers less protected

Could the FCC’s Title II regulations leave American consumers with less protections?  It’s quite possible.  This question was raised by House Judiciary Committee Chairman Bob Goodlatte (R-Va.) in a recent antitrust oversight hearing.  The problem is that while the FCC is greatly expanding its authority over the Internet with its latest open Internet order, this expansion appears to be coming at the expense of the authority of antitrust and consumer protection enforcers simply because of the jurisdictional basis the FCC has asserted as its base of legal authority. 

There is no doubt that the push for net neutrality is primarily motivated by concerns over competition and consumer protection.  Therefore, it would make sense if the antitrust enforcement agencies – that have expertise and valuable experience in this area – had a primary role in safeguarding consumer protections on the Internet.  However, this is simply not the case.  In fact, the course of action the FCC has taken has put these antitrust enforcers in a position where they could lose their ability to oversee a significant chunk of the Internet eco-system. 

{mosads}The FTC is the hardest hit by the Open Internet Order. Section 5 of the Federal Trade Commission Act specifically exempts common carriers. Since the FCC has reclassified the provision of Internet service as a common carrier service, it appears the FTC will no longer be able to pursue competition and consumer protection cases against companies that are subject to the FCC’s regulations.  

The Section 5 exemption that keeps the FTC off the field is not the only problem created by the FCC’s Open Internet Order.  The FCC may have curtailed the ability of the Department of Justice to step in if there is anti-competitive behavior occurring in violation of antitrust laws.  This is because the Supreme Court has stated that it is up to courts to determine whether regulatory statutes preclude the application of antitrust laws when they are silent on this matter.  Anti-trust laws can be trumped by other regulations when there is a “clear repugnancy” or “clear incompatibility” between the two laws.  

In Credit Suisse Securities v. Billing, the Supreme Court highlighted three critical factors in determining whether antitrust law would or would not apply to an industry already subject to regulations by an expert agency:  “(1) the existence of regulatory authority . . . law to supervise the activities in question; (2) evidence that the responsible regulatory entities exercise that authority; and (3) a resulting risk that the . . . laws, if both applicable, would produce conflicting guidance, requirements, duties, privileges, or standards of conduct.”  The Open Internet Order could potentially meet all three of these factors meaning FCC rules will preempt other regulations from applying, regulations that are perhaps better informed and more effective than what the FCC has adopted.  

In passing the Open Internet Order, the FCC has done something very dangerous.  They have crafted an FCC solution to a future problem that involves many different areas of interest – including competition and consumer protection.  If this FCC solution becomes an FCC only solution than consumers will likely be worse off overall.  The FCC simply does not have the competition and consumer protection experience and expertise that the FTC and DOJ have.  It is doubtful that the FCC will be able to provide the same oversight that can be obtained by the FCC, FTC, and DOJ working together. 

The only solution to this problem is for Congress to address net neutrality in a holistic manner that prevents these inter-agency conflicts and allows each agency to do what they excel at.  Consumers can’t count on the FCC protecting them on its own.

Balto is a former policy director of the Federal Trade Commission, attorney-adviser to Chairman Robert Pitofsky, and antitrust lawyer at the U.S. Department of Justice. 

Tags Bob Goodlatte

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