FTC Should Get Jurisdiction Over Internet Ecosystem, Verizon’s Silliman Says
The Internet will have rules and backstops, but those should be handled by the FTC, Silliman said. “The FTC, for example, has plenty of jurisdiction to protect consumers to deal with competition issues, but we feel the FCC should not be creeping its jurisdiction into these areas.” As the FCC takes an expansive view of its jurisdiction on the Internet using an ancillary theory, that “concerns” Verizon, he said: For instance, the Open Internet order said the FCC would forbear from applying its rules to Wi-Fi in coffee shops. That forbearance itself is an “implication that it could apply the FCC’s jurisdiction to Wi-Fi in coffee shops,” he said.
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The Open Internet order leaves the door open for all sorts of Internet regulation, said former Commissioner Robert McDowell, now a visiting scholar at the Hudson Institute. The FCC is not regulating Wi-Fi in coffee shops, but “if they're forbearing from that, in their view, of course they could,” he said. The order did carve out wireless, but it “kept the FCC’s hooks on it": With its wireless competition report, the commission has been “slowly laying a logical foundation for the regulation of the wireless marketplace.” Given the U.S. Court of Appeals for the D.C. Circuit “blew wind in its sails” when it determined in the data roaming decision that the FCC had wide authority to regulate this space, the FCC could “start piling on the regulations,” he said. As a policy matter, “that would be a disservice."
"We don’t know what the bounds of FCC jurisdiction are,” Silliman said. “That makes it very hard to plan for the future.” Whether the D.C. Circuit upholds the Open Internet rules or not, “there will be people out there who say the sky is falling, no matter what the decision is,” he said. If regulators determine that there’s a problem, and the market doesn’t solve it, the FTC has “all the tools to deal with this,” he said.
The FTC Act has a common carrier exemption, Ohlhausen said, adopted with the idea that there was already a government body that pervasively regulated the telecom space. But it’s no longer a pervasively regulated monopoly market, she said. The FTC has since advocated many times for the common carrier exemption to be rescinded, she said, including at Wednesday morning’s robocall hearing. (See related story in this issue.) The FTC construes the common carrier exemption “very narrowly,” she said: The agency can’t regulate common carrier activities performed by a common carrier. Broadband, she said, has not been deemed such an activity.
Many net neutrality concerns fall in the bucket of exclusionary conduct, Ohlhausen said. Some concerns relate to vertical integration. These are all “garden variety” issues at the FTC, as are the “pretty typical consumer protection” issues that would be raised by ISPs not delivering their advertised speeds, she said. In the 1990s, the FTC sued AOL for false advertising when it advertised an all-you-can-eat plan for dial-up that it couldn’t deliver. The FTC’s “very traditional, very flexible analysis” focuses on harms to competition that ultimately harm consumers, and then looks for a remedy, she said.
Net neutrality is an “empty vessel” into which people pour whatever meaning they have in mind, Silliman said. Sometimes neutrality isn’t as great as it sounds, he said: Imagine a neutral postal system. In theory it sounds great, he said, but does that mean a customer couldn’t pay a premium for express delivery, or that a magazine distributor couldn’t pay bulk rates for slower delivery? Sometimes mandating neutrality can “preclude a lot of consumer-enhancing behavior,” he said.