Antitrust Provides a More Reasonable Regulatory Framework than Net Neutrality

Abstract

In 2015, the FCC reclassified the framework for regulation of the Internet from Title I of the Telecommunications Act to Title II. This reclassification treats the Internet as a common carrier and bans any vertical agreements between Internet service providers and content providers. Economic analysis shows the 2015 Order harmed consumers and depressed investment. In April 2017, the FCC initiated a proceeding to end the Title II regulatory approach. Such a shift will also replace the categorical ban on vertical arrangements to a regulatory regime grounded by antitrust law and its “rule of reason.” Critics argue the antitrust approach cannot reach each of the harms envisioned by proponents of net neutrality or is otherwise insufficient. We explain that the criticism that antitrust cannot reach harm to innovation caused by anticompetitive conduct is wrong as a matter of both antitrust as a matter of theory and practice. We conclude that antitrust is superior to proposed alternatives that would condemn vertical arrangements in broadband markets either on a categorical basis or the plaintiff bearing the prima facie burden of showing proof of harm to competition.

Keywords: Net Neutrality, Antitrust, Rule of Reason, Title II, Broadband, Federal Trade Commission, Federal Communications Commission, Price Discrimination, Vertical Restraints

JEL Classification: K21, K23