Wednesday, September 5, 2007

U.S. Department of Justice Opposes "Network Neutrality"

The U.S. Department of Justice cautioned the FCC against imposing "Net Neutrality" regulations, arguing that such proposal could hamper the development of the Internet and related services.

In a response to a FCC Notice of Inquiry regarding broadband practices, the DoJ said that some regulatory proposals offered by various companies and organizations in the name of "net neutrality" could deter broadband Internet providers from upgrading and expanding their networks to reach more Americans.

Specifically, the DoJ stated that precluding broadband providers from charging content and application providers directly for faster or more reliable service "could shift the entire burden of implementing costly network expansions and improvements onto consumers." If the average consumer is unwilling or unable to pay more for broadband Internet access, the result could be to reduce or delay critical network expansion and improvement.

The Department said in its filing that it may make economic sense for content providers who want a higher quality of service to pay for the Internet upgrades necessary to provide such service, arguing that "any regulation that prohibits this type of pricing may leave broadband providers unable to raise the capital necessary to fund these investments."

The Department also noted that differentiating service levels and pricing is a common and often efficient way of allocating scarce resources and satisfying consumer demand. "The U.S. Postal Service, for example, allows consumers to send packages with a variety of different delivery guarantees and speeds, from bulk mail to overnight delivery. These differentiated services respond to market demand and expand consumer choice."

"The FCC should be highly skeptical of calls to substitute special economic regulation of the Internet for free and open competition enforced by the antitrust laws," the Department said in its filing. "Marketplace restrictions proposed by some proponents of 'net neutrality' could in fact prevent, rather than promote, optimal investment and innovation in the Internet, with significant negative effects for the economy and consumers."

While cautioning against premature regulation of the Internet, the Department noted its authority to enforce the antitrust laws. "Anticompetitive conduct about which the proponents of regulation are concerned will remain subject to the antitrust laws and enforcement actions by government as well as private plaintiffs, and the Department will continue to monitor developments, taking enforcement action where appropriate to ensure a competitive broadband Internet access market," the Department stated.

A copy of the filing is available from the Department of Justice.

  • In March 2007, the FCC voted to open an inquiry into Net Neutrality issues, postponing any decision on whether the market for broadband services should be further regulated. In its 2005 Internet Policy Statement, the FCC announced four principles to encourage broadband deployment and to preserve and promote the open and interconnected nature of the public Internet. The new inquiry seeks information on the behavior of broadband market participants.

See also