An Antitrust Analysis of the Case for Wireless Network Neutrality

Competition Policy and Antitrust, Networks, the Internet, and Cloud Computing, Networks and Infrastructure, Wireless and Net Neutrality

Article Snapshot

Author(s)

Gregory L. Rosston and Michael Topper

Source

SIEPR Discussion, Vol. #08-040, July 30, 2009

Summary

This article asks whether wireless firms should be regulated to improve competition.

Policy Relevance

Wireless firms' practices are sometimes efficient and the industry is competitive; some regulatory changes would make it more competitive without the need for net neutrality rules.

Main Points

  • A network neutrality rule for wireless carriers would work much like an antitrust rule that places many types of restrictions on how consumers use their services (“vertical restraints”) should be assumed to be harmful (“per se illegal”).
     
  • Both antitrust and regulation are intended to benefit consumers and correct market failures. One can assess the need for a regulation using antitrust analysis.
     
  • In 1968, the FCC ruled in Carterphone that customers should be allowed to attach devices made by any firm to Bell Telephone handsets. Some, including Tim Wu, recommend a Carterphone type rule for wireless devices today.
     
  • At the time of Carterphone, the Bell Telephone system was a price-regulated monopoly, and firms in these circumstances are more likely try to boost profits in ways that harm consumers.
     
  • Antitrust analysis today shows that the four largest firms in the wireless sector compete quite vigorously with one another; prices are falling while service quality improves.
     
  • Wireless firms must manage bandwidth and sometimes restrict how consumers use it in order to avoid scarcity of spectrum. Current restrictions and price plans provide consumer benefits.
    • Network neutrality rules might harm consumers by banning helpful types of network management methods.
       
  • To ensure that competitive pressure on wireless firms to benefit consumers continues, the FCC should:
    • Make more spectrum available.
       
    • Make sure network operators have flexibility in how spectrum is used.
       
    • Speed the redeployment of spectrum now used by government.
       
    • Reform universal service.
       
    • Watch for antitrust violations.
       

 

Get The Article

Find the full article online

Search for Full Article

Share