An Antitrust Analysis of the Case for Wireless Network Neutrality

Article Source: SIEPR Discussion, Vol. #08-040, July 30, 2009
Publication Date:
Time to Read: 2 minute read
Written By:

 Michael Topper

Michael Topper



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.


Key Takeaways:
  • 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.



Gregory L. Rosston

About Gregory L. Rosston

Gregory L. Rosston is Deputy Director and Senior Fellow at the Stanford Institute for Economic Policy Research (SIEPR) and Director of the Public Policy Program at Stanford University. He is also a Professor of Economics by courtesy and teaches courses on competition policy and strategy, intellectual property, personal finance, and writing and rhetoric. His research has focused on industrial organization, antitrust and regulation.