Number range CHAPTER**Before the**

**FEDERAL COMMUNICATIONS COMMISSION**

**Washington, D.C. 20554**

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| In the Matter of             | * | WC Docket No. 07-52              |
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**EX PARTE FILING**

**UNITED STATES DEPARTMENT OF JUSTICE**

The United States Department of Justice ("Department")[^1] submits this
*ex parte* filing to respond to suggestions by some companies and
individuals that the Federal Communications Commission ("FCC" or
"Commission") adopt new regulations governing the transmission of
traffic over the Internet---so-called "net neutrality" rules. 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. 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.

The public policy objective here is clear: a thriving and dynamic
Internet capable of meeting the demands of consumers for fast and
reliable access to a rich variety of content and applications. Many
commenters in this proceeding agree that the best way to achieve this
objective is through marketplace competition. Other commenters, however,
have urged the FCC to consider imposing prophylactic "neutrality"
regulations to prohibit what they regard to be undesirable
differentiation in the provision of Internet services. Some of these
proposals, for example, could restrict broadband providers from offering
different levels of quality of service at varying costs to content and
application providers in a manner that efficiently responds to market
demands. Other proposals would require interconnection, open access, and
structural separation of companies offering both Internet access
services or transmission and content or applications deliverable over
the Internet.[^2]

The Department submits, however, that free market competition,
unfettered by unnecessary governmental regulatory restraints, is the
best way to foster innovation and development of the Internet. Free
market competition drives scarce resources to their fullest and most
efficient use, spurring businesses to invest in and sell as efficiently
as possible the kinds and quality of goods and services that consumers
desire. Past experience has demonstrated that, absent actual market
failure, the operation of a free market is a far superior alternative to
regulatory restraints.

However well-intentioned, regulatory restraints can inefficiently skew
investment, delay innovation, and diminish consumer welfare, and there
is reason to believe that the kinds of broad marketplace restrictions
proposed in the name of "neutrality" would do just that with respect to
the Internet. Congress passed the Telecommunications Act of 1996 to
"promote competition and reduce regulation," and to "encourage the rapid
deployment of new telecommunications technologies."[^3] In response, the
Commission has deregulated various aspects of broadband services.[^4]
Against this background, commenters proposing special regulation of the
Internet should bear a substantial burden of demonstrating that it is
appropriate.

Based on the record in this proceeding to date, proponents of "net
neutrality" regulation have failed to show that a sufficient case exists
for imposing the sorts of broad marketplace restrictions that have been
proposed. Moreover, the Department has grave concerns about the
potential negative consequences of such restrictions were they to be
enacted. Given the dynamic and evolving nature of the Internet, the
Department finds that there are especially strong reasons to be cautious
about imposing restrictive regulations in this context.

-   In response to the FCC's request, commenters provided scant evidence
    that consumers are being harmed by the business practices of
    Internet industry participants. To the contrary, Internet usage is
    soaring. Consumers are reaping substantial benefits from new
    services and technologies.

-   The types of conduct that some proponents of regulation seek to
    prohibit---e.g., the prioritization of certain content and content
    providers (such as streaming video and other latency-sensitive
    content), offering of premium services and different levels of
    quality of service, preferential treatment of certain content, and
    vertical integration---in many instances actually may be
    procompetitive. A blanket prohibition on such conduct would likely
    result in significant marketplace distortion. Even assuming that a
    potential danger exists, the ambiguity of what conduct needs to be
    prohibited raises a real possibility that regulation would prohibit
    some conduct that is beneficial, while failing to stop other conduct
    that may be harmful.

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-   A number of proposed "neutrality" restrictions have the potential to
    harm consumers. For example:

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-   Precluding broadband providers from charging fees for priority
    service could shift the entire burden of implementing costly network
    expansions and improvements onto consumers. Because the average
    consumer may be unwilling or unable to pay significantly more for
    access to the Internet in order to ensure smooth delivery to
    consumers demanding bandwidth-intensive and latency-sensitive
    content, critical network expansion and improvement may be
    significantly reduced or delayed.

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-   Mandating a single, uniform level of service for all content could
    limit the quality and variety of services that are available to
    consumers and discourage investment in new facilities. Services that
    are particularly vulnerable to delays in delivery or other network
    problems may either not be offered or will be offered at a lower
    level of quality than a competitive marketplace would have provided.
    In addition, the resulting one-size-fits-all uniform level of
    service may deprive consumers of the choice to pay for the quality
    they want---leaving some unhappy with the low quality and others
    unhappy with the high price.

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-   Proposed regulations could unreasonably limit the ability of
    broadband providers to manage their networks efficiently. There are
    benefits to treating certain content differently. A number of
    companies offer services to provide faster delivery of content
    and/or to avoid some of the congestion and delay on the public
    Internet. Owners of network facilities have legitimate reasons to
    manage their facilities in ways that lessen congestion and address
    public safety issues.

    The Department urges the Commission to weigh carefully the potential
    negative implications of regulation as it considers requests to
    initiate a rulemaking. Regulatory restraints in this dynamic and
    evolving sector of the economy could perversely stifle innovation
    and investment, reduce consumer choice, and increase prices to
    consumers. 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.

# I. THE GOVERNMENT SHOULD LIMIT REGULATION IN DYNAMIC INDUSTRIES SUCH AS THE INTERNET

As a general matter, market forces, rather than regulatory restraints on
competition, are better at fostering innovation and investment,
stimulating new products and services, reducing costs, and expanding
choice.[^5] Accordingly, regulation should be avoided except in those
rare instances of market failure (e.g., where competition cannot work
because of a "natural monopoly") or where regulation is necessary to
protect a clearly defined and compelling public policy goal that cannot
be achieved through competition. There is neither a sound theoretical
nor empirical basis for restricting broadband competition at this time.
From a theoretical perspective, differentiated products and pricing can
provide consumers (and content providers) a broader array of choices
that meets service preferences more effectively and efficiently.
Further, such practices can enable greater investment that will speed
innovation and development.

On the empirical side, despite the Commission's request for evidence of
harmful discrimination or behavior, as discussed further below,
commenters failed to present evidence suggesting that a problem exists.
To the contrary, it appears that the Internet is flourishing without the
proposed sectoral regulation. Statistics evidence an explosion in
Internet usage in recent years due to new applications and increased
broadband subscribership. According to press accounts, in June 2006
alone 2.5 *billion* videos were watched on YouTube;[^6] by May 2007,
"hundreds of millions" of videos were being downloaded every day.[^7]
Consumers increasingly are utilizing the Internet for everything from
shopping, to news and information. E-commerce accounted for sales of
\$31 billion in the first quarter of 2007, an 18 percent increase from
the first quarter of 2006.[^8] Internet advertising produced \$16.9
billion in revenues in 2006, a 35 percent increase from 2005.[^9]

The number of Internet subscribers also continues to grow, with reports
indicating that there were approximately 65 million new broadband
subscribers worldwide from June 2006 to May 2007.[^10] In 2000, there
were 420 million online users worldwide, a number that increased to 1
billion in 2005 and is expected to double by 2010.[^11] In the United
States, the FCC found that high-speed (or broadband) lines increased by
26 percent during the first half of 2006, from 51.2 million to 64.6
million lines in service. Between June 2005 and June 2006, the
Commission found that high-speed lines increased by 52 percent (or 22.2
million lines).[^12]

The increased usage and popularity of new services that are sensitive to
delays in delivery (known as latency-sensitive traffic) has increased
demand for bandwidth.[^13] In response, broadband providers have made,
and continue to make, significant investments in Internet infrastructure
to meet rising demand and reduce Internet congestion.[^14] The
Commission's statistics report that the total number of broadband fiber
lines increased from 40,627 in 2000 to 698,990 as of June 30, 2006,[^15]
and the number of residential broadband fiber lines likewise increased
from 325 in 2000 to 442,027 fiber lines as of June 30, 2006.[^16]

In addition, several companies have developed services to provide faster
delivery of content and/or to avoid much of the congestion and delay on
the public Internet.[^17] For example, commercial content distribution
networks, such as Akamai, Limelight Networks, and Internap Network
Services, operate thousands of servers throughout the world that cache
content and services to provide faster and more reliable access to
specific Internet websites.[^18] Even though these arrangements allow
participating content and access providers to pay for a higher quality
of service, and thus create unequal treatment vis-à-vis other content
providers, proponents of "net neutrality" do not allege that such
services need to be prohibited.[^19] In addition to these caching
services, the Department believes that there can be significant benefits
in allowing broadband providers to manage their networks and
differentiate among some traffic on the Internet.[^20]

# II. THE CASE FOR REGULATING THE INTERNET HAS NOT BEEN MADE, AND REGULATORY RESTRAINTS CAN STIFLE INVESTMENT AND INNOVATION TO THE DETRIMENT OF THE ECONOMY AND CONSUMERS

Commenters failed to submit evidence in response to the Commission's
request for evidence of harmful discrimination or other behavior
suggesting the existence of a systematic or widespread problem. Rather,
commenters advocating regulation cited only a few isolated examples of
problematic conduct, such as in Madison River, where a small, rural
incumbent local exchange carrier in North Carolina allegedly blocked the
traffic of a competing VoIP service. The FCC promptly addressed the
issue and commenters submitted no evidence of any such blocking or other
harmful conduct since this 2005 incident. A few commenters cited
examples of alleged harmful behavior that occurred outside the United
States, which are irrelevant to the instant proceeding.[^21] Other
commenters stated that there is not widespread evidence of a
problem.[^22]

In contrast to the paucity of evidence of present harm to correct, there
is reason to believe that the type of regulatory restraints proposed by
some commenters under the mantle of "neutrality" could actually deter
and delay investment and innovation, and result in less choice and
higher prices to consumers of Internet services. Proponents of "net
neutrality" regulation do not agree on a definition of what conduct
should be prohibited, nor what networks would be regulated (wireline
and/or wireless), or even the extent to which pieces of the Internet
need to be regulated (just the last-mile or the Internet backbone). The
mere fact that a definition of "net neutrality" remains elusive should
give the Commission great pause before imposing regulation. Without
knowing what services and technologies will be introduced in the future,
it will be difficult to craft regulations that take into account the
dynamic nature of the Internet. Indeed, given the ambiguity surrounding
what conduct regulatory proposals seek to prohibit, there is a real
possibility that regulation would prohibit some conduct that is
beneficial, while failing to stop other conduct that is harmful.

As noted above, much of the conduct that some proponents of "net
neutrality" regulation are concerned about can be procompetitive.
Differentiating service levels and pricing, for example, is a common and
often efficient way of allocating scarce resources and meeting consumer
preferences. The United States 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 products respond to market demand and expand consumer
choice. No one challenges the benefits to society of these
differentiated products; nor does anyone seriously propose that the
United States Postal Service be banned from charging different fees for
next-day delivery than for bulk mailers. Whether or not the same type of
differentiated products and services will develop on the Internet should
be determined by market forces, not regulatory intervention.

One argument by some proponents of "net neutrality" regulation is that
broadband providers should not charge content and application providers
for faster and/or more reliable service. Such a rule, however, could
force consumers, regardless of their usage of broadband services, to
bear the costs of maintaining and upgrading broadband providers'
networks.[^23] Several studies have noted that prohibiting broadband
providers from charging content providers directly would leave consumers
shouldering a disproportionate share of the costs necessary to upgrade
network infrastructure. A recent paper by Benjamin E. Hermalin and
Michael L. Katz examines the relationships among consumers, broadband
providers, and content providers, and suggests that "net neutrality"
regulation that requires broadband providers to offer the same quality
of service to everyone may be inefficient and reduce overall
welfare.[^24] Other studies have identified similar effects and have
attempted to quantify the effect of proposed regulations.[^25]

Other "net neutrality" proposals could prohibit broadband providers from
offering differentiated quality of service. Such a rule, however, would
eliminate choice and could deter the use and development of new,
latency-sensitive applications that require more reliable delivery. A
study by Robert Litan and Hal Singer concludes that without reliable
low-latency packet delivery, applications that demand a high quality of
service, such as telemedicine, may not be viable.[^26] The Litan and
Singer study examines online video gaming, another application that
demands high-quality packet delivery, and attempts to estimate the cost
to society of "net neutrality" regulation as to this application. The
study estimates consumer surplus in the online video gaming industry to
be \$195 million in 2006,[^27] and argues that "net neutrality"
regulation may reduce or eliminate this surplus entirely.

Finally, it may be efficient for content providers that demand higher
quality of service to bear the cost of upgrades necessary to support
those services. Any regulation that prohibits this type of pricing may
leave broadband providers unable to raise the capital necessary to fund
these investments. Most significantly, regulation may reduce or deter
investment in current and future competitive alternatives for broadband
access, such as wireless, fixed wireless/WiMAX, WiFi, broadband over
power lines, and satellite providers.

# III. CONCLUSION

For the foregoing reasons, the Department urges the Commission to
exercise caution before initiating a notice of proposed rulemaking and
adopting rules that would regulate this dynamic sector.

Respectfully submitted,

[*\_/s/ Nancy M. Goodman*]{.underline}

Thomas O. Barnett Nancy M. Goodman, Chief

Assistant Attorney General Laury Bobbish, Assistant Chief

Antitrust Division Rebekah P. Goodheart, Attorney

Telecommunications & Media

Enforcement Section, Antitrust Division

Deborah A. Garza W. Robert Majure

Deputy Assistant Attorney General Chief, Competition Policy Section

Antitrust Division Antitrust Division

Jeffrey Wilder

Assistant Chief, Competition Policy Section

> Antitrust Division

September 6, 2007

[^1]: ^?^ Through its antitrust enforcement and competition advocacy
    efforts, the Department has substantial expertise in assessing
    competition and the effect of regulation with respect to the
    Internet and "net neutrality"-related issues. The Department has
    undertaken extensive examination of issues relating to Internet
    access and delivery services in connection with its investigations
    of the AT&T/Bell South, SBC/AT&T, Verizon/MCI, MCI/WorldCom/Sprint,
    and AT&T/MediaOne mergers. In AT&T/BellSouth, for example, the
    Department "investigated whether the merger would create competitive
    problems in Internet services, including 'net neutrality' concerns
    regarding the merged firm's ability or incentive to favor its own
    Internet content over that of its rivals." Press Release, U.S. Dep't
    of Justice, Statement by Assistant Attorney General Thomas O.
    Barnett Regarding the Closing of the Investigation of AT&T's
    Acquisition of BellSouth at 3 (Oct. 11, 2006), *available at*
    http://www.usdoj.gov/atr/public/press_releases/2006/218904.pdf.

[^2]: ^?^ *See, e.g.*, Comments of Google, *I**n the Matter of Broadband
    Industry Practices*, WC Docket No. 07-52 ("*Broadband Industry
    Practices NOI*"), at 36 (June 15, 2007) ("Comments of Google")
    (encouraging the Commission to consider, among other things,
    interconnection and open access requirements); Comments of Computer
    & Communications Industry Association, *Broadband Industry Practices
    NOI*, at 5-6 (June 15, 2007) (urging the FCC to adopt structural
    separation rules).

[^3]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56,
    56 (preamble).

[^4]: *See, e.g., In the Matter of Appropriate Framework for Broadband
    Access to the Internet Over Wireline Facilities, Universal Service
    Obligations of Broadband Providers, Review of Regulatory
    Requirements for Incumbent LEC Broadband Telecommunications
    Services*, CC Docket No. 02-33, Report and Order and Notice of
    Proposed Rulemaking, 20 F.C.C.R. 14,853, 14,896, paras. 1, 84 (2005)
    (removing common carrier regulations from "the dynamic and evolving
    broadband Internet access marketplace") ("*Wireline Broadband
    Order*").

[^5]: As reported by the Antitrust Modernization Commission, for
    example, "\[n\]umerous studies of sectoral deregulation in the
    United States show that the unleashing of market forces has greatly
    increased efficiency and provided substantial benefits to consumer
    welfare." Antitrust Modernization Comm'n, *Report and
    Recommendations* 334 & nn.9, 10 (Apr. 2007), *available at*
    http://www.amc.gov/report_recommendation/amc_final_report.pdf.

[^6]: *YouTube Serves Up 100 Million Videos a Day Online*, [USA
    Today]{.smallcaps}, July 16, 2006, *available at*
    http://www.usatoday.com/tech/news/2006-07-16-youtube-views_x.htm?.

[^7]: *See* Comments of AT&T, *Broadband Industry Practices NOI*, at 21
    (June 15, 2007) (citing Rob Hof, *YouTube: 100 Million Videos a
    Day*, [BusinessWeek]{.smallcaps}, July 14, 2006, *available at*
    http://www.businessweek.com/the_thread/techbeat/archives/2006/07/youtube_100_mil.html[)]{.underline}.
    According to AT&T, some analysts project that video traffic will
    represent 80 percent of all Internet traffic by 2010. *Id.*

[^8]: Kristina Knight, *Online Retailing Sees 18% Growth in U.S.*,
    BizReport, May 18, 2007, *available at*
    http://www.bizreport.com/2007/05/online_retailing_sees_18_growth_in_us.html.

[^9]: Internet Advertising Bureau, Internet Advertising Revenue Report 3
    (May 2007), *available at*
    http://www.iab.net/resources/adrevenue/pdf/IAB_PwC_2006_Final.pdf.

[^10]: Michael Paxton & Elaine Potter*, Global Broadband Subscriber Base
    to Nearly Double,* In-Stat, May 30, 2007 ("*Global Broadband
    Subscriber Base*"), *available at*
    http://www.in-stat.com/press.asp?ID=2016&sku=IN0703510MBS.

[^11]: *See* Thomas M. Lenard and Daniel B. Britton, The Digital Economy
    Fact Book 8 (8th ed. 2006), *available at*
    http://www.pff.org/issues-pubs/books/factbook_2006.pdf.

[^12]: FCC, *High-Speed Services for Internet Access: Status as of June
    30, 2006* 1 (Jan. 2007), *available at*
    http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-270128A1.pdf
    ("*2006 FCC High-Speed Services Report*").

[^13]: For example, reports indicate that YouTube consumes as much
    bandwidth as the entire Internet consumed in 2000. *See* Jim Duffy,
    *Don't Expect Video to Exhaust Fiber Glut*, Network World (Feb. 15,
    2007), *available at*
    http://www.networkworld.com/newsletters/optical/2007/0219optical1.htm[l]{.underline}.
    In addition, according to Cisco, by 2010 "just 20 homes using the
    latest broadband technology to access video content will generate
    enough traffic to equal the entire load on the Internet in 1995."
    *See id.; see also* Comments of Packet Management System
    Manufacturers, *Broadband Industry Practices NOI*, at 1-2 (June 15,
    2007).

[^14]: For example, Verizon projects that it will spend nearly \$23
    billion to deploy its FiOS service to 18 million customer premises
    by 2010. *See* Verizon Comments, *Broadband Industry Practices NOI*,
    at 10 (June 15, 2007). AT&T reports that it has invested over \$18
    billion in capital expenditures since 2004. AT&T, *2006 Annual
    Report* 49 (2006), *available at*
    http://www.att.com/Investor/ATT_Annual/downloads/ATT_2006_Annual_Report.pdf.
    AT&T recently announced plans to invest approximately \$500 million
    in fiber network upgrades to deliver broadband services (including
    video) to customers in Georgia alone. *See AT&T to Invest \$500
    Million into Georgia Optical Infrastructure*, Lightwave (May 31,
    2007), *available at* http://
    <http://lw.pennnet.com/display_article/294094/13/ARTCL/none/XNEWS/AT&T-to-invest-$500-million-into-Georgia-optical-infrastructure/>.
    Comcast reports that it devoted over \$11 billion to capital
    expenditures in the last three years, including over \$4 billion
    investment in 2006, of which \$320 million was devoted exclusively
    to upgrading its fiber-optic cable network. Comcast, 2006 Annual
    Report 41 (2006),
    [http://www.comcast.com/2006ar/annual2006.pdf.](../%3Chttp://www.comcast.com/2006ar/annual2006.pdf%3E.)
    Press Release, Comcast, *Comcast Reports 2006 Results and Outlook
    for 2007 Announces 3-for-2 Stock Split* 3, 10 (Feb. 1, 2007),
    *available at*
    http://media.corporate-ir.net/media_files/irol/11/118591/Earnings_4Q06/4q06_release.pdf.

[^15]: *2006 FCC High-Speed Services Report* tbl. 2.

[^16]: *Id.* tbl. 3. Increases in the availability of fiber and DSL
    occurred as the FCC relaxed wireline broadband regulation, see *id.*
    tbls. 1-3, which suggests that deregulation may be correlated with
    increased investment. The Commission previously concluded that
    historic regulation of the wireline broadband Internet access
    marketplace "constrain\[ed\] technological advances and deter\[red\]
    broadband infrastructure investment by creating disincentives to the
    deployment of facilities capable of providing innovative broadband
    Internet access services." *Wireline Broadband Order*, 20 F.C.C.R.
    at 14,865, para. ¶ 19.

[^17]: Packets of traffic on the public Internet are processed on a
    "best efforts" basis, which does not provide any guarantees
    regarding speed, delivery, service quality, or priority treatment
    when the network is congested. When routers have more packets to
    process than capacity to do so, the overflow packets are queued up
    for processing in the order they arrive, up to the router's physical
    capacity. Any additional packets beyond the router's capacity are
    lost.

[^18]: One of the largest content distribution networks, Akamai, reports
    that its services "reduce the impact of traffic congestion,
    bandwidth constraints and capacity limitations" by "accelerating and
    improving the delivery of content and applications over the
    Internet." Akamai, 2006 Annual Report 1, 2 (2006), *available at*
    [http://www.akamai.com/dl/investors/akamai_annual_2006.pdf](http://www.akamai.com/dl/investors/akamai_annual_2006.pdf.).
    According to Akamai, its servers alone deliver 10-20 percent of all
    web traffic. Akamai, Facts & Figures 2, *available at*
    http://www.akamai.com/html/about/facts_figures.html (last visited on
    July 16, 2007). Another way in which a business service can obtain
    prioritized, more secure and reliable service is through a virtual
    private network.

[^19]: *See, e.g.,* Comments of Google at 4 n.6.

[^20]: Broadband providers also need the ability to prioritize Internet
    traffic in order to (1) serve public safety officials better during
    emergencies, and (2) ensure the security of their networks.

[^21]: *See, e.g.,* Comments of the National Association of
    Telecommunications Officers and Advisors, *Broadband Industry
    Practices NOI*, at 8 (June 15, 2007) (citing a 2005 incident in
    which a Canadian broadband provider, Telus, allegedly blocked access
    to the website of a Telus union during a labor dispute between Telus
    and the union).

[^22]: *See* Comments of Hands Off The Internet, *Broadband Industry
    Practices NOI*, at 4 (June 15, 2007); Comments of the Media
    Institute, *Broadband Industry Practices NOI*, at 3 (June 15, 2007);
    Comments of Fiber-to-the-Home Council, *Broadband Industry Practices
    NOI*, at 56 (June 15, 2007). Comments of Consumers for Cable Choice,
    *Broadband Industry Practices NOI*, at 1 (June 15, 2007); Comments
    of the United States Internet Industry Association, *Broadband
    Industry Practices NOI*, at 2 (June 15, 2007).

[^23]: Consumers also would likely face higher prices due to the added
    costs incurred by providers to comply with regulations, such as
    monitoring and reporting requirements.

[^24]: *See* Benjamin E. Hermalin & Michael L. Katz, *The Economics of
    Product-Line Restrictions With an Application to the Network
    Neutrality Debate* 28 (AEI-Brookings Joint Center for Regulatory
    Studies, Working Paper 07-02, 2007), *available at*
    http://www.aei-brookings.com/admin/authorpdfs/page.php?id=1362&PHPSESSID=5db67c5b521ccdddb517c3dbe68ed2bb.

[^25]: For example, Steven Pociask estimates that, if consumers bear the
    entire cost of network upgrades through increases in broadband
    Internet access, this type of "net neutrality" regulation will cause
    consumer surplus to fall \$9.3 billion annually. *See* Steven B.
    Pociask, *Net Neutrality and the Effects on Consumers* 24 (American
    Consumer Institute 2007), *available at*
    http://www.theamericanconsumer.org/ACI%20NN%20Final.pdf. Although
    the study's approach depends on a number of key assumptions
    comparing market dynamics absent "net neutrality" regulation (e.g.,
    that the entire cost of network upgrades are borne by
    content/application providers, which causes consumer prices for
    Internet access to fall and demand to increase) with market dynamics
    with "net neutrality" regulation (e.g., that consumers bear the
    entire cost of network upgrades, which causes consumer prices for
    Internet access to increase, and demand to fall), the magnitude of
    the estimated loss in consumer surplus suggests "net neutrality"
    regulation may not be in consumers' interests.

[^26]: *See* Robert E. Litan & Hal J. Singer, *Unintended Consequences
    of Net Neutrality Regulation*, J. Telecomm. & High Tech. L.
    (forthcoming 2007), *available at*
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=942043 ("*Litan
    and Singer Study*"). This finding is consistent with comments
    submitted by users and providers of telemedicine, who fear that
    regulations that prevent prioritization of packets could "threaten
    continued advances in telemedicine." *See* Comments of Provideaat 2,
    *Broadband Industry Practices NOI* (filed June 15, 2007). Providea
    is "a video communications and network integrator that supports
    health care and 'telemedicine' applications across the nation."
    *Id.* at 1; *see also* Comments of the Association of Washington
    Public Hospital Districts at 1-2, *Broadband Industry Practices NOI*
    (filed June 15, 2007) (urging against the enactment of "regulations
    that would stifle investment, innovation and network intelligence"
    because such action would harm telemedicine).

[^27]: *Litan and Singer Study* at 26.