A Common Carrier Approach to Internet Interconnection

I. INTRODUCTION The Internet is rife with disputes over interconnection. These disputes take many forms, ranging from complaints over unfair peering policies by "backbones," to assertions that instant messaging is being monopolized, to arguments for mandatory Internet Service Provider ("ISP") access to cable television Internet systems, to compensation disputes among local telephone companies over the delivery of Internet-bound telephone calls. And yet, despite these controversies and many others, the only legal rules governing Internet interconnection are a limited number of company-specific conditions imposed in some merger reviews. Certainly, the Federal Communications Commission ("FCC") has developed no rules governing Internet carriers, frankly admitting that it "has struggled with how to treat Internet traffic for regulatory purposes." (1) Indeed, it is fair to say that no comprehensive regulatory scheme exists. Of course, the FCC's general approach is to declare that the Internet is competitive and that there is no need for comprehensive regulation; such regulation, it is said, might even be harmful by stifling innovation, increasing costs, or distorting competition. In fact, one chairman said that the agency would not regulate the Internet because, in that manner, it was sure to "do no harm." (2) This dominant rhetoric, however, is belied by the government's action in particular cases. For example, in each of the recent communications industry megamergers, opponents claimed that the combination would hurt competition in the Internet. These claims varied from the assertion that Internet backbone markets were concentrated and that the dominant Internet backbones would discriminate against their smaller competitors (MCI/Worldcom); to the assertion that cable companies would gain the ability and incentive to restrict their subscribers' access to the content and services of unaffiliated companies (ATT to the assertion that those entities controlling Internet transmission facilities should be required to sell raw transmission capacity to permit unaffiliated companies to market competing services directly to consumers (including the cable mergers and Baby Bell mergers as well). In one fashion or another, opponents of the mergers argued that the essential nature of the Internet--open, democratic, and fiercely competitive--was threatened by the mergers. Although, on the surface, the government seemed unpersuaded and the dominant rhetoric of "no regulation for the Internet" continued, in each of these mergers, the antitrust authorities or the FCC permitted the merger only after the companies agreed to specific conditions designed to address the competitive structure of the Internet. In the MCI/Worldcom merger, the government required the divestiture of MCI's Internet backbone. In the various Bell Company mergers, the government required specific steps to open the local loop for greater competition among DSL providers. In the AOL/Time Warner merger, the government required the merged company to develop new wholesale transport arrangements favoring unaffiliated Internet service providers. What seems to be missing is a generalized approach to Internet interconnection problems. Some of the specific merger conditions seem right, and some seem wrong or irrelevant to the competitive issues raised by the mergers. But all of them were imposed only on specific players in a market and were based on reasoning specific to a single (albeit important) transaction in that market. Moreover, many interconnection disputes arise in contexts other than mergers. This Article argues that some generalized interconnection rules are broadly appropriate. Specifically, this Article suggests that some lessons learned from the ancient regime of common carrier regulation provide the appropriate regulatory foundation for the modern Internet. Since at least the middle ages, most significant carriers of communications and commerce have been regulated as common carriers. …