Unintentional Antitrust: The FCC’s Only (and Better) Way Forward with Net Neutrality after the Mess of Verizon v. FCC

Table of Contents I. Introduction Ii. Net Neutrality Rejects Antitrust Iii. The D.C. Circuit Rejects Common Carrier Nondiscrimination Iv. Rejecting the idea of Nondiscrimination Without Common Carriage V. Why the FCC Must Now Be an Antitruster--and Why That's Not a Bad Thing Vi. Coda: Where I Reject This Whole Business I. Introduction The principal, alternative vision to network neutrality rules has always been antitrust. Opponents of the Federal Communications Commission's use of Communications Act regulatory authority (if any it had) to create nondiscrimination rules have long argued that competition law is both an adequate and a superior way to address any concerns over ISP actions against content and applications providers. On the other hand, network neutrality advocates have argued that antitrust is neither doctrinally nor institutionally adequate for the task. In adopting its Open Internet Rules, (1) the FCC expressly rejected antitrust as well. The recent decision of the U.S. Court of Appeals for the D.C. Circuit in Verizon v. FCC (2) somewhat ironically puts the FCC in the position of turning to antitrust. After the court granted a partial win to the FCC, recognizing its authority to regulate Internet carriers even if they do not provide "telecommunications services," the court also held that such regulation must stop short of "common carrier" regulation. (3) The FCC's quest, therefore, is how to address nondiscrimination without going so far as to impose common carriage. Indeed, although the court's opinion does not expressly state that conclusion, I believe that, short of reclassifying broadband services as telecommunications services, the FCC's only path forward is to adopt antitrust-like rules. It is the only way to make sense of the court's holding that the FCC has "some" authority under section 706. (4) Moreover, I believe that such an approach is preferable to any of the other alternatives the FCC might consider. Doctrinally, a competition law-based rule would better fit with the D.C. Circuit's explanation of the FCC's section 706 authority and would fall short of the forbidden zone of common carrier rules. As a policy matter, the FCC could address the core concern of net neutrality arguments: that ISPs would alter content or distribution markets by discriminating among content providers. And this approach would be better than reclassification, a scenario that would require the FCC to begin a lengthy process of calibrating numerous, outdated regulatory rules. The FCC in fact does seem to be moving in the path of a competition-law like standard, although as we go to press, its final path has not been decided. If the foregoing reasoning is right, and the FCC has the authority to address discrimination by ISPs but the FCC's rules must mimic antitrust principles, then the remaining question is whether the FCC should bother with this path. The FCC could decide to leave such a scheme to the Department of Justice ("DOJ") or the Federal Trade Commission ("FTC"). After all, those agencies have long-standing, principal expertise in competition law. FCC action would likely be duplicative and perhaps not as competent as an approach led by the antitrust agencies. I think this challenge is wrong. The FCC likely has relevant technical and industry expertise that the antitrust agencies may not possess. More importantly, as an administrative agency, the FCC is empowered to make rules based on predictive judgments. (5) Though I am no defender of some of the FCC's more fanciful theories of the past, I do think, given the likelihood that broadband access markets will remain significantly concentrated, that a specialized agency should have the authority to impose certain behavioral requirements on the basis of predicted competitive effects. Although all of this may be an acceptable policy result, Verizon also reveals the very serious dysfunction that plagues telecommunications policy. …