FCC Picking Winners, Losers in Internet Marketplace, AEI Says

By imposing net neutrality rules on ISPs, but not edge providers like Google and Netflix, the FCC is effectively picking winners in the Internet marketplace, wrote Bronwyn Howell, visiting fellow at the American Enterprise Institute, in a blog post. “Back in the late 1990s and early 2000s, it was becoming evident that regulators had effectively ‘picked a winner’ in the Internet marketplace by applying the provisions of the 1996 Telecommunications Act asymmetrically between phone companies and cable companies.” Phone companies were required to provide regulated, below-cost, access to selected “unbundled network elements” to their competitors, while cable operators were not. “Predictably, this significantly dampened phone companies’ incentive to invest in new infrastructure, leaving the market for the taking by cable companies,” she said. “Even if the architects of the 1996 Act did not intend to pick a winner in the Internet marketplace contest, the asymmetric application of the provisions nonetheless ensured that the spoils were unevenly shared.” The FCC fixed this “asymmetry” in 2003 by removing Internet unbundling obligations, she said. “Today, we are witnessing history repeat itself, this time with the Open Internet Order.”