AT&T Suit Shows Web Has Enough Rules, Open Internet Foes Say

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(Bloomberg) — People who cheered the Federal Communications Commission’s move to reject Obama-era net neutrality rules Tuesday say the government already has all the power it needs to regulate internet service without another set of regulations.

And that power lies in the courts, as evidenced by the Justice Department lawsuit to block AT&T Inc.’s purchase of Time Warner Inc., announced just a day earlier. Antitrust law can keep the internet free, they say.

“There’s no reason for anyone to panic,” said Randolph May of the Maryland-based Free State Foundation, which advocates for limited government. “The Department of Justice and the Federal Trade Commission will be able to more than adequately perform that oversight function. The case that has been filed is a good example.”

Critics aren’t convinced and have promised to mount an aggressive campaign against FCC Chairman Ajit Pai’s decision to seek the elimination of the net neutrality rules.

“Antitrust cannot replace the value of open internet rules,” said Gene Kimmelman, the president and CEO of the policy group Public Knowledge. “It’s a much more limited tool and it applies only in a situation where there’s plenty of time to review behavior to discover if it’s discriminatory.”

And, without clear rules on how antitrust rules apply, there’s nothing to prevent the control of the internet by a small group of powerful companies, said Kimmelman, a former antitrust regulator with the Justice Department.

Internet service providers such as AT&T, Comcast and Verizon didn’t like the way the FCC imposed its open-internet rules, concerned that the broad power the agency adopted to regulate broadband service could be used to justify future regulation, including how much the companies charge for access, according to Matthew Schettenhelm, a litigation analyst with Bloomberg Intelligence.

Those companies lobbied for a move away from the rules established by a Democratic-run FCC and found a champion in Republican Pai, who said his draft order would restore freedom and eliminate “heavy-handed” regulations from the internet, requiring service providers to only be “transparent” about their practices.

Pai also said he would turn over enforcement of these policies to the Federal Trade Commission to “police ISPs, protect consumers, and promote competition, just as it did before 2015.”

On Wednesday, Pai acknowledged in an interview with Fox News that the free market may allow companies to charge extra for fast Internet. “In some cases, you can imagine that kind of arrangement being pro-competitive, being good for start-ups and consumers. And in other cases it might not be so worthwhile. And that’s exactly why the Federal Trade Commission is the better agency to investigate it,” he said. “They have a long tradition of investigating anti-competitive conduct.”

The FTC is the nation’s primary consumer-protection watchdog, bringing cases against firms over deceptive practices and privacy violations. It shares a mandate to enforce antitrust laws with the Justice Department.

Acting Federal Trade Commission Chairman Maureen K. Ohlhausen said in testimony before Congress earlier this month that her agency is up to the task. “Antitrust enforcement, by protecting the competitive process, can promote net neutrality — if that is what consumers want,” she said.

Democratic Commissioner Terrell McSweeny disagreed.

The agency “does not possess specialized subject matter expertise in telecommunications,” McSweeny told Congress. “That expertise is housed at the FCC. These are very real and significant limits to the effectiveness of the FTC’s tools.”

Herbert Hovenkamp, a professor at the University of Pennsylvania Law School and an expert on antitrust law, said that current laws would not prevent most of the things considered antithetical to net neutrality, including charging two different rates for difference classes of customers.

“When somebody says antitrust is going to pick up the slack they’re probably talking about future antitrust rules that have not been developed yet,” Hovenkamp said. “What the FCC is doing is handing it from a more qualified agency to a less qualified agency.”

“The antitrust division is not well-suited for terms and conditions that require ongoing supervision,” he added.

Evan Engstrom, executive director of the San Francisco-based startup advocacy group Engine, called Pai’s proposal “far out there” in its favoritism of internet service providers, or ISPs.

“You are handing over free rein to the ISPs to allow them to discriminate at will,” he said. “If an ISP wants to accept payment from a larger company to box out a competitor, they can do that.”

Engstrom said if the FCC passes the rules as expected, he and other open internet supporters will likely to continue the fight in Congress and the courts. “There’s a lot left to be done before we give up,” he said.

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