Wednesday, November 5, 2014

Terminating ISP Monopolies and the Similar Harm to Edge Providers and End Users

            It appears that FCC Chairman Tom Wheeler wants an Open Internet order that differentiates access into 2 categories: 1) edge provider downstream access and 2) end user upstream access to content.  This frame has some appeal, particularly when one looks at Internet access as a two-sided market.  However the real world does not create a bright line dichotomy or separation of these two functions.

            Edge providers and end users can face the same potential for harm if an Internet Service Provider (“ISP”) discriminates in ways that constrain, degrade, block or otherwise meddle with a downstream traffic flow.  Both sides of the market suffer if an ISP exercises its market power: 1) the edge provider sells fewer ads, subscriptions, or product; and 2) the end user encounters a reduction in utility and value for his or her monthly broadband access subscription.

            I do not understand the possible FCC emphasis on upstream edge providers.  Perhaps the drafters seek to structure an order that resonates with the D.C. Circuit Court of Appeals examination of potential discrimination to edge providers.  But the court also endorsed the FCC’s view that retail ISPs providing the last mile delivery can operate as terminating monopolies.  Applying an emphasis on this market power in the last mile delivery, both edge providers and end users suffer when retail ISPs engage in some types of discrimination.

            It makes little sense to differentiate between edge providers and end users if both groups have similar grievances with the intermediary.

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