Two days ago, the FCC and broadband providers were challenged by
President Obama’s petition for net-neutrality, that is, that all traffic on the
Internet should be treated equally. For several years, the FCC has been
increasing regulatory policies on Web traffic, benefitting Internet service
providers (ISPs) by allowing them to charge for the use of “fast lanes” and
discriminate against small content producers that cannot afford the pay.
However, Obama believes that the Internet should be treated as a public utility,
giving equal access to everyone and eliminating the power of ISPs as
gatekeepers.
The battle is between two powerful industries: broadband providers on one
side, such as Comcast, Time Warner, Verizon and AT&T Inc., and web giants (Google,
Facebook, and Amazon) and smaller tech companies (Etsy, Tumblr, Kickstarter) on
the other. Upholding Stigler’s argument, the regulation is being sought out by
the latter industry. However, whether Obama’s petition will pass or not will
require analyzing Olson’s pressure factor. Up until now, only broadband
providers have expressed their strong opposition to net neutrality, some even
have threatened to challenge it legally if passed. Because the broadband
industry is composed of a selective number of providers, they are more likely
to organize an exert pressure on opposition. The industry of web giants and
smaller businesses, on the other hand, is composed of more actors and hence
will have more trouble organizing, some will opt to free ride. For instance,
Google, Facebook and Amazon have yet remained silent and showed little support
for smaller companies like Etsy and Kickstarter. If they overcome organization
problems and determine selective incentives, resulting in more pressure, then
victory could tilt towards net-neutrality… Lean back, because the battle has
just started.
1 comment:
The FCC’s increased regulation on web traffic is a great example of Stigler’s capture theory, with ISPs petitioning the FCC for increased regulation. To expand a bit on the post, the favor that Stigler mentions in his paper that the ISPs are mainly seeking is regulations on substitutes. As the article mentions, “[internet activists] favour net neutrality because they worry that big internet-service providers such as Comcast and Verizon will use their market power, for instance, to discriminate against internet-based services that compete with products of their own.” As can be seen from this quotation, ISPs like Comcast and Verizon support the FCC internet regulation so that they can restrict access to sites on the internet that are substitutes for websites Comcast or Verizon owns, therefore driving more traffic to the ISPs’ websites and increasing the ISPs earnings. It is clear that the ISPs strongly support the FCC regulation because if a net-neutrality bill does pass the article states that “at least one of the big telecoms firms is expected to sue.”
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