FTC on Net Neutrality: “We Are Being Set Up to Fail” by Ajit Pai and FCC

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GOP congressman introduces new bill to reinstate net neutrality protections (Illustration: The Verge)

By now everyone who even remotely follows the technology industry knows that there is something going on about net neutrality. Thanks to how the internet is used to turn every issue into a turf war, net neutrality advocates and opponents in the government have been following the same strategy - to make it a party issue. But, net neutrality has far worse repercussions and goes beyond the party lines as we have previously listed only some of the violations that big corporations routinely committed before activists fought to have net neutrality rules approved.

However, the Federal Communication Commission continues to suggest that no one needs to be worried because its sister department, the Federal Trade Commission, will be protecting the internet for everyone. FTC, on the other hand, doesn't seem to believe if it can take on this new role and believes that it's being set up by the FCC to fail.

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FTC says not to count on it once net neutrality is gone

Earlier this year, Chairman Ajit Pai had said that he will see net neutrality gone during his time in the Commission and nothing can stop him (not even million of Americans' views or the due process, apparently). He had also repeatedly said that the FTC is better suited for the job and will protect consumer violations if carriers like Verizon (Pai's ex employer), AT&T, Comcast, and others engage in any anti-consumer or market practices.

So far, many have said that FTC cannot protect consumers because FCC is a stronger body with more powers. Now, the FTC has itself come forward saying that the FCC is setting it up to fail.

"The United States has a specialized telecom agency with the expertise and technical capability to protect net neutrality and ensure an open internet. That agency is the Federal Communications Commission."

FTC Commissioner Terrell McSweeny has said that while her small agency works tirelessly to protect consumers and there are many things that her commission is equipped to do well, "protecting the open internet is not one of them."

While FCC is ready to hand over all its responsibilities to the FTC in less than a month, the trade commission doesn't believe if it has any expertise to handle that job.

"The FTC does not have specialized expertise in telecommunications," the Commissioner wrote. "We don’t have engineers with technical experience in data network management practices."

"We don’t even have jurisdiction over common carriers."

She added that these limitations are "very real and significant" when it comes to ensuring that "networks are open and free of harmful discrimination." While both sides have released scathing views and comments that do nothing but confuse the consumers, McSweeny has offered some real information and scenarios to clearly convey that the FTC cannot do what the FCC is asking it to.

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For one thing, the FTC’s mandate in the competition space is to “maintain competition.” I believe in the virtues of competition. But we cannot “maintain” competition that does not exist. The reality is that tens of millions of Americans have little or no choice when it comes to wireline broadband service. Those who oppose net neutrality rules often make the mistake of suggesting that market competition will limit discriminatory conduct and push ISPs to offer consumers better service. But that argument only makes sense if there is underlying market competition to begin with. Otherwise, it’s like saying your dog will protect your house when you don’t own a dog.

She went on to write that FTC lacks the FCC's technical expertise in data network management and even if the FTC does get the legal authority and jurisdiction, - which she calls "rosy enforcement assumptions" - it will take years before it can stop the accused company from discriminating practices. Here's what she wrote (emphasis is ours):

It might take years before the agency could get a court order halting the practice. During that time, the dominant ISP could continue to discriminate against its rival, potentially driving it out of business. Even if the FTC were ultimately to prevail, we couldn’t resurrect the dead rival. Nor could we go back in time and undo the harm to consumers or to the competitive evolution of the marketplace. At the end of the day, the dominant ISP might lose the antitrust suit and yet still wind up better off.

If ISPs are okay with "voluntary promises" to follow open internet rules, "why eliminate the rules in the first place?"

McSweeny asks the question on everyone's mind - why remove the rules when you are asking ISPs to follow them on voluntary basis? Chairman Pai is willing to remove net neutrality rules to empower big corporations suggesting that the ISPs will make promises to follow open internet rules. But many have asked why remove those clear rules in favor of promises made by fickle companies who will do anything to take down their competition?

Some have suggested that FTC enforcement of “voluntary promises” by ISPs could substitute for clear open internet rules. But if ISPs were prepared, voluntarily, to commit to the principles in the FCC’s 2015 Open Internet Order, then why eliminate the rules in the first place?

"The answer is that the broadband ISPs know that they will be able to leverage their market power far more effectively if the only check on their behavior is after-the-fact enforcement by the FTC," McSweeny answers the questions herself.

We lack the tools, the expertise, and the resources to carry out such a charge on our own.

FTC Chairman also believes that the FCC is using FTC as a scapegoat. "Years from now, when Americans demand to know why the government allowed powerful broadband ISPs to kill the open internet, I fear that the FTC may become a scapegoat," she writes. "I have every confidence that our staff will work tirelessly to protect consumers as best they can using the tools we have."

"It will not be enough," she added. "We are being set up to fail."

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