The Proposed FCC order on the regulation framework for ISPs in the US will be voted on by the FCC’s Commissioners on Feb 26. The proposal is rumoured to be one that pulls in ISPs into the common carrier provisions of the US Telecommunications Act, with just, reasonable and non-discriminatory access, regulate privacy and disability and avoid other measures.
There is the view that a legislated solution to the regulation of ISPS would in theory avoid subsequent judicial overturning, which lends some weight to the common carrier measures. But Professor Christopher Yoo of the University of Pennsylvania argued at NANOG 63 that this may not be an optimal outcome. He argues that there has always been some suspicion of the common carriage provision. There is a ricj history of the application of this principle in the provision of warehouses, ferries, barges, inns, taverns, etc in common law, but he maintains that the common carriage provisions have been poorly understood. Back in the 1930’s the US Supreme Court used a public interest provision in testing the applicability of common carrier provisions when rejecting them. and maintains that there is little further to learn from the historic references to common carriage than is relevant to today’s situation. However, he notes that the US uses common carriage measures in utilities including gas, electricity and water, yet do not include such measures in other forms of carriage and transit.
The traditional focus of common carriage measures is natural monopolies. The objective is to regulate rates and require structural separation. Professor Yoo argues that the public interest fix is itself far less than ideal and the argument is unregulated vs regulated in terms of acceptable compromise The direct costs of such regulatory intervention within this industry would be high: regulatory filings, accounting rules, technological disintegration, etc and they would be challenging to apply when there is no consistency of product, no consistency of technology, and when the interface is complex. So when the service is not precisely uniform and substitutable, then it declaration as a common carriage service would be challenging. The risks that the industry would face were the access service regulated include the risk of imposing barriers to innovation, adding impediments to further private investment, the imposition of inertia and unresponsiveness, biasing investment to inefficient solutions in the market.
The basic point that I took from this presentation is that any approach to regulation of the internet access service has its problems. It’s not a black and white case in any respect. The issue is one of a case of trade offs. Allowing local access monopolies to continue without any form of regulatory constraint, and leave the threat of competition as being the only form of constraint for local access providers seems to construct a weak case for avoiding common carrier regulatory measures. On the other hand the lack of regulatory imposition on the products and services provided by the Internet to end users should encourage innovation, and through that to encourage competition in these markets.
