[Ecommerce] Dorgan's and Snowe's Comment for the FTC

[Seth Johnson]

Comment of Byron L. Dorgan and Olympia Snowe for the FTC's Workshop on
"Broadband Connectivity Competition Policy:"
> http://www.ftc.gov/opp/workshops/broadband/index.html


> http://www.ftc.gov/os/comments/broadbandwrkshop/527031-00037.pdf


Comments of Senators Byron L. Dorgan and Olympia Snowe in the Federal
Trade Commission's Proceeding on Broadband Connectivity Competition
Policy Workshop - Project No. V070000

Chairman Majoras and Commissioners:

     As you know, we are the Sponsors of S. 215, the "Internet
Freedom Preservation Act," which is the leading Senate
legislation that addresses tbe increasingly important and high-
profile issue known as "net neutrality." The debate over net
neutrality has quickly become the dominant telecommunications and
Internet policy debate in Washington. It has raised concerns
among hundreds of millions of Internet users, small and large
Internet companies, consumer electronics manufacturers, software
publishers, and countless public interest groups ranging from the
Christian Coalition to MoveOn.org. In fact, it is hard to imagine
a broader and more diverse coalition working together on any
other policy debate in Washington.

     Consequently, it is appropriate that the Federal Trade
Commission, with its roles in protecting consumers and guarding
against anti-competitive behavior, is conducting this workshop on
"Broadband Connectivity Competition Policy."

     Today, it is difficult to conceive of a world without the
Internet. In only a few short years, this medium has
revolutionized the way we communicate with each other. People all
over the world can share ideas, information, goods, and services
with only a few strokes on a keyboard and a click of the mouse.

     The Internet has provided the oxygen for a new, robust
economic engine of electronic commerce among both businesses and
consumers. It provides a worldwide, egalitarian platform where
the marketplace picks the winners and losers, rather than
previous barriers to entry or success such as capitalization,
geography, or size.

     This revolutionary shift created by the Internet is largely
attributable to the open architecture that defines it. As the
Senate Commerce Committee heard last year from Vint Cerf, who is
credited with largely creating the Internet and the TCP/IP
protocols that govern it, the open architecture of Internet
allows Internet users, content creators, and service providers to
communicate without having to seek permission from broadband
providers for special deals or access.

     Appropriately, this open design has resulted in the Internet
being described as the most democratic tool ever invented.
Udortunately, this same tool that serves our free-market
structure and democratic ideals is now at risk of being
manipulated into something that is costly, slow, or even
potentially oppressive by broadband providers. Broadband
providers are now technologically capable and financially
incentivized to exercise considerable control over how, when, and
even if information can be viewed and shared.

     Furthermore, in addition to the technical ability and
financial incentives to discriminate, the Federal Communications
Commission recently has enabled broadband providers to exert such
control over content. It did not take long for large broadband
access providers to announce they would take advantage of the
FCC's action.

     On November 7,2005, now-AT&T CEO Ed Whitacre was quoted as
saying, "They don't have any fiber out there. They don't have any
wires.  They don't have anything.... They use my lines for free -
- and that's bull. For a Google or Yahoo! or a Vonage or anybody
to expect to use these pipes for free is nuts!"

     Last year, a Cablevision executive stated, "So, anyone who
buys Vonage on our network using our data service doesn't really
know what they are doing.... Our service is better, its quality
of service.  We actually prioritize the bits to so that the voice
product is a better product."

     Such anticompetitive conduct is the very issue that the
Federal Trade Commission should actively investigate and oppose.
The FTC's congressionally authorized mandate is to prohibit
business practicea, that are anticompetitive, deceptive, or
unfair.  Furthermore, the FTC is appropriately positioned to
assert its role in this area through its julisdiction over
broadband Internet access services that are offered on a non-
common carrier basis.

     Although legislation is needed to ensure that broadband
service providers abide by non-discrimination rules, the FTC can
and should use its existing authority to bring enforcement
actions under the antitrust laws to protect consumers from
anticompetitive behavior relating to the control of content by
broadband providers.

     Today, vigorous antitrust enforcement is badly needed as
there is an unprecedented consolidation of broadband market power
among only a handful of large corporations. Last year, AT&T CEO
Ed Whitacre stated among his justifications for the AT%T-Bell
South merger that "no partnersbip between two independent
companies, no matter how well run, can match the speed,
effectiveness, responsiveness and efficiency of a solely owned
company."  While net neutrality proponents were successfully able
to restrict the merged entity from engaging in content
discrimination for two years, Mr. Whitacre's statement should
send a signal to antitrust enforcers that the means and desire to
engage in anticompetitive activities is upon us.

     Perhaps we would not be as concerned about the potential for
anti-competitive behavior if, in fact, there was true competition
in the marketplace to choose among broadband providers.
Unfortunately, the truth is that the vast majority of Americans
have, at best, a choice between only the phone company and the
cable company for broadband services. In this environment,
consumers face few choices and high prices, and the lack of
competition means that broadband speeds svailable to most
consumers are disproportionately slow compared to available
speeds in other industrialized countries. It is indeed a shame
that the country responsible for inventing the Internet and
fostering the world's most innovative Internet products and
services provides its citizens with the slowest broadband speeds
compared to our economic competitors.

     We applaud the FTC's efforts to study net neutrality issues
in greater detail, and feel confident that the workshops will
reveal that there is a need for FTC involvement to prevent harms
to consumers and competition. Given the lack of broadband
comnpetition, the ability and incentive of broadband providers to
discriminate among content providers, and the public statements
from executives of leading broadband providers, the FTC should be
both vigilant and engaged to preserve the open architecture of
the Internet before there are widespread examples of
discriminatory and anticompetitive behavior.

     We hope that the FTC will utilize its existing authority
under the FTC Act and the antitrust laws to investigate
anticompetitive behavior that harms Internet users.

     We look foward to continuing to work with the FTC as it
seeks to implement its worthy mandate to protect consumers by
prohibiting business practices that are anticompetitive,
deceptive, or unfair.