Rely more on outcome based-policy making and case-by-case supervision: a lonely call from Telefónica?

Adapt Public Policies to the new Digital Markets chapter five of the Digital Manifesto is structure around a few basic ideas

  • Current policies and regulatory approaches, especially for the intensively regulated communication and broadband markets, are often outdated and do not fit the fast evolving competition environment of the Digital Economy.
  • Increased competition in new convergent markets reduce the need of ex ante regulation
  • New approach should be  focused on reaching desired policy outcomes by intervening ex-post in cases of anti-competitive behaviour of market participants

So, in a nutshell, from Telefonica we are making a call for policy makers to rely more on case-by-case supervision by Competition Authorities while reducing the weight of ex-ante Regulation: it is our belief that in dynamic and fast-changing digital markets, case-by-case decisions are less likely to restrict growth and innovation than regulation.

But is our call, a lonely call in a desert island? Certainly not.

Maureen K. Ohlhausen, Commissioner of the U.S. Federal Trade Commission, at her keynote for theFTC’s 100th anniversary suggested some potential changes as the FTC entered into its second century. Her ideas about expanding and promoting FTC Authority over Broadband Issues provide a strong back up for our call.

“Man Controlling Trade” sculpture completed for the FTC Building in 1942 by New York sculptor Michael Lantz

Ms. Ohlhausen believes that with the convergence of telecom, broadband, and other technologies, it is time for Congress to remove the antiquated exemption from FTC’s jurisdiction for communications common carriers.

Also, within the broadband space, after the D.C. Circuit just struck down the Federal Communications Commission’s (FCC) most recent version of network neutrality, the Commissioner supports FTC’s efforts to apply existing antitrust and consumer protection laws and norms to any alleged discrimination, blocking, or other conduct by broadband providers that would violate so-called network neutrality principles. She considers consumers would be much better off with the FTC enforcing existing laws in a rigorous, fact-based manner than with the FCC pursuing network neutrality via any other mean.

As Ms. Ohlhausen has already discussed, the antitrust laws offer the right lens through which to view most network neutrality issues,  not the per se prohibition of the FCC’s network neutrality order, should be used to analyze the consumer welfare effects of such broadband provider conduct. More importantly, she believes that It is simply not justifiable to conclude that, as a rule, the largely vertical conduct decried by network neutrality advocates constitutes facially anticompetitive conduct. Allegations of vertical integration, foreclosure, or price discrimination on the Internet should be evaluated the same way as done everywhere else—by balancing the procompetitive benefits against the anticompetitive harms of those restraints.

To sum-up, given FTC’s substantial expertise in analyzing competition issues in numerous online contexts, as well as their experience in assessing vertical competition issues, Maureen K. Ohlhausen believes the FTC is well positioned to be an alternative to the more invasive and proscriptive approach that network neutrality regulation imposes.