In August 2015, I wrote a blog entitled “FCC’s ‘Gatekeeper’ Theory Is a Flawed Market Failure Analysis,” explaining how the FCC’s 2015 Open Internet Order fails a basic cost/benefit analysis and how it misuses data in order to support its claim that competition in the broadband market is lacking. Then, in January 2016, FSF President Randolph May and I wrote a blog entitled “Mobile Broadband Is a Substitute for Fixed Broadband,” where we state that the FCC continues to misrepresent competition in the broadband market by refusing to acknowledge the extent to which mobile broadband, for an increasing segment of the U.S. population, is a substitute for various fixed broadband services.
In a Hill article on January 20, 2016, Mario Trujillo reported that advocacy groups have been pressing the FCC to adopt Internet privacy rules. In a letter to the FCC, the advocacy groups say: “[Internet service providers’] position as Internet gatekeepers gives them a comprehensive view of consumer behavior and until now privacy protections for consumers using those services have been unclear.” The letter urges the FCC to “move forward as quickly as possible on a Notice of Proposed Rulemaking proposing strong rules to protect consumers from having their personal data collected and shared by their broadband provider without affirmative consent.”
The longer the Open Internet Order is in effect, the more people will realize that the regulatory costs imposed by the Order are stifling innovation and investment from both Internet service providers and edge providers. (See my October 2015 blog and Randolph May’s December 2015 blog for more on this.) However, there is reason to worry that if the FCC continues to misuse data to claim that “gatekeepers” eliminate choices for consumers, that switching costs create monopolies, and that mobile broadband should not be included in an analysis of broadband marketplace competition, then the FCC will be able to use these claims to justify adopting more Internet regulations.Regardless of how Internet privacy rules would positively or negatively impact consumers, it should be concerning that the Commission could (and likely will) use misguided analysis to adopt such rules. In evaluating whether Internet privacy rules (and other regulations) benefit competition, consumers, and economic growth, it is imperative that they be supported by accurate data and valid cost/benefit analyses. But if the data and analysis used to inaccurately describe the broadband market during the Open Internet proceeding is used to draft Internet privacy rules, then the proceeding will start off on the wrong foot.