DoJ, the New Arbitrary and Capricious FCC

by Mike Wendy on June 13, 2012

The WSJ reports today that:

The Justice Department is conducting a wide-ranging antitrust investigation into whether cable companies are acting improperly to quash nascent competition from online video, according to people familiar with the matter.

…In its cable TV probe, Justice Department investigators are taking a particularly close look at the data caps that pay-TV providers like Comcast and AT&T Inc. T +1.13% have used to deal with surging video traffic on the Internet. The companies say the limits are needed to stop heavy users from overwhelming their networks.

Internet video providers like Netflix have expressed concern that the limits are aimed at stopping consumers from dropping cable television and switching to online video providers. They also worry that cable companies will give priority to their own online video offerings on their networks to stop subscribers from leaving.

Am I missing something here?  Why the DoJ?  I mean, doesn’t the FCC enforce Net Neutrality, which the bulk of this investigation seems to address?

You know, there’s a procedure where such violations are alleged.  The Net Neutrality Order provides a formal complaint process at p. 90.  There, in part, it states:

Any person may file a formal complaint alleging a violation of the rules in this part.

Pleadings must contain facts that, if true, are sufficient to warrant a grant of the relief requested.

Facts must be supported by relevant documentation or affidavit.

Question – if there is a formal process for Net Neutrality violations – which has seemingly been put forth here – why was it not used in this instance?

Answer – because the FACTs are missing.  Consumers aren’t being blocked or harmed, and networks aren’t being managed unreasonably.  Quite simply, pro-consumer choice abounds, consistent with FCC rule.  If it didn’t, wouldn’t the FCC be there, addressing any supposed infractions?  That’s its role, right?

In my mind, this “investigation” is nothing more than a way to achieve what couldn’t be done in an open process, subject to due process and tethered to the rule of law.  For complaining competitors and public interest groups, it’s just easier and has far better payback to go the ole’ government-by-consent-decree-extortion route through the DoJ instead of having to do real work, and show real violations through the FCC’s (still applicable) Net Neutrality process.

If this investigation is the real deal, the main conclusions I can draw from it are:

  • For a growing list of edge providers, it’s seemingly easier to “compete” through regulatory arbitrage and agency forum shopping than actually, er, competing in the real world.
  • The investigation is political and not substantive because the marketplace thrives.
  • The DoJ’s action reveals that the FCC’s Net Neutrality rules and related formal complaint process are likely dead in the water.
  • This FCC and DoJ have become perhaps the greatest force / partners ever in the quest to quash innovation and job creation for political gain and payback to favored constituencies; the one-two extortion punch they represent has essentially brought America’s communications policy back to 1934 (or earlier), creating an inflexible industrial policy that cannot meet the quickly evolving challenges of the Internet age.
  • The anti-property Left, through any means necessary – i.e., via pliant regulators, cops and policymakers at the FCC, DoJ, FTC, SEC and ITU (this is not to mention those aiding its cause in the Congress and the media) – will, if not stopped, make the private provision of network Internet services so unpalatable and unprofitable that one would be a fool not to abandon the space altogether and just let the communications networks be run as (unsustainable, rotten) taxpayer supported public entities.
  • And, the private sector is not doing fine (I digress).

Prophylactic investigations are the hallmark of arbitrary and capricious government.  They are a tool of coercion and threat.  Consequently, they should be viewed with great suspicion – more often than not they are the harbingers of corruption and cronyism than anything else.

Companies like Comcast and AT&T should be allowed to innovate for consumers, free from this distorting game – one which primarily benefits complaining competitors, special interests and favored entities to the detriment of real consumers.

If competing legally is a problem here in America, then the private sector is not ever going to do fine.

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