New FTC Task Force to Examine Net Neutrality

The FTC also is concerned about whether large companies with dominant market shares may be violating antitrust laws, Majoras said. The FTC plans the next 6 months to hold a series of hearings with policymakers, academics and technology experts from the US and abroad to identify potential problems, she said: “This is a difficult area and an issue of enormous interest” to the Commission, Majoras said: “The worst mistake we can make is to assume we know it all.”

Intel, Microsoft and major phone companies will face an increasing barrage of litigation in the U.S. and worldwide as regulatory bodies and courts raise antitrust challenges, said Jeffrey Eisenach, chmn.-Criterion Economics. He said these companies are “dominant” -- they have intellectual property (IP) patents on unique and desirable products, and multiple products embedded in their infrastructure. This gives them the ability to set prices, terms and “exclude competitors,” Eisenach said.

“We're seeing some evidence of attempts to police” this behavior all over the world, in Europe, Asia and the U.S., he said. Challenges are prompted by competitors; for instance, AMD has conducted a nearly 15-year long legal battle against Intel in a variety of venues on antitrust grounds. “The troubling thing is there’s no international consensus about what it means,” Eisenach said.

But one thing is clear: Plaintiffs are “venue shopping” for friendly jurisdictions where they're likely to get rulings against the “dominant” firm, he said. That trend is certain to continue. Regulators should focus on consumer welfare, not the welfare of competitors, Intel’s Communications Policy Dir. Peter Pitsch told us: Regulators “should look at how well the market is working.”

It’s clear that mandatory unbundling didn’t work in the telecom industry, Eisenach said. Courts forced the FCC to repeal burdensome regulations, prompting more competition, he said. But “the rest of the world is headed for trouble,” he said: “All of this presages an international debate over net neutrality.” Instead of focusing on network access, Eisenach said, the net neutrality debate is about backbone networks. Eisenach made his comments on a panel forecasting the future of the digital economy. While panelists were generally optimistic about U.S. competitiveness, many had reservations about the govt.’s ability to battle cybercrime and to adopt sensible policies to encourage economic competitiveness.

“Is there a problem with trust and security on the Internet? Yes,” said Arthur Coviello, CEO-RSA Security. Consumer confidence is eroding from rising ID theft, he said: “People are willing to take the risk and they are paying the price, but for how long?” Coviello said 15 million people a year are victims of ID theft and thieves have about one chance in 700 of getting caught.

Problems are even more acute in the corporate world, where security isn’t as strong as it should be, Coviello said. “We can only minimize and never eliminate the risk. It’s evolving too rapidly,” he said: “The Internet is crime- ridden neigborhood.” Coviello said govts., companies and consumers need to take proactive steps to curb the problems. The U.S. govt. needs to lead by acting more quickly on cybercrime legislation. Companies should control access to systems and consider monitoring them for vulnerability. Consumers have a responsibility to protect their systems with firewalls and virus protection. “I believe we can create a culture of trust and security.” -- Anne Veigle

PFF Aspen Notebook…

More than 75% of Internet users are outside N. America, the Progress & Freedom Foundation said. Its new “Digital Economy Fact Book” lists 2005-2006 data, offering an overview of the digital economy and chapters on e-commerce, hardware, the communications industry, digital media and global Internet use. It and the other 6 most recent editions are at pff.org.