Hazlett in Financial Times: "All You Can Eat" Internet Thing of the Past?

In a Financial Times op-ed, Professor Thomas Hazlett observed that the times of unlimited internet access are nearing an end following Comcast's announcement that it will levy explicit bandwidth limits on its subscribers.

Hazlett blamed Comcast's actions on the Federal Communications Commission's charge that Comcast had acted to "unduly squelch" an "open and accessible internet" and its resulting order that the company abandon its existing practices and better disclose its network management methods to customers. Expecting other broadband providers to follow Comcast's lead in applying bandwith limits, Hazlett argued that the effect is "Not exactly what the plea for network neutrality regulation was said to be aiming for."

 FCC should leave net neutrality to anti-trust courts, Financial Times, September 30, 2008. By Thomas Hazlett.

"While many net neutrality advocates praised the FCC's ruling (Stanford law professor Lawrence Lessig told the Commission that it had made it 'clear that those who wish to profit from the internet do so without harming the internet'), others are howling over the quick market migration to data caps. While Comcast's 250 GB per month limit is loose – the average Comcast customer uses only 2-3 GBs per month – 'a line has been crossed,' writes industry analyst Craig Moffett. Other cable operators are reported to be following.

"When one rationing scheme is excluded, others emerge. Download limits, upload limits and tiered service pricing are the most obvious. Lost upgrades or build-outs, where investors simply fail to commit more assets, are potentially unseen carnage. To craft better rules for the market, policymakers must understand that options have prices and rules have consequences.

"The FCC ignored these realities. The venerable Alfred Kahn, professor emeritus at Cornell and the dean of US regulatory economists, anticipated this result in arguing that net neutrality rules are best left to antitrust courts.  Such proceedings, imperfect though they are, require evidence, economic analysis, and a verdict on consumer welfare.  Noted telecommunications attorney Jon Nuechterlein's recent article nicely explains why such standards are preferable to ad hoc agency rulings. As we stumble forth in the mist of duly and unduly squelches, this argument will become more and more compelling."

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