The self-regulatory two-step

Self-regulation is a great move to forestall legislation. “Here,” you can say, “we’ve solved your problem. We don’t have all the details yet, but we’re making progress. Don’t try to write rules for this markeplace – you’ll just make mistakes and embarrass yourself. Let us help consumers by doing it ourselves.”

The second step of this particular dance is enforcement – in the form of results that real people can understand.

We don’t have all the details of the first Verizon self-regulatory step yet. A lot will depend on how reasonable Verizon’s certification standards are and what testing VZ requires from application and handset developers.

Notwithstanding Verizon’s announcement yesterday, the issues surrounding internet access via wireless handsets (and any other modality) remain. The fact is that granting network providers the right to exclude (or degrade) unwanted uses of their systems will very likely interfere with unanticipated, as-yet-unborn, and socially valuable developments. The default rule that grants that right is still in place, and can only be removed by legislation. It’s undeniable that network owners will tend to systematically undervalue the social/economic benefits of open access.

VZ’s statements make clear that customers will be able to stick any application they want to on their devices. But will it work? Will some applications be prioritized over others? On what basis? The ability to price by tiers carries with it enormous power to define the tiers in the first place – and then to decide what fits within a particular tier. The right to degrade communications carries with it the right to — effectively — exclude and can be exercised in an anticompetitive manner.

The Verizon move is well-timed to signal intent to dominate the upcoming auction. Will it lead to real openness? We can’t tell. The move also may be intended to forestall legislation along “no-locking, no-blocking” lines.

But we know that the risks of non-neutrality haven’t gone away. The second step of this particular move isn’t part of today’s story.

3 thoughts on “The self-regulatory two-step

  1. can only be removed by legislation.
    Isn’t this a bit of a bold prediction? I can imagine circumstances under which Verizon would be forced, not by legislation, but by consumer action, to remove this rule.

  2. The idea here is that with sufficient market power behind them, and the default rule of total discretion in place, network providers have no particular incentives to make available a neutral network.

    If there were true competition in this marketplace, then, I agree with you, the default rule of discretion would likely be removed by consumer preferences. But when it comes to pure internet access (unbundled from other “services”), we don’t have a competitive market in this country.

  3. I continue to believe this is part about playing policy games, but it’s also the perfect opportunity for Verizon to implement billing by the byte. In essence, charge a steep premium for the honor of being able to access a neutral network (subsidize them for lost content revenue)….

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