A Case for Net Neutrality

Nicholas Economides
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Unfortunately, today’s FCC serves as a perfect example of the definition of “regulatory capture.” It has put the profits of the industry it regulates above the public interest.
By Nicholas Economides
In the first decades of the 20th century, telecom regulation arrived late. Facing significant competition from “independent” telephone companies, AT&T lost 50 percent of its market share once its patents expired. To stifle the competition, AT&T blackmailed its independent rivals—AT&T would never interconnect with them unless they were acquired by AT&T.

As a result, many customers needed two different phones—one for AT&T, and one for their local independent telephone company. AT&T’s market share increased to 89 percent by acquiring its rivals until this absurd situation was solved by imposing mandatory interconnection through regulation in 1935.

Fast forward to 70 years later. Similar to AT&T’s historical long-distance network, the Internet has become today’s most important network. But, because the Internet is based on public protocols, it’s difficult for any one company to control. Since its inception, it has operated under “network neutrality,” which means the order of arrival of information packets is not disturbed by telecom and cable companies.

Read the full article as published by IEEE Spectrum

Nicholas Economides is a Professor of Economics at NYU Stern School of Business.