FTC: What, Me Worry?

majoras.jpg The U.S. Federal Trade Commission (FTC) says there’s no need for net neutrality:
FTC Chairwoman Deborah Platt Majoras said that without evidence of “market failure or demonstrated consumer harm, policy makers should be particularly hesitant to enact new regulation in this area.”
So in a “market” where the average customer has at most two choices, we’re supposed to wait for a market failure?

So, let’s see:

Market Failure: An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers does not equate to the quantity supplied by suppliers. This is a direct result of a lack of certain economically ideal factors, which prevents equilibrium.

Market failures have negative effects on the economy because an optimal allocation of resources is not attained. In other words, the social costs of producing the good or service (all of the opportunity costs of the input resources used in its creation) are not minimized, and this results in a waste of some resources.


Customers of first-mile ISPs would like to have fast Internet access and a choice of providers. They don’t have those things. Meanwhile, resources such as 700Mhz spectrum are being wasted. And there are already external effects such as suppression of diversity, see the suppression of Internet radio and the policing of somebody else’s copyrights by a major ISP. Both of these things (and other similar developments) will suppress innovation via sampling, not to mention participation in general, and free flow of information.

I am not an economist, but the duopoly seems to me like a textbook case of market failure. Yet the FCC is more interested in censoring Cher and the FTC doesn’t see any market failure. What, me worry?

Use of this buzzphrase is not unexpected, since market failure is what many government agencies are using these days to justify not doing their jobs. That’s what happens when you have most agencies run by political commissars, as is the case with the current administration.

Meanwhile, if the general public doesn’t know that in Japan and Korea and some other countries you can get ten times the speed for the same or less price, and from a variety of providers, they are less apt to demand the same in the U.S. This is why the USA Today story about speeds in other countries is important: maybe more duopoly customers will realize what a raw deal they’re getting. Maybe they’ll vote in some politicians who will appoint commission heads who will do something about the problem. What we really need is competition so there will be a market, and it would help if the FCC and FTC would facilitate that.