Christopher Yoo gave his talk, and I encourage you to watch it. As you can see from the rather extensive comment thread below, Yoo does not think that my critiques are fair, and he is more than a little bit upset that I trolled him. Nevertheless, upon review of the debate, I believe that you will find that the TL;DR is:
- He admits that his “well established” means of quantifying broadband competition are anything but.
- When I ask him to verify basic assertions that he made in answering my critique (eg: Netflix has historically paid ISPs for “carriage”), he dodges and claims that I don’t understand the industry.
- He thinks that ISPs are incapable of traffic shaping that they were already doing six years ago.
- He admits that ISP discrimination, which has recently helped ISPs to negotiate “paid peering” (a.k.a. reversing the transit relationship), does in fact destroy the “bill-and-keep” model that has historically been de facto for broadband service, and that this discrimination leads to a terminating access problem.
- He claims that, nevertheless, last-mile market power does not exist when “networks at the core of the network engage in settlement-free peering.” I’m not sure why.
- He avoids answering my basic critique of his legal interpretation of Time Warner v. FCC, 240 F.3d 1126, which is key to his “viability” standard.
- He appears to feel that the government should make regulatory decisions based on what feels equitable or at least some economist’s definition of welfare-maximization (presumably a leading-edge neo-schumpeterian n-sided-market economist).
- He accuses me of not reading his scholarship, even after I quote from it liberally, and equates ex-post enforcement of antitrust principles to “regulatory intervention” (I suppose we could have a semantic debate about this one, but the chasm between concrete rules and his notion of antitrust is great.)
- He’s upset that I keep mentioning his own public disclosures of corporate funding. My view is that if you are a decent academic, the degree to which corporate support is relevant is indirectly proportional to the merit of your scholarship. This calculation is an exercise left to the reader.
Today at 12:30, Christopher Yoo will give a live-streamed talk at CITP entitled “The Open Internet in the Aftermath of Verizon v. FCC: What Comes Next?” Yoo will talk about the Verizon v. FCC ruling that overturned the FCC’s network neutrality rules, and place them in the context of the proposed merger between Comcast and Time Warner. Yesterday, unnamed sources within the FCC gave a possible answer to Yoo’s question: a “fast lane” for sites and services that pay for preferential access to Comcast’s customers. The FCC is reportedly considering new rules that would permit broadband Internet providers to discriminate against specific content as long as they don’t do so in an “anticompetitive manner.” The FCC will then be left to decide what makes for anticompetitive behavior — a domain typically left to antitrust law.
This FCC decision about network neutrality is taking place in the context of the controversial proposed merger between Comcast and Time Warner — which itself is undergoing antitrust review. The core question is whether or not competition will be harmed in a way that is bad for consumers, or for business on the Internet in general. One of the most-touted examples of alleged network neutrality violations (or of interconnection discrimination, depending on how you look at it) is Netflix. Netflix recently announced plans to raise prices, noting Comcast’s success in demanding payment from the backbone network providers that deliver Netflix content to paying Comcast customers when they request it. Traditionally, “last-mile” providers like Comcast would pay backbone providers to connect their customers to the rest of the Internet, but in recent years Comcast has become so large that it has managed to reverse this relationship. They have done so by threatening to cut off or degrade connections when particular backbone providers begin to deliver higher volumes of Comcast customers’ bandwidth requests. Companies like Netflix argue that they are left with nowhere to go, because Comcast will take a similar approach with any backbone provider they use.
David Cohen, Comcast’s Executive Vice President, is a University of Pennsylvania law graduate and has been arguing his case in the language of antitrust law. Serving as “Comcast’s Real Repairman”, he takes the following approach when lobbying:
Mr. Cohen approaches his advocacy for Comcast’s transactions like the litigator he once was. “It’s the same way you build a case. You understand all the facts down to a minute level,” he says. “And then you pull the lens back so everyone else can understand it, and organize the advocacy in a way that is compelling and persuasive.”
He makes several points about the merger with Time Warner Cable: The two companies do not compete in the same cable markets, so the deal in his view will have no impact on consumers.
I can’t speak to the veracity of the claims reported by the Wall Street Journal, the analysis of the New York Times, or the explanation by the Washington Post, but I do think that it will be interesting to see what Yoo will say. I have a pretty good idea. He recently testified before Congress, alongside cable lobbyists, stating that:
In short, established principles of antitrust and communications law dictate that the merger is unlikely to harm consumers in either market. In fact, technological and economic changes are transforming the markets in ways that should make the prospect of anticompetitive harms even more remote.
Yoo has been giving his opinion on the state of broadband competition for many years. In his book, published by free-market think-tank AEI, he wrote that:
Any change necessarily creates new winners and losers, which will inevitably prompt those disadvantaged by a change to argue that it is anticompetitive. [...] Far from being regarded as a problem in need of remediation, change should be embraced as a natural and indispensable part of the process of the Internet’s evolution.
Yoo is an antitrust lawyer, so for him everything has to do with whether a given market is competitive. Back in 2008, I wrote the following about his analysis of the home broadband market:
Yoo admits that the last-mile market is concentrated. “Were network neutrality designed to promote competition on the side of the market in which last-mile providers meet end users, the market would be local in scope and sufficiently concentrated to provide an arguable basis for regulatory intervention” (Yoo, “What Can Antitrust Contribute to the Network Neutrality Debate?“, 2007). However, he attempts to define the market nationally, claiming that the relevant scope is the field of all national broadband providers.
I went on to describe why the local market seemed to be the most critical market in competition analysis. I argued that what matters is how many options a given consumer has, not how many options the superset of all consumers have collectively. Providers that do not serve a particular home, I said, are not competitors for that consumer despite Yoo’s reasoning. “If his reasoning held, one might just as well include all international broadband providers as well, making for a very rosy picture indeed.”
On Yoo’s telling, antitrust law would have us adjust our count of the two home broadband providers that most consumers face. On his accounting, this might be closer to two hundred or two thousand. It’s hard to do the math.