//  11/30/17  //  Commentary

In an earlier post, I explained that vertically-integrated broadband carriers can harm competition by excluding competitors to affiliated services from their platform (or from certain platform features). This may be especially true where these adjacent industries are characterized by significant first-mover advantages and large network effects. This means that ex post enforcement is often too little and, perhaps more importantly, too late. But I am sometimes asked whether these potential harms to competition are outweighed by the efficiency gains from the vertical integration.

The short answer is that it’s hard to tell. Scholars have debated the question, in general terms, without reaching a clear conclusion. Related economic models and studies say different things. Maybe it’s worth stomaching some exclusion to enjoy these gains. But maybe these gains aren’t really all that large, and the harm to competition is quite high. (Both the Obama and the Trump Administrations signaled their belief that the latter view is the better view.)

If these models can’t offer a straightforward answer, maybe a better approach is a simple error cost calculation.

If we don’t have net neutrality protections, then the risk is that phone companies will block competing voice services, cable companies will undermine threats to their video distribution businesses, and so on. That risk is credible: As I noted in my previous post, carriers have attempted to do precisely that.

If we do have net neutrality protections, then a risk is that we may lose some innovation though vertical integration that, say, optimizes an affiliated application for the platform (and vice versa). Is that risk credible? It is certainly possible. But carriers have also publicly disclaimed any interest in breaching the protections of the net neutrality rules—suggesting, perhaps, that the carriers don’t see much potential for innovation by doing so. Moreover, the FCC relies on the carriers’ representations in its draft order.

The cost of erroneously repealing the net neutrality rules is harm to competition along the lines of previous examples of exclusion. The cost of erroneously keeping the rules is, given carriers’ promises not to break them anyways, essentially nothing. Hence, under this calculus, the case for net neutrality comes down a pithy adage: Trust [that carriers won’t violate net neutrality principles], but verify [compliance through enforceable rules].


The Fight for Contraceptive Coverage Rages in the Time of COVID-19

5/6/20  //  Commentary

Even the Supreme Court has been required to take unprecedented steps by closing the building, postponing argument dates, and converting to telephonic hearings. Those impacts should be reflected in all aspects of the Court’s work, including the decisions it renders for the remainder of this term.

Take Care

Are There Five Textualists on the Supreme Court? If So, They’ll Rule for Transgender Workers.

5/6/20  //  Commentary

The Title VII cases before the Court present a fundamental question: are there really five textualists on the Court? We’ll find out soon.

Take Care

With Passage of COVID-19 Relief Package, Vigorous Congressional Oversight Will Be Key

4/7/20  //  Commentary

By Brianne Gorod and Becca Damante: Congress’s $2 trillion relief legislation is the largest aid package in modern American history. That’s a lot of discretion to give to an Administration in which self-dealing and corruption are disturbingly common. There is thus an urgent need for vigorous congressional oversight.

Brianne J. Gorod

Constitutional Accountability Center