June 2, 2014
Data communications service provider, Level 3, publicly accused six unnamed Internet service providers (ISPs) of deliberately slowing Internet traffic to undermine service quality. These allegations appear to support the calls for regulatory action to protect “net neutrality.” They also raise important questions regarding potential antitrust and competition law violations on the part of some of the leading ISPs.
Level 3 accused five ISPs in the United States and one in Europe of deliberately refusing to upgrade ports in their networks to accommodate dramatic growth in data traffic associated with Internet use. The ports function as essential gateway facilities through which all Internet traffic must pass. If port capacity is not properly adjusted to accommodate traffic volume, Internet service quality is degraded. Inadequate port capacity can result in slow Internet service or blocked access to some Internet content.
Some industry observers believe that the leading ISPs that own and operate the “backbone” facilities vital to all Internet traffic are attempting to restructure the economics associated with transport of that traffic. They claim that the largest ISPs want to end the current practice of traffic “peering” under which the various parties that carry Internet traffic exchange that traffic on an essentially equal basis.
Instead, some of the major ISPs reportedly want to be paid directly by content providers who use their networks. This payment structure would make it possible for the ISPs to charge the “premium” rates associated with access to enhanced network facilities and the improved service quality made possible by those facilities.
Level 3 and others contend that deliberate action by backbone ISPs to degrade service quality is part of an effort to undermine the net neutrality principle. Allegedly, these actions set the stage for launch of premium data networks that provide greater capacity and support higher quality service.
To the extent that the Level 3 allegations represent the current thinking and actions of some of the world’s leading ISPs, they highlight serious potential antitrust and competition law problems. If major ISPs are deliberately permitting Internet service quality to degrade as part of an effort to extract higher payments from network users and to force substantial changes in the economics of Internet traffic exchange, important antitrust and competition law challenges must be addressed.
To date, much of the discussion associated with net neutrality has focused on the regulatory aspects of that principle. It has emphasized the role of the Federal Communications Commission in oversight of Internet access and use.
The Level 3 claims remind us that there is another important aspect of the net neutrality debate. In addition to the issue of FCC regulatory oversight, we should also actively consider the effects of any breakdown of net neutrality on consumers and commercial competition.
Regulations enforced by the FCC provide one set of tools for the protection of net neutrality. Another equally important set of policy tools available to support net neutrality is the framework of antitrust and competition laws. It is likely that antirust litigation will soon become a highly visible forum for battles over net neutrality.