Ex Ante Versus Ex Post Approaches to Network Neutrality: A Cost Benefit Analysis

Abstract

Many advocates for less intrusive government oversight of telecommunications support the migration from regulation by an expert agency to the use of judicial remedies largely guided by antitrust/competition policy principles. They believe that reviewing courts can resolve disputes after they have occurred in lieu of having expert regulatory agencies available to anticipate and resolve problems before they become acute. Such ex post remedies occur when courts apply legal precedent not necessarily tailored to specific telecommunications cases and controversies. Advocates for retaining so-called ex ante regulation believe that an expert agency remains essential particularly in light of fast changing market conditions and technological innovations that may not promote sufficiently robust facilities-based competition. They also note that courts in the United States have decided to reduce opportunities for consumers to seek remedies by limiting rights to bring suit and to form a class of similarly harmed parties. Additionally they cite case precedent where courts offer no additional competitive safeguards if the expert regulatory agency concludes that rising competition justifies streamlining, or eliminating safeguards. This paper will identify the strengths and weakness in ex ante and ex post enforcement of network neutrality policies. The paper concludes that ex post enforcement should generally serve as the goal in a deregulatory glide path that links increases in facilities-based competition with incremental reductions in government oversight. However, current marketplace conditions evidence limited competition particularly for the first and last kilometer of Internet access. Because Internet Service Providers (“ISPs”) serving end users continue to have both the incentive and ability to pursue anticompetitive strategies, the paper supports the continuing role for an expert national regulatory authority. However the paper emphasizes that ex ante regulation should concentrate on procedural safeguards rather than the formulation and imposition of substantive rules and service definitions. Ex ante regulators should provide a forum for the resolution of complaints on a timely basis, in light of the immediate harm to consumers when the delivery of Internet content becomes degraded or blocked.