Wireless Net Neutrality?

Abstract

A recent proposal for net neutrality regulation in the wireless industry suggests carriers should open their networks in particular ways. The proposal advocates creating standards that will make it easier for developers to write applications and for hardware firms to create devices that will operate on a network, and argues that wireless providers follow some net neutrality standard for use of the spectrum itself. This proposal is flawed in several fundamental respects. Most advocates of network access regulations base their argument on a plausible assumption that some firm has enough market power to profitably act anticompetitively. The presence of four major national carriers and several regional players (some of which have now bought enough spectrum to eventually provide nationwide service) suggests that investors are able to mobilize resources to enter the market. The lack of a market failure in the wireless industry suggests that such regulation would be completely unwarranted. Consumers consistently benefit from increasingly lower prices and more features. This competition shows no signs of letting up. To ensure that competition and innovation continues in this market, the FCC should continue to move spectrum into the market quickly and make its use flexible and allow it to be traded. Any proposed regulation must always be considered carefully to ensure that it carefully targets a specific market failure and that the benefits of the regulation are expected to exceed its costs. The wireless industry exhibits no evidence of a market failure, and regulations are likely to impose significant costs on society and ultimately harm consumers.