Daniel Lyons

[Commentary] The Federal Communications Commission announced that it had begun reviewing the recent interconnection agreements that Netflix signed with Internet service providers Comcast and Verizon.

The Commission’s growing interest in the heretofore unregulated interconnection market has prompted some commentators to renew their calls for all interconnection agreements to be filed with the Commission and made publicly available. Greater transparency, they argue, would provide consumers a better understanding of the economics of the Internet ecosystem beyond last-mile broadband networks, and would help the public police potential anticompetitive risks.

While transparency is often a laudatory goal, a mandatory public disclosure requirement in this case may ultimately harm the very competition that proponents seek to protect. Even absent any actual anticompetitive effects, the increased antitrust scrutiny invited by price transparency will impose additional costs on the industry, which will ultimately be passed along to consumers in the form of higher prices.

[Lyons is an associate professor at Boston College Law School]

[Commentary] Online video continues to assert its claim to the title of Killer App of the Early 21st Century.

Cisco Systems has released its annual Internet traffic forecast, which Re/code amusingly summarized with the headline “Cat Videos, Binge TV Watching Will Account for 84 Percent of Internet Traffic.”

Another study suggests that Netflix is making significant inroads into traditional pay television markets.

This growth disrupts old business models, putting pressure on traditional media providers to find innovative new ways to connect with viewers. But it also puts pressure on regulators, who face the unenviable task of protecting consumers in a dynamic, chaotic business environment. Too little regulation risks anticompetitive behavior that harms consumers. But importantly, too much regulation also risks consumer harm, by preventing companies from testing new, innovative business models that may benefit consumers.

When navigating uncertain competitive terrain, the regulator must resist the urge to reflexively apply old rules to a new business environment where they may do more harm than good.

[Lyons is associate professor at Boston College Law School]

[Commentary] The European Court of Justice ruled against Google in a landmark case about the so-called “right to be forgotten.”

The Court took aim at a very real problem: the fact that an individual’s information can be made available online without his or her consent, and once there, may remain accessible indefinitely.

But its solution threatens to harm the flow of information online without actually protecting privacy in any measurable way. The ultimate effect of this decision is to undermine the Internet’s strongest value proposition: its ability to dramatically reduce information costs.

[Lyons is an associate professor at Boston College Law School]

[Commentary] Opera Web Pass is a pay-as-you-go mobile broadband app targeted to customers who cannot afford, or otherwise refuse to purchase, costly monthly smartphone data plans.

The beauty of the Web Pass app is its flexibility. Consumers that have installed the Opera Mini app can use the app to purchase short-term data plans for weekly, daily, hourly, or even three-minute intervals, each at a different price.

Customers can choose unlimited web access, or can choose to purchase access only to specific sites such as Facebook or Twitter. And in a throwback to the NetZero model, Opera recently announced the debut of Opera Sponsored Web Pass, which grants the consumer a free web pass in exchange for watching a video ad before the session begins.

[Lyons is associate professor at Boston College Law School]

[Commentary] The Federal Communications Commission confirmed that it will not expand the scope of the ongoing network neutrality proceeding to encompass peering and transit services.

This was a blow to Netflix CEO Reed Hastings, who launched a blistering attack designed to focus the agency’s attention on this market. But given the robust state of competition in the interconnection market, the FCC’s response was good news for the future of the Internet ecosystem.

Despite Hastings’ hand-wringing, the Comcast-Netflix agreement illustrates the robust competitiveness of the interconnection market. The fact that Netflix pays Cogent transit fees is uncontroversial. The Netflix-Comcast agreement should be no less controversial merely because the identity of the transit provider has changed, or because the transit provider also happens to manage a last-mile broadband network.

The FCC is absolutely right that the market for interconnection is robust and competitive, meaning there is no reason to justify regulatory intervention. Its regulatory humility is both refreshing and promising for the future of Internet policy.

[Lyons is associate professor at Boston College Law School]

[Commentary] When a court struck down the Federal Communications Commission’s network neutrality rules, many consumer advocates argued that the result would be less online innovation. But a glance at international markets suggests that the FCC’s one-size-fits-all approach to broadband service may actually have left American consumers with fewer choices and denied them the potential benefits of more innovative broadband pricing models.

This all-or-nothing homogenization of the broadband product placed America increasingly at odds with the rest of the world. This is especially true with regard to mobile broadband. In various parts of the world, customers are offered a variety of alternatives to the unlimited Internet model, many of which are explored at length in the paper. These include: Social Media Plans; Facebook and Google “Free Zones”; and TELUS VoIP partnership.

[Lyons is an assistant professor at Boston College Law School]

[Commentary] The 1992 Cable Act, passed over the veto of President George H.W. Bush, contained two major provisions regarding the carriage of broadcast stations on cable and satellite systems.

First, the Act prohibits these systems from retransmitting a commercial broadcaster’s signal without the broadcaster’s explicit permission. This is known as “retransmission consent.”

However, not all broadcast channels are popular enough to warrant inclusion on a cable system. As more Americans ditched their antennas for cable, these stations found themselves reaching smaller and smaller audiences. To protect them, the Cable Act granted broadcasters the second provision, the so-called “must carry” rights. Generally, cable companies are required to carry a broadcaster’s signal upon request on cable systems within the broadcaster’s local market, without charge. If requested, the cable company must give a must-carry station the channel number corresponding to its over-the-air channel designation. These two provisions are designed to work together. However, in recent years, retransmission consent has become much more lucrative for major broadcasters. [Lyons is an assistant professor at Boston College Law School]

[Commentary] Should regulators condemn potential mergers before they are even proposed? That’s the question being raised by statements coming out of the Department of Justice and the Federal Communications Commission about the rumored Sprint/T-Mobile deal.

These rumors have piqued the interest of regulators, who have made unusually public comments apparently designed to discourage the merger. Conversations between companies and regulators about proposed deals are not uncommon. Markets abhor uncertainty, so investors crave early feedback regarding how a hypothetical deal will be greeted by regulators and what may be done to reduce the risk of an unfavorable response. If regulators identify anticompetitive concerns that can be cured by concessions, it’s better for agency officials to pinpoint the problem and propose a tailored solution during the merger approval process, rather than have the parties guess what might be a problem and what concessions might fix it. Unquestionably, regulators should scrutinize this deal closely. But both due process and the public interest demand that they be given the opportunity to do so, without regulators placing a thumb on the scale. It may be that without a merger, neither company has the scale to compete effectively against Verizon and AT&T. If this is true, then the regulators’ quixotic quest to preserve four national carriers will deprive consumers of the benefits of a more efficient market structure and the more robust competition it would bring.

It is far too early to determine that a Sprint/T-Mobile merger would be good for consumers. But it is also far too early to unequivocally decide otherwise.

[Lyons is an assistant professor at Boston College Law School]