Comcast, Netflix, and the unregulated interconnection market

[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]