The FCC Aims for Dominant Firms - Hits Little Guy

Always clear thinking Tom Hazlett has a new piece in the Financial Times on one foreseeable result of the new Net Neutrality rules (gated but free). The FCC feared that big telecom operators would favor their own affiliates at the cost of consumer choice. The first case demonstrates the limits, indeed the counter-productivity, of regulation.

MetroPCS, hit with its first formal complaint, is an upstart wireless network offering low prices and short-term contracts. As part of their $40 a month “all you can eat” voice, text and data plan, they slipped in a bonus: free, unlimited YouTube videos, customised to run fast and clear.

But is this monopolist favoring one service over another to its own benefit?

MetroPCS possesses no market power. With 8m customers, it is the country’s fifth largest mobile operator, less than one-tenth the size of Verizon. Under no theory could it force customers to patronise certain websites. It couldn’t extract monopoly cash if it tried to.

Rules meant to foster innovative services are thwarting them.