FTC NN8
- See FTC Workshop Transcript for index
Consumer Protection Issues Panel
This panel addresses consumer protection issues relevant to the network neutrality debate, such as: The disclosure of material terms in Internet access agreements; what terms are or should be material?; the ability of consumers and enforcers to verify compliance with such terms; and privacy issues raised by developing data packet inspection technologies.
>>MARY BETH RICHARDS
As you may have guessed, one of our panelists is going to participate remotely.
But so this panel will go until 2:15 and we'll take a 15-minute break and start
again at 2:30 and we'll go straight on through to 5:30. I'd like to turn it over now
to Mary Beth Richards, the deputy director of our FTC bureau of consumer
protection.
>>MARY BETH RICHARDS
Good afternoon and thank you, everyone, for braving the weather to get here.
This panel will focus on consumer protection. I like to think of it as the reason
we're holding the hearing. The consumer protection issues to throwing a party.
If you throw one no one comes, why bother. Well, we've got a party in full swing
and most of the country has gotten an invitation from at least a couple providers,
and we've got millions of people already there. But some of the issues, and I
think those we're going to talk about today are, you know, are there -- is the --
what's the price to get in the door and are there charges once you get inside? Is
there a fee for the carving the roast beef at the beef station, what's on the name
tag that you wear. Is it, my name is Mary Beth or more? Is someone taking
down that information on the tag and going to provide it to another party planner
that you know about or don't know about. How long is it going to take you to get
through the room. Does the answer to that depend on how much you are
carrying, and might you be denied access to the room based on what you do
have? So we've got a great panel today to talk about the consumer protection
issues. We're going to start and just kind of go down the row with introductory
statements. Tim Muris is joining us by telephone. I'll do more brief introductions.
Fuller introductions or bios are in your packet. We'll start with Phil Weiser, a
Professor at the University of Colorado where he has a joint appointment with the
school of law and the interdisciplinary telecommunications program. Phil
founded and continues to serve as executive director of the silicon flat irons
telecommunications program. They hold a terrific regular seminars on issues
that talk about the interception of information technology business and law. He
lectures and writes widely on these issues, and previously served in the antitrust
division of the Department of Justice. Next is Dan Brenner, Dan is Senior Vice
President for law and regulatory policy at the national cable and
telecommunications association. I first met Dan when he was senior legal
advisor to Chairman Mark Fowler at the FCC in the 1980's. He also has served
as the director of communications law program at UCLA law school and was the
senior fellow at the Annenurg Washington program. Jean Kenney. Jeannine to
my left is the scene your policy analyst for consumer unions, publisher of
consumer reports where she covers telecommunications and media policy for the
organization, representing consumers on Capitol Hill and before federal
agencies. Prior to joining consumers union, she served as vice president for
public affairs and member services at the national cooperative business
association, a membership organization for consumer owned cooperatives. She
also worked on the hill as a Capitol Hill staffer. Ron Yokubaitis in 1994 along
with his wife and son founded Texas.net, the first ISP in San Antonio and one of
the first 50 ISPs in America, renamed data foundry, Inc. In 2003, the company is
one of the largest operators of Internet data centers in Texas, as a global
provider of managed services, data foundry maintains and monitors a scalable
redundant and available network infrastructure. He practices law in Houston and
Austin after serving in the Peace Corps in Brazil. Finally Tim Muris is the
foundation professor at George Mason university school of law. He has
extensive experience including an antitrust consumer protection privacy
regulation and strategic counseling. Tim has served in numerous capacities at
the FTC, including as Chairman from 2001 to 2004, and in fact, Tim probably
could have singled -- single-handedly moderated each of the panels of the two
day sessions based on his prior experience and former jobs. He's currently of
counsel sell at O'Melveny & Myers and Myers and co-chairs the firm's antitrust
competition practice. So with that we will start with Phil.
>>PHILIP WEISER
Thanks, so much. It's great to be here and it's very important that the Federal
Trade Commission has embarked on these hearings in a new frontier for
broadband regulation. In a great Yiddish tradition I want to say a few words
before I speak, and I'll try to follow-up bill's master of metaphors. He spoke at
our recent conference and it was a tour deforce on different metaphors all used
effectively. The party metaphor is not what I came prepared for. Part of the
telecom policy party wars leave many of us with a hangover type feeling, and I
think that unfortunately the FTC has gotten a little sense of some of those wars,
although I think what's valuable about this forum is it provides a chance for sober
analysis. It's difficult to do sober analysis getting off of a hangover, but if the
commission can take the time, and I know they can, they can invest in some
valuable analysis and I'll mention a few words on that, but I really do think there
is an opportunity here, and I'm very glad you are moving forward on it. The
opportunity that I'm going to talk about are going to be two-fold. The quick one
will be the planting trees. One comment that commissioner Kava sick made in
Washington is there is a focus on picking the low hanging fruit which are some
quicker wins. I think there are some very important quick wins here which I'll talk
about. But there are also broader questions about how to invest to build new
trees, to help develop this area. Before I get to the low hanging fruit and the
planting trees, I want to talk a minute or two about something Harold Feld said
which is this idea of the free speech and egalitarian Internet, and I think the
commission should look at that and note how challenging those aspirations are in
the following sense. The Internet is not today and will not be egalitarian, and it's
very important to start from that premise. There are very well healed companies
who have the ability to pay for service level agreements that insure quality of
service that pay for caching services that insure quicker delivery of their content.
If I start a company in my garage I can't do that, and that's okay, because in most
sectors in our economy, those who are well healed have advantages that those
who are starting companies in their garage have other advantages. What's
critical about this issue is that we need to make sure there is always room for
people starting new types of applications from the garage. However, they don't
need to be on an equal playing field. They can't be and shouldn't be for some of
the reasons John Thorne mentioned, you wouldn't want to stop enhanced
services people can buy because they have money just because there are
people who might not have the money. That's the challenging idea of the
egalitarian Internet. There are some I think maybe moments in time where the
Internet was close to that. But right now the Internet is an incredibly important
part of our commercial infrastructure and is and won't be that. I want to start with
that by way of a little background. So in terms of the low hanging fruit, I want to
suggest that there is app lot of laboring on the competition policy issues. The
price discrimination concerns issues around rent extraction and two-sided
markets are not the sort of discourse you'll hear in Congress, and by bringing
some of those analytical tools to bear this commission can do a great service,
although I don't think it's necessarily going to solve those issues. The consumer
protection issues, however, I do believe can be solved and addressed very
effectively. That's where the low hanging fruit lies. Let's me spend a couple
minutes on that. First is there is a jurisdictional never never land today because
of the questions around the classification. In particular, consumer protection in
telecom was largely the bailiwick of state public utility commissions, we have Phil
Jones in the audience from the great state of Washington. Right now
commissioner Jones doesn't necessarily know what he could or should be doing
on broadband because it appears to be subject to only federal regulatory
oversight. However, the FCC has never been active or all that effective in
consumer protection. It's generally left up to the states. Thus, there is a critical
role for the Federal Trade Commission to play in effect the counterpart to what
the states used to do as to broadband. How they should play that role is
something I want to spend a few minutes on. The first point is it's very important
that consumers be given clear understandable explanations of what the product
they may purchase. Many providers today do just that. They have Web sites
where they offer broadband usage policies. There is a value to having that
standardized, and I think some form of guidance, it could be informal like a
speech or other, like a report from this investigation can give providers a sense
as to what they should explain. Many people focus on the level of bandwidth or
speed although that's just a starting point. In explaining what your level of
bandwidth is it's important that you explain what the effective band width is, not
the theoretical bandwidth. Many people know their advertised services might up
it to 2 megabits but they only ever could get 2 megabits at like 5 in the morning
on a Sunday. You know, that's not exactly fair advertising in the sense that
consumers might have some expectation they would get that on some
reasonable basis. There needs to be some explanation as to what they are
actually getting, not merely on speed but also on performance, and the
performance point would get to what can you do with it? What type of
applications would work? And that gets into some of the more technical issues
alluded to you previously, is there a lot of latency or is there a lot of jitter on the
network. If so, that could undermine the ability to juice voice over IP, for
example. That's okay. There are some networks that might have that but
consumers need to know what the limitations are up front. Now, the other things
consumers need to know is is there prioritization available so prioritization would
say yes, there might be latency and jitter as a default matter but firms can pay for
enhanced service prioritized quality of service. Now, that's important because if
I'm a consumer and I'm looking at an over-the-top voice over IP product, I know
that some companies may have access to that prioritized service and may be
able to overcome the latency that others might not. And that means I can
complain to those companies, wait, why is your service not buying this higher
quality service, or if they are not buying it then I can switch away from them. It
also tells those application companies that there is now to buy prior to the service
so they are able to compete as well. Finally there needs to be disclosure of
network management policies. Estimates suggest that maybe 50 to 60% of total
Internet traffic is pier to pier video file sharing. So every -- and that's probably
about 90% on college campuses. So every Internet provider needs to manage
their network somehow so that people can get emails through or can use voice
over IP over the top connections. And those are necessary for any provider.
However, they should be disclosed. So if I, for example, like Harold Feld, like to
share home movies and those might be subject to these sorts of network
management policies I can look at who has better policies for what I want. And
that is part of, I think, a vibrant marketplace and should be part of any disclosure
regime. So let me get to a couple more points on the plan -- planting trees front
that I think will come from this. The first one is in addition to the basic issues I
mentioned I think there is a valuable role the commission can play as a little more
of a kicker. This is described in a paper with rob Atkinson called the third way on
network neutrality and it's on the ITIF website. The idea here is when consumers
think they are getting broadband they think they are getting best efforts, you can
do whatever you want with it broadband. And so when a level of broadband is
out there, I would suggest that level of broadband needs to be best efforts.
There can and should be room for prioritized broadband, above and beyond the
best efforts made available. But our basic claim is that as a matter of giving
consumers what they expect, it's vitally important that when a provider says I'm
selling broadband, they be held to the requirement to sell best efforts broadband
of some reasonable connectivity. Now, what makes this issue hard for the
Federal Trade Commission is the FCC set the reasonable level of connectivity as
John Thorne mentioned, in 1998 at 200 kilobytes per second. I think people
laughed the first time that was mentioned because it is laughable. Very few
people would call that broadband today. What should be done about enforcing a
commitment to best efforts broadband of a reasonable amount of connectivity in
the absence of that role being played by the FCC puts the commission in a little
bit of a quandary and I think there are ways they could come up with another
reasonable level through surveys, consumers expectations and the like. But the
best of all worlds would be if the FCC would be willing to revisit what is clearly an
anachronistic amount because they are after all the expert agency on this. So
that's the second major prong. And I would say that a third prong would be that
there has to be eventually some model of self-regulation here. In other industries
that have grown up, there are systems, for example, in advertising like a national
advertising review board where they refer the worst cases to the Federal Trade
Commission. The FTC could be besieged with complaints and this could pose
institutional challenge. And so one area of investment of building -- planting
trees, if you will, is how to manage the challenges of cases that could come in,
and both consumers and applications providers are going to be concerned
parties, applications providers may be the ones with a little bit more on the
resource front. But they are both going to bring, you know, violations, that is a
firm says my policy says X and in practice they are doing Y, they'll bring that to
the attention of the FTC. I think overtime I think a more effective regime will be
one where there is some self regulatory forum that can handle such matters in
the first instance, referring the matter to the FTC. So why does all this matter?
Well, the reason it matters is because in many markets the type of robust
disclosure and consumer awareness doesn't necessarily happen on its own.
Nutritional information, for example, or restaurant hygiene, the value of regulatory
oversight actually brings more consumer awareness and more effective
consumer choice and has shown to actually increase output in those markets.
My full testimony which got posted will give you the citations on that. But it's
worth knowing that this is a constructive role that will make the industry better off,
and the industry can rely on consumers knowing what they are getting, being
more confident in what they are getting and overall being more satisfied as a
result. Finally, consumers can play a role that, miss Chairman Deborah Majoras
talked about which is being their own best activist. So one very healthy part of
the Internet is consumers are activists about telling providers, hey, I don't want
this. And Chairman Majoras pointed to in her speech in connection with the tech
aid hearings that face book rolled out some feature that was thought to be anti-
privacy and they complained and face book changed their policies. Where you
live in a world where policies are more notorious, open and known, people can
complain about them. The problem is if those policies are less known, more
opaque, it's harder to have that sort of dynamic take hold. So I would encourage
the commission to move forward in this area. There is a lot they can do. It's
going to take some work. This hearing I think is only the beginning of building
the institutional confidence and capabilities. It's going to require cooperation.
There is a lot to learn from the FCC, from state commissions. But there is a
vacuum here and there is an opportunity, and I look forward to seeing the
commission move forward on this front. Thank you.
>>MARY BETH RICHARDS
Thank you. Dan?
>>DANIEL BRENNER
Thanks very much, and to everyone here for coming in for what I think is an
important topic and one that I think is one that the Federal Trade Commission is
right to take a look at. Let me make several points about at least the cable
broadband product. Many of you know this, but how do we get here? Well,
cable invested more than $110 billion since 1996 in private risk capital for a
number of reasons to upgrade its network, but not the least of which was to roll
out hybrid fiber coaxial networks that led to the broadband infrastructure we have
today. But we were first to market residential service, you all know the story of
how DSL followed cable in terms of residential service. And we validated what
was a questionable business at the beginning. You know, could you have
broadband in the home. The answer is a resounding yes. But today it's available
to more than 94% of the United States with speeds from 5 to 15 megabits per
second. About 29 million residential cable customers at the end of 2006, so
we're probably coming up on 30 million by now. There are almost 19 million DSL
customers so that gets close to 20 million, so nearly 50 million DSL and or cable
customers. That's a pretty good record for the United States, think, for a product
that's less than 10 years old, and there are new competitors whether it's BPL,
obviously wireless, you can't go into a coffee shop without having the opportunity
to make wireless connections. And this raises a product that's new and different
and sometimes very complicated, and sometimes very simple. Regulatory
questions. What are the material terms of the relationship between the customer
and the broadband provider? Pricing, purchase and installation, privacy, and I
think what has been the focus of this panel, speed and what the representations
as to speed, how can it be measured, can it be measured? Is there a way to do
that in a meaningful way, that's meaningful for the customer? Well, most of the
providers have links on their home pages directing subscribers to not only
subscription agreement that people tend to sign quickly when they are getting the
service because they want to start it right away, but also to their acceptable use
policy. So going to Phil's point about disclosure it's there. I don't know how
many people on the panel were in the audience that actually went to the Web
and looked up Comcast, or Time Warner or Cablevision's acceptable use
policies, they are there in black and white. There is no mystery about what is or
isn't permitted. What you won't find in those agreements is typically guarantee of
speed. That's because not only has the speed changed all to the better and
typically without an increase in price, it's one of the nice things, one of the good
stories about the cable broadband is that we've increased speeds without
increasing prices over the years. At least several of our companies have. But
because it's changing, and we'll get into how you measure speed a little bit in a
moment, it's not something that's actually in the user agreement. There are
some restrictions on user agreements. They are to be used for private
residences, for noncommercial uses, to be used only by the signer. You are not
supposed to buy one subscription and then use WiFi to share it with all your
neighbors in the apartment building. And those policies are out there. You are
not supposed to use it as a -- you are not supposed to use your computer as a
server or as an email, junk mail FAX, a junk mail email server sending millions of
emails using your residential subscriptions. That's not what we are selling for
residential customers and they should talk to the cable company. I'm sure the
same is true for the DSL company if they want a different kind of product. So
let's talk about pricing. Pricing is unlike I see my friend Mike Altschul here, I have
to say the pricing of cable broadband is a pretty simple affair. It's one price for
speed, sometimes they have tiered service, it's pay one price and generally
speaking it's all you can eat within the terms of the acceptable use policy. That's
a whole lot different than a typical wireless plan or even some cable video plans
which are more complicated in terms of tiers and optional offerings, so pricing is
very straight forward in the broadband product. I think the same is true for --
DSL. It's even better than in some way for the traditional telco pricing, where if
you want call forwarding they are an add-on. Fortunately pricing is not a
complicated issue for the consumer. Privacy, well, with the cable industry
generally recognizes section 631 as applicable to its cable service though there
have been some cases that raise questions about that. That's a very very strong,
that's the strongest privacy regime in any of the media today in terms of
disclosure to the customer whenever information is passed on to a third party.
Purchase and installation. Again, I think we have really good news here. No
market failure. We have a separation of equipment from service. You can buy
your modem. You can buy it from hundreds of authorized manufacturers, cable
does not link equipment and service here, as some of you know from the FCC
docket, this is a very complicated issue on the video side because we've not
been able to achieve the retail marketplace there that we'd hoped for in terms of
set top boxes. But here in the cable modem world the retail market is alive and
living. You can go down and buy your modem and that's the end of it, or you can
rent it if you choose to, from your cable company. So let's talk about speed a
little bit. Typically the representations by cable, and I imagine the same is true
again for telephone companies and other broadband providers, is that it's claim
of up to a certain amount. And in every one of the ads that I've looked at on the
Web and in disclosure documents, to the customer, it's always statements like
speeds will vary, and it's up to a certain amount. And anyone familiar with the
Internet knows that speeds can and will vary, depending on the kind of download
that you are doing, and other things that are happening on the net at a certain
time. Not the least of which is how many customers are on your node and are
active at that time and what they are downloading. So if you are download
together front page of the Federal Trade Commission website that is going to be
at the very highest speed and very like lit the highest speed guaranteed or even
higher than your provider offers it. If are you downloading a movie with lots of
bits over a fairly long period of time and there are others on the same node, that
speed may vary. It may not be the same speed that you will get for a quick
bursts download of a single Web page of text. So how do you test for speed?
Well, with regard to online speed tests are there are ways for consumers to
check speeds but they are not always accurate. There are these broadband
speedometer Web sites that measure it. But they may not tell you as much as
some consumers would like because you sort of -- they vary in terms of how they
measure, and you probably have to do many many tests on the same website to
get kind of an average speed to get an adequate sample size. So that is a
challenge for actually measuring it. And needless to say there are many points
between the key strokes of the customer and the download in which the speed
can be effective. So does the website that you are seeking a download from
have ACAMI where they have local server farms that make the download faster?
Are there other complications at the server where you are seeking it quite apart
from any server farm to bring it closer. We all know the famous story of
downloading the Victoria secret streaming video when so many -- so much
demand was placed on it nobody could get a download. Are there other people
on your node at the same time that you are trying to download? All those things
can affect the speed of the download. So it's almost impossible to do a realtime
diagnostic. Sometimes you know, you seek a website and you get a failed
knowledge response. You do it again and the page comes. We've all
experienced that. It has probably nothing to do with speed and everything to do
with other things in the Internet. But the customer solution there is to go back
and get -- try again, and when you refresh you get it rather than trying to analyze
the speed. So the most important and overarching point I think from a regulatory
standpoint particularly given Chairman Majoras' speech on this which I think is
launching this very useful inquiry, is there a market failure.
>>SPEAKER
Are customers routinely find together speeds promised are not being delivered to
the effect that they are not get together product they want. Everything tells me
that that isn't the case. The ever increasing number of people who elect to go
from dial-up to broadband, this product is a desire step up in service and quality.
The amount of time spent in the home using broadband. During the last four
years homed usage per person has risen 30% from 25 1/2 hours per month to 33
hours per month. All that, of course, requires investment by Telcos, cable,
wireless networks because the greater usage obviously means greater demand
on the network, and, but we have kept up because if customers found this
product to be not what they had in mind, we're giving them speeds that were
inadequate, customers I think would find that they wouldn't be buying this. There
is obviously competition for some, lots of competition for broadband in some
areas. The FCC has surveys that show sometimes more than a dozen
broadband providers in some areas, if you add all the wireless providers in. But
in any case, a lot of customers have, you know, at least two choices and maybe
more with wireless. So by in large I would argue that at this point there is not a
market failure due to the difficulty customers may have from time to time in
establishing what their exact speed was on a particular download. You might
want to compare it, you know, to mile per gallon claims by companies like Honda.
I know it's slightly different because those measurements are established by
Honda, but, you know, Honda gives you an up to number of miles per gallon and
most customers of their vehicles, if they have problems with their cars it's not
because the cars aren't quite measuring up. They really do the job for most
people who buy those cars that they expect to do, even if the number doesn't
quite always match. Now, is that a federal trade matter? I think to some degree
you have to ask are customers basically happy with this service and are there
things we can do to improve that in terms of explain together product better? I
think it is incumbent upon all providers of broadband to communicate with
customers who are having a problem, or who do find something not working in
their broadband service. And I think that our companies are committed to doing
that and to doing more of that as this product rolls out. We're probably beyond
the nascent period of broadband in this country, the early early days of it, but we
are still at a point where many many homes don't have it. We hope as a nation
that all homes eventually have broadband at a price they can afford. So I would
just say to conclude that, while this is a question that bears watching by the trade
commission, we welcome that, there is just so market failure here and because
of the increasing interest in broadband, we should allow networks that are
providing it to continue to grow and expand, and to avoid complicated monitoring
or reporting requirements that I think would do nothing but going back to Phil's
analysis, add more trees and then cut them down.
>>MALE SPEAKER
I can see the forest for the trees.
>>MARY BETH RICHARDS
One example of when people weren't able to access a website was at 10 of 2
when every federal employee was trying to look at the OPM website to see if in
fact we were closed for the day. We'll move to Jeannine.
>>JEANNINE KENNEY
Okay. Thank you. Thanks to all of you who have braved the weather to come
here today. I'm going to take a slightly different tact here and hopefully it won't
be one that's unexpected by FTC's conference organizers. I've made it pretty
clear that I think the most important consumer protection issue and in terms of
the Net Neutrality debate is the anti-competitive impacts, the anti-consumer
impacts of network discrimination. I think these disclosure issues are important,
but I don't think that's the issue here today. And in fact, the elephant in the room
is whether or not this disclosure of prioritization practices is sufficient to remedy
the harm. I don't think there is any question that disclosure is an inadequate
remedy and in fact doesn't even address the issues at stake. I think the other
major consumer issue here and I'm not going to touch on it much. I hope Ron
does, is privacy, and the technology that broadband providers will use to facilitate
tiering and network discrimination, poses some substantial privacy issues.
Privacy is a top concern among consumers. It always polls number one in every
survey that we do at consumers union. I don't think anyone has a full
understanding of what sort of security and vulnerability issues are at stake with
deep packet inspection technologies. No one wants to talk about it. It's a
complicated issue that stems far beyond what we can address on this panel and
in fact there are no privacy experts represented on this panel today so my
recommendation on that issue is that FTC take that up separately, and give it
some pretty serious concern. Now, first, why do I think the biggest consumer
issue are the anti-competitive impacts, network discrimination?
>>SPEAKER
It's pretty clear and we've seen this kind of behavior in every other marketplace
where telecommunications or media providers have network power. They use
that market power to exclude rivals, to exclude competitors. And that's because
in the broadband market there is not competition. The notion that there are 12
broadband providers providing substitutable services in any market in this
country is laughable. And the data show that. So the notion that if you disclose
your prioritization practices, consumers will simply walk with their feet elsewhere
is pretty ridiculous if you think about it. If I don't have another alternative, where
am I going to go? And the notion that if consumers don't like the practices they'll
complain to their provider, and the provider will change the practice is also pretty
suspect when you consider that 75% to 80% of the public would prefer to have a
choice of cable channels and Mr. Brenner's members refused to provide that
choice. Now why is that? Because consumers can't walk with their feet. There
aren't unsubstitutable services for that particular product market. So our concern
from a consumer standpoint with network neutrality is what happens to
innovation, what happens to competitive services that consumers currently have
access to via the Internet that would be foreclosed in a nonneutral network
world? And I think those implications are pretty significant. So let's talk a little bit
about consumer disclosure. I mean FTC's own principles recognize that
disclosure is not always an adequate remedy. It's advertising principles
recognize that. If you look at the harm of network discrimination as anti-
competitive effects on online service and content providers, then you have to
look at this issue entirely differently. And what I'm going to recommend is that
FTC take a look at its retail slotting allowances report back in 2001, and if you
substitute a few of the words in that report, you have the network neutrality
debate. And that report was the result of a process much like we are going
through here today where I think there was inadequate consumer representation
and adequate representation of all the stakeholders in the debate. But the issue
in that report was not disclosure. The issue of disclosure is to the anti-
competitive impacts of slotting allowances in the retail grocery industry wasn't
even mentioned. The issue was the impact on smaller manufacturers and the
access of all -- alternative to consumers, in the broadband market we simply
don't have those alternatives. So I don't think the issues here are as clear in
terms of the remedies as disclosure, and I'm raising this issue as a significant
one because I've been asked repeatedly, what if we just disclose? Now, how --
so let's talk just briefly about in the few minutes that I have remaining, about how
consumers might react to that disclosure. So say they are really unhappy with
the fact that their broadband provider advertises and they want to switch. Well,
let's say they buy a bundled service and they've got a package deal for that
service and if they drop one of those services they are going to pay the full price
for the other two. Are they going to switch because Amazon loads faster than
Barnes & Noble? Or are they just going to buy the new Daniel steel novel from
Amazon.com putting Barnes & Noble at a disadvantage. Are they going to want
to change their email address simply because some services load faster than
others? Probably not. The point is that the abuses have to be pretty severe for a
consumer to go through the hassle of switching their broadband provider,
particularly in a bundled world which is where the competition is at this point.
And at the end of the day it isn't realistic to expect that in your disclosure of
discriminatory practices does anything to police the anti-competitive
discriminatory effects of a nonneutral world. So I'm happy to address many of
the other issues that the panelists have raised in terms of whether disclosure is
even adequate now and obviously I don't think it -- I don't think it is. I think it's
incredibly unclear and all you have to do is read one ad for bundled service in the
"Washington Post" on any given day of the week. But we can get into those
issues. But that's not the issue here today. We've been talking about network
neutrality for two days and suddenly we're going to have a discussion about
broadband disclosure policies. You can't have that discussion without
recognizing that disclosure as a remedy to nonneutral anti-competitive harms is
completely inadequate and frankly shouldn't be on the table.
>>MARY BETH RICHARDS
Thank you.
>>RONALD YOKUBAITIS
Thank you. May I step up to the podium?
>>MARY BETH RICHARDS
Sure.
>>RONALD YOKUBAITIS
Can everyone hear all right? Let's get a little closer. Good. I'm going to pull it
down here. Good afternoon all. Glad to be here. Thank you to the FTC for
putting this on, and letting us all get our say. We come from Texas, Austin,
Texas with data foundry. We are a data center company. We can house the
servers and adequately provision them to where they don't go down. You've got
plenty of capacity. We put multiple carriers in there to where we have plenty of
band with width and plenty of redundancy to where there is capacity. We grew
out of an Internet company. One of the ones you, a lot have forgotten about. We
started out in dial-up in San Antonio, Texas. My wife said to one of my business
partners, we got so early on the Internet we got the name Texas. But what we
did was bring it when you didn't have it. There was no Internet. You couldn't get
on the Internet prior, because I tried to get on the Internet. We're talking about
the open-ended Internet, not this thing they call broadband, which is broadband
private Internet protocol network but it's not open. I'll touch on that later. But this
was the open Internet. Go anywhere, do anything. Couldn't wait to get on it.
Found out about it in 1976 from Stewart brand's book Cybernetics frontiers II.
Okay. And tried to get on in 84. That's when I found out it was a closed deal.
I'm a small business guy. Pay tax, create jobs, run a small business, support my
family. I couldn't get on. I wasn't a member of the government, big education,
university, okay, military, or a big defense contractor because that's the way it
grew up. It was a closed network. It wasn't open. When did it get open? It got
open right around 93-94. I will safe 1994, because it was NSF ran the backbone,
nonprofit. There was a router out in Palo Alto run by kicks, commercial Internet
exchange which had a few members, Sprint was among them, BBN, and if you
were a member of kicks, of which they were, it had pretty high entry level you
could route commercial traffic, very limited. Well, I tried to get into kicks. It was
$12,500 a year up front. Well, you know, we were founded with the down
payment on our house. We deferred the house, started an Internet company.
I'm married to that kind of entrepreneurial lady. So 12,500 was more. I asked if
we could make payments. Long story short, Sprint let us hide behind their IPs,
we bought connectivity to Sprint and Sprint started promoting an IP network and
we opened up in October of 1994 on Sprint, and hey, it was people lined up to
buy Internet. There was such a pent up demand. And it went from there. There
requester quickly propped up like mushrooms in the next year, two, three, dial-up
Internet providers. We started pushing it out of the big city of San Antonio,
Austin, sorry? Maybe I should have sat down. And why am I saying this? This
is how the Internet grew. This is the open public Internet. It wasn't public. It was
closed before that time. And it really grew fast after that. Started putting, and
within flee years, I don't know where this history ever comes, but it just,
broadband started with the cable companies. No it didn't. It started with ISPs
like us, with DSL. I'll get to that. What happened was in three years, 90% of this
country was covered with dial-up Internet and Internet providers without the
subsidies, without the promotion, without the national plan. Basically without
Wall Street. And what happened during that period, too, is we started
broadband. How did we do it? You know the old burglar alarm, you know, that
you had a place of business and you'd get a telephone line over to the security
company and it would ring there, mostly false alarms? Well, that was copper,
straight copper. You could put DSL equipment on that and it was tariffed which
is a word of art mean together telephone companies asked the regulator what
price they want and the regulator makes it and it sounds like the regulator made
the price. The telephone company made the price. These prices were often
under $10, maybe $13. You could get that line, put your own physical
equipment, your own investment, okay? And a number of small ISPs like us
started doing that to move broadband because we were technical people. We
can build, run, servers, do all that. That is difficult I'm going to say with all due
respect to the cable companies. That's not their shtick. And what happened was
as soon as the telephone companies found out we were doing it, withdrew the
tariff. You couldn't do that anymore. So I'll say between that time and when the
cable companies started doing it in the late 80's because Time Warner
Roadrunner started in Austin so we got to see that, we got to see it up close. So
I can see that. Then the DSL came on. But that was open Internet. But we
didn't have access to it. We tried to get access under open access at the FCC.
We're the ISP called Texas.net then sued the FCC to enforce its own order to
have open access. Well, it's kind of like the UN. They have a resolution and
don't enforce it. So they just missed our petition and didn't enforce their own
order. So we may have a market failure but we've got a regulatory failure. They
can go down there and withdraw the tariff. We also were moved out of the rule
areas with Verizon. I brought this up with Mr. Thorne. This gentleman here.
We moved out in the rule areas with dial-up and we were doing that on, with
remote call forwarding. And as soon as Verizon started seeing what we were
doing and serving these smaller towns out of the large areas that didn't have any
Internet, they quadrupled the price of the tariff and we could no longer offer $20 a
month all you can eat out here in these small communities that wanted it. This
has been the -- so when you try and do it and we put our own capital up to do
this. This wasn't the -- and we didn't pay our shareholders 3.9%, 4% dividends
like Verizon and southwest earn bell do. We invested that money back up. We
didn't ask to have that investment protected in our profits forever protected, that
we got a market. But anyway, I wanted to put that. But I referred to broadband.
We have a truth in packaging problem here, because we've had this
conflagration, this broadband term. Well, when they say broadband they really
don't mean broadband Internet, and that's why when we had the example, last
one of well, we want to have Johns Hopkins and this and that, I don't have any
problem with that. We'd do that, too. That is a circuit running IP private deal.
But when you use the word Internet, it is not this little private closed club that you
prefer some and you don't. It's open and that's what the customer wants and
they want access to it. So I think there ought to be some truth in packaging
some consumer fraud, if you -- but it's been pushed together, and I think
intentionally pushed together to confuse the public. It's not the Internet. It's
broadband. Now, here is a broadband Internet but broadband IP private
networks head on it. So I wanted to mention that. We also have this term
"Content." Where did this content come up? We just talked about packets and
bits an all the sudden content. We have the cable companies are content
providers. Google is a content provider now. Okay? Well, I would say that all
the people looking at us on the Web today worldwide are content providers too
that aren't brought into this two-dimensional economic model, the Ph.D.s and
economics are talking about. There is another one besides content and access,
it is all Y'all out there, all the kids that are swapping content. They don't care to
go to the cable company. They don't care to show up on their radar. It's
MySpace to something or other or just straight pier to pier. In the Amsterdam
Internet exchange I heard a figure of 60% was pier to pier. I don't know that
figure. But I know there are published figures on the Amsterdam Internet
exchange which is very open which is surpassing anything in the United States
that 19% of the traffic is using that traffic. You may all not remember use net but
that was the open network before the Web and it's still here and it's very
broadband. But in Europe 19% of the traffic is use net, a whole bunch of
American companies are over there running servers and providing it. 13% is P
2P. That is all user generated. All the folks out here and not represented in this
room barely talked about, you know, they don't know your dog on the Internet
because, you know, that's who we are talking about. As I say when we opened
up in San Antonio we were bringing Internet to the unwashed. We weren't a part
of the closed clique that got to be on it. This was out to all y'all. This is you in
your underwear back home. This was nobody has got the Internet, got the power
of this global network. And all of us are talking over it today and people are
participating. It isn't just this room. This isn't the closed conversation among the
folks that all know each other here in Washington. It's everybody. I hope some
of those Dutch customers of ours are running their bikes around there can ride
into the FTC and say right on, you know. We're sitting on a higher broadband
network. We're kicking your guys and all the video games and we're laughing at
you, and the Japanese in Hong Kong customers saying the same. The number
was floated earlier today that well, we're 12th in the Internet broadband
penetration. That is not correct. I wish it were. We have continually dropped.
And when we started talking about this back in Texas we didn't call it Net
Neutrality. It was before the term. We called it customer choice in broadband
applications, services and devices. You know, a market, let the customers
choose and have an open market. Well, we didn't quite succeed in legislation but
we got the only Net Neutrality legislation passed to any legislative body I'll say
that, Texas Senate, by partisan, Republicans sponsored it. This is a by partisan
issue. Up here it's red and black and Cripps and the bloods and one guy. This is
everybody. It's a Republican issue, it's a Democrat issue, it's a people issue, it's
our kids' issue, it's our future. But according to the latest I've read and it's FCC
filings by Adleson and Mr. Cops, commissioner cops, according to the ITU,
United States is now 21st in the world in broadband Internet. The implications for
our innovation, we've got closed networks. We've got discrimination. So I'd like
to speak to that. You know, the security of this -- the first speaker, and it was a
Dr. Coha from Carnegie Mellon, yes, sir. You discussed very clearly the type of
discrimination we'll have, the good and the bad. Okay? You know, bits aren't
more than just the quantity of the bits. We've got a qualitative aspect to these
bits. Okay? And it's kind of like, you know, we thought packets were packets,
bits were bits and they went best efforts and no one knew what was in them
because the routers didn't know. Well, now Cisco, and I didn't -- I tried to route a
question up here to Mr. Pepper here yesterday for Cisco, but it got -- was a lost
packet, hit the bit bucket over here. Okay? But I'm going to ask the question
now of Cisco. We're big Cisco customers. Is this deep packet inspection that
we're going to tier and qualify these bits, is this the same packet inspection that
goes on in China that makes the great fire wall of China to where if I happen to
mention in my packet few long gong, that particular spiritual exercise or consult
or practice or religion, whatever, I'm not sure what it is, but it's whatever it is, the
gatekeepers of those it is go and find them and give them extra special
treatment. Okay? You know, that kind of tiered treatment we're talking about.
And you know, we sit here like I'm saying, you know. That kind of content
filtering, content routing that we've talked about. Well, I'd like to talk about that
content routing --.
>>MARY BETH RICHARDS
Real short.
>>DANIEL BRENNER
I see this discussion we have in the room, do I have one. I'll get it. These little
cards you ask the questions on, they come up and this is perfectly legitimate.
Like a court of law.
>>RONALD YOKUBAITIS
They come up to the router which is the FTC representative here. Keep this
civilized, and no, I'm serious. We have to. You know, this is the technology we
have in this room. I agree to it. We abide by it. We don't interrupt. We keep
quiet. And we route our questions to the speaker. But then the quality of the
question is examined because I've seen a lot of complaints and a lot of questions
didn't get answers, brought up. It was packet loss. It wasn't routed directly the
fastest best way, because someone else got that priority. I'm not -- I'm just
saying that's what we have. But it so happens mine got in the bit bucket. You
know. We can resend it which I am now. Okay? This is it. It's open and read
and the content judgment is made. I will submit to you we have serious problems
that I have a law firm who called us when they found out the NSA was reading
stuff, these are insurance defense lawyers. These are not raving, you know,
libertarians. These are lawyers who have a duty to confidentiality and want to
know if we can guarantee that their email on our network and servers is not being
read.
>>MARY BETH RICHARDS
We need to let --.
>>RONALD YOKUBAITIS
I couldn't guarantee that.
>>MARY BETH RICHARDS
We'd to let speakers have time. We're running out of time.
>>RONALD YOKUBAITIS
Let me just conclude. I hope we can discuss later the privacy of these tiered
networks. I do not want to have the great fire wall of China installed here. Thank
you very much, and thank you to the FCC.
>>MARY BETH RICHARDS
Okay. Tim, you're up next.
>>TIMOTHY MURIS
Okay. Can you hear me all right?
>>MARY BETH RICHARDS
I believe so.
>>TIMOTHY MURIS
Okay. Well, thank you. I'm about 25 miles to your west and watching on the
Webcast. I was asked to speak for about five minutes in introduction so I will.
Let me make four points. The first is that the Federal Trade Commission has an
important role in the debate over what is sometimes called Net Neutrality. The
FTC has broad jurisdiction to address antitrust and consumer protection
problems in most of the economy. The FTC's role in this debate transcends
jurisdiction. As this workshop shows and has Chairman Majoras said yesterday,
the FTC has a broader mandate than law enforcement. The commission
historically has used its full range of tools, law enforcement, hearings and
workshops, studies, advocacy and consumer and business education to protect
consumers by defining the proper role of law and regulation in industries ranging
from wine to mortgages to wireless Internet access. This takes me to my second
point. At the moment the business of providing consumers with Internet access
is not specifically regulated. As the FTC observed in the press release
announcing this workshop, this has caused great concern to some who fear that
in the absence of more direct regulation consumers will be harmed. This push
for regulation is not based, however, on the current robust marketplace the
instead it is based on a suspicion about two issues. First, the durability of the
competition that we currently observe, and second, the ability of existing
enforcement tools to solve whatever problems that arise. I take a different view.
To paraphrase the title of a famous antitrust article by the late Phil ARITA, the
term "Net Neutrality" is an epithet devoid of analytical content. In saying so I am
not denying a role to the law or the FTC in this industry. I have previously
described the relationship between market forces, common law and competition
and consumer protection policies as a three-legged stool. Today most agree that
a properly functioning market is the best mechanism for protecting consumers.
In a competitive market firms that fail to meet consumer demand for high quality
low prices and accurate information face harsh punishment. They lose sales to
their competitors. The role of government is not to pick winners or losers.
Instead, the powerful combination of contract, property, and tort that we call the
common law provides the essential building blocks of competition. They define
property rights and provide the default rules that enable consumers to engage in
the voluntary exchanges that lie at the heart of the market mechanism. The
government then plays an important but limited role to supplement the common
law. It acts as a check on conduct that interferes with the proper functioning of
the market, particularly collusion and fraud. I do disagree with some of my fellow
panelists regarding the consumer protection prescriptions they would apply which
I hope we account to some of that in our abbreviated question and answer
session. My third point is that the market for broadband access appears quite
competitive. A decade ago consumers almost universally relied on dial-up
services to access the Internet. Today they are turning to broadband in ever
increasing numbers. Cable and telephone companies now compete head to
head in much of the country to provide consumers with broadband access. The
technologies have very different costs and benefits and neither has emerged as
dominant. In addition, nearly every one in the United States has accessed to
satellite broadband. Numerous other providers are entering now, including fixed
and mobile terrestrial wireless providers and power companies. We heard a
comparison earlier to slotting allowances. The FTC's two reports on the subject
and a follow-up study using the FTC's data do not support the anti-competitive
theories of slotting allowances. Fourth, and in closing, there simply is no reason
for the federal government to intervene massively in the seemingly robust
industry. Again, that doesn't mean that there is not a consumer protection and
antitrust rule, but systematic regulation of the type called for comes at high costs.
However well intentioned, prospective regulation inevitably limits competition.
Although preemptive intervention can sometimes be justified, the case has not
been and in my view cannot be made in this industry. If problems of the sort
imagined by the advocates of regulation emerge, the appropriate law
enforcement authorities have the jurisdiction and expertise necessary to address
them.
>>MARY BETH RICHARDS
Thank you. Okay. This is the consumer protection panel so I'm going to ask the
panelists to go down and tell me what two things the FTC should be doing with
regard to consumer protection in this area, and also what two things we should
be fearful of, or we should be paying particular attention.
>>MALE SPEAKER
Let me start with the latter. Think there are two arguments I'm fearful of. We
heard them both on this panel and I think I'm misconstruing Tim here and he can
correct me. First is that we can trust common law tort actions in this area. I'm
pretty sure that Chairman Muris, you know, didn't mean to say this so let me
knock this one out. There are serious collective action problems for consumers,
and also expertise issues for regular common law courts. The FTC has an
opportunity here to basically be an advocate for consumers, and to take cases
consumers would not prosecute on their own and with relatively small damages
to individual consumers, but to help police the marketplace generally. I do think
historic Elle in telecom that role has been played by state public utility
commissions. Their jurisdiction here I believe is questionable at best and that the
FTC has a key role. That's one fear. The second fear is the one that I heard
jean made, the argument that disclosure concerns shouldn't be on the table. To
that I would say to any consumer group that makes that argument, be careful
what you wish for and don't let the perfect be the enemy of the good. I don't
disagree that the competition policy concerns are very important. Some might
say they are more important than consumer protection. But there is an obvious
opportunity here on the consumer protection front, and I would be very saddened
to see this commission not move ahead there because it isn't also able to do
something more definitive on the competition policy front. The two things to keep
in mind and proceed, the first is the point Ron made which is really important,
which is there are going to be different Internets, and there should be different
Internets. There will be private network services like those being used today by
companies like Comcast for the digital voice product or AT&T and Verizon
tomorrow for IPTV. That's a different animal. There is also going to be prioritized
traffic and I believe that has a constructive role and will bring consumer benefits.
But finally there must be, and this is my final point and the most important one,
the continuation of the best efforts Internet, when consumers get broadband
Internet access, that's what they believe they are getting. That's what the
Internet has been and we can't lose that, because that's what gave
entrepreneurs like Ron a chance to invent something new, the fact that there is
enough of an opportunity for anyone to provide services or applications on a best
efforts basis. So as I mentioned and described further in the paper, that's a key
role, in addition to the other points that people have discussed.
>>MARY BETH RICHARDS
Thank you.
>>MALE SPEAKER
The two things that I think should be on the front burner of the FTC are fraud on
the Internet. Whether it's email fraud, phishing, other abuses of consumers. This
goes on day in and day out, and it's particularly, as more and more people
subscribe and use the Internet, go beyond the kind of tech savvy people that may
have been the early adopters to the Internet to where broadband is in the home
and young people and very old people rely on the Internet. This is going to be,
you cannot ever close the doors at the FTC. It's a 24/7 obligation because
people are hurt by fraud on the Internet. Really hurt. The other thing I suggest in
this context is the continued monitoring of policies and practices, I think
educating policymakers here of what the practices are as the development of
broadband continues as speeds increase, as tiering of services proliferate, and
as we maybe see experiments and models of different pay systems where going
to Jean's point, other than -- the only person under the current system who can
pay is the customer. There may be others who may want to be able to enhance
their content, and think we should see how those develop, and see whether there
are abuses. We shouldn't assume that there are always going to be abundance
and we shouldn't assume that every possible economic model is -- doesn't
violate competition or consumer protection policies, but we need to see some
things in the marketplace rather than shut them down by forbidding any kind of
experimental behavior under the epithet as Mr. Muris called it on Net Neutrality.
The two things I'm fearful of, number one related to my last point, declaration of
market failure before there is market failure. There has been no market failure
here. If anything we're at the beginning stages of all the things broadband will do
for our economy and people's lives, for independence, for freedom, for all the
things that were spoken about earlier, and we've seen also when the government
puts up a fancy regulation anticipating some fault, I'm reminded that I'm at the
commission that first reviewed the Time Warner Turner merger, and then when
the Federal Trade Commission had finished with it, it wept over to your former
commission, the federal communications commission, and added an additional
requirement on advanced IM messaging, instant messaging, that should AOL
ever get involved in advanced messaging they would have to comply with a
whole set of requirements that were dreamed up by bureaucrats at the federal
communications commission. Of course wanting to get the merger done Time
Warner said okay, whatever. Those were on the books for a couple of years,
until in an embarrassment, federal communications commission had to get rid of
those requirements because this advanced IM system never even emerged. So
the government dreamed up some parade of horribles, but the parade never
went down Main Street and eventually government itself got rid of those
requirements. So let's not invent restrictions on the Internet that haven't been
justified by a clear showing of market failure and a clear showing that the remedy
will solve the problem that's been identified. And finally, my other fear is that we
get into a world of industrial policy in this country where, whether it's the 12th or
the 22nd or the third, wherever we are in the broadband race for adoption, that
we begin to subsidized broadband providers where providers already exist. The
phone companies and cable companies and wireless companies have invested
real dollars in the ground to provide a service, I am -- I as a taxpayer, I am
offended by the idea that government will then subsidize a second, third and
fourth entrant in that market all in name of some industrial policy to promote
broadband. It's not right when private dollars go into a marketplace that the
government dollars follow for the second, third and fourth provider.
>>MARY BETH RICHARDS
Okay.
>>JEANNINE KENNEY
Just to clarify my position on the disclosure issue. Operating policy disclosure is
always important but it's not a remedy to the harms of the discriminatory effort
network. It just isn't. You have to look at how the disclosure affects the
consumers' decision to switch broadband providers as well as how they choose
online content and service providers. That's where it's inadequate. So let's be
clear about that because, you know, this is hair a see for a consumer advocate to
say don't look at disclosure. What I'm saying is don't look at disclosure as the
excuse not to take real action on what is really an issue of competition in the
online marketplace. In terms of the -- one other point I wanted to respond to Mr.
Muris, he's right in that the issue of slotting allowances is different from the issue
before us, and the biggest difference is that the grocery retail industry is far more
competitive than broadband industry, and yet it was sufficient to generate the
concerns, the concerns were sufficient to generate an 80 page report about the
competitive impacts where disclosure was never even mentioned as a potential
remedy. Now, the two most important consumer protection issues, think FTC
has to look at, I'm going 0 confine this to the issue before us in this workshop
which is on line marketplace discrimination, privacy. Completely unexplored in
this workshop. We don't even have the right players at the table. We've got to
look at the technology. We've got to look at the implications for financial security,
for security of consumer private health information, security and privacy of just
basic email communications and everything else. And the other major issue is
choice in competition in the online marketplace. It is -- it astounds me that one of
the recommendations is that if you disclose your prioritization policy that I can
call Vonage and tell them to pay you, the broadband provider for faster service
so that you, Vonage, can then hike my rates. I mean that issue is -- I mean if you
want to look at how you can exclude or effectively exclude, that's one way. So I
just raise that to emphasize that disclosure is not the issue. Now, the two things
you need to be really fearful about, the loss of competition in the online
marketplace and closing the barn door after the horse is out. If you rely on
antitrust enforcement and other remedies to deal with this problem after
discrimination has already occurred and someone -- and a competitor has been
excluded from the marketplace, the damage has already been done. The
damage to the consumer has been done, the loss of competition, the choice in
the marketplace has been done. It's been done to the economy as well as those
competitors' opportunities in the marketplace are foreclosed.
>>MALE SPEAKER
Can I respond? I'd like to respond to the privacy by just looking at some of the
terms of service of the providers. And why you know, AT&T had to agree for a
limited amount of period in their merger with Bellsouth to not discriminate as to
the source, destination, content of the packet for 30 months. And that's really
probably a good chance until they get their equipment installed it's a freebie.
They probably aren't set up to do that just yet. But when they do, their own terms
of service define the contents of those packets that come up here would be
considered by them a business record. Okay? And a business record that they
have exercised dominion and control of that information and can use it how they
wish. Now, once they open the packet, do the content filtering and routing it's a
business record. You know, do you have any copyright interests insides privacy
interests in your communications with your lawyer or your doctor? We have real
privacy issues here in this very good discrimination called content routing or
filtering, deep packet inspection. Great wall, fire wall of China brought to us by
Cisco who I sent that question to the Cisco representative, Mr. Pepper here
yesterday but this is really serious privacy matter. I think there needs to be --
here is a disclosure. How many of Y'all would have ever thought that your
private communications are a business record now of AT&T because they have
the technology of deep packet inspection, via IMS. I dare say no one would
anticipate that. Now, they are not currently implementing that. We had notice
but we're going to have to wait until your privacy is compromised to Sue the
when they've got so much market power and legal power. It's just -- we can go
on with WiFi networks to when you do the pier to pier --.
>>MARY BETH RICHARDS
I'm sorry. We've got two minutes left. So give me the two things you'd have the
FTC do and then let's turn to Tim and ask him.
>>RONALD YOKUBAITIS
I think the FTC needs to look at the privacy problems of packet inspection,
opening up the packets that previously just went best effort a bits a bits a bits.
And my second effort would be that you really look at competition, ask some hard
questions. What are you going to do with this? Do you currently do it? Get
answers rather than oh, it's too complicated. It's a solution in search of a
problem. We have a problem that's in search of the solution. It's privacy here.
It's going to continue to be. Thank you.
>>MARY BETH RICHARDS
Dan?
>>DANIEL BRENNER
First in terms of tort law, the point I made today, the FTC exists I believe in large
part because of collective action problems but to enforce these common law
principles, not to imply new regulations. Second, I mentioned briefly the up to
claims. Let me talk about that because I think that's an important issue. I first
looked at those 25 years ago when I was director of the bureau of concern of
consumer protection in context of energy saving claims for houses U up to can
be useful in areas where the conditions vary so much that averages in fact can
be misleading. The truth is that consumers is astounded, when they hear "Up to"
they know it doesn't mean average and they in fact discount. And many of the
factors that apply in homes, the tremendous differences in the age and quality of
homes are relevant in terms of and up to claim in broadband. Finally, in terms of
the FTC's role, in this workshop reports are an extremely important part of the
FTC, the Chairman before I was and I did an 80 page dialogue in the antitrust
law journal entitled "More than a law enforcement agency, the FTC's many tools."
This is a great example of one of them. But the law enforcement tool is another
and final important thing that the FTC needs to do. Its role on the Internet in
police together Internet for fraud and deception is an excellent one. The FTC
has a tremendous role and with the passage of the safe Web act I think it will be
even able to enhance that role internationally. Thank you.
>>MARY BETH RICHARDS
All right. Thank you all very much. I appreciate it.
- See FTC Workshop Transcript for index
