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musqington, iilC!r 2D515
October 5, 2009
The Hon. Julius Genachowski
Chairman
Federal Communications Commission
445 12th Street SW
Washington, DC 20554
Dear Chairman Genachowski:
Thank you for explaining the circumstances surrounding your announcement ofplans to adopt
proposed network neutrality rules. You said that you intended to be transparent and we are
encouraged by this pledge as well as your desire to be bipartisan.
Turning to the substance ofthe matter, you should provide a thorough market analysis prior to
proposing any regulation. The FCC bears the responsibility to prove a market failure, especially
since its 2002,2005,2006, and 2007 decisions on cable modem service, digital subscriber line
service, broadband over power line service, and wireless broadband service were predicated on
the notion that the broadband market nationwide is competitive and that regulation is
unwarranted. In a sector this innovative and this vital to our economy, it would be irresponsible
for the Commission to do anything less, especially since this is one ofthe few sectors that is still
investing billions ofdollars in the current financial climate. You have repeatedly said that you
want this to be the most data-driven FCC ever. This is an opportunity to demonstrate that
commitment.
Will the FCC be examining networks, services, consumer electronics equipment, applications, or
all fuur? Will it be examining cable, wireline, wireless, satellite, broadband over power line, or
all five? Are they each individual markets or one larger one? What data speeds will you use to
define the market?
Once you answer these questions, you should determine ifany entity has market power. In doing
so, you should look at availability rather than adoption. The ability ofa consumer to choose an
alternative source will prevent a company from being able to exert market power, regardless of
the level ofactual adoption. You also should examine the ability ofother entities to enter the
market. Even ifa competitor is not already deployed, the threat ofnew entry places a check on a
company's (l,bility to exert market power. In addition to any finding ofmarket power, there
should be real evidence that such market power is being used to the detriment ofconsumers, and
that such exercise ofmarket power could be continued profitably in the long run. Only then is
there a market problem.
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All ofthis should be part ofa notice ofinquiry, since it would only be appropriate to propose
rules after finding a market failure. Ideally, you would also wait until you have the broadband
mapping complete and we have seen the results of the stimulus plan, as both will be relevant in
determining ifthere are any competitive problems. This fits with your desire to make the FCC
more data-driven.
There also should be a cost benefit analysis ofany regulations you propose. In the first instance,
this requires identifying the specific practice or practices arising from the exercise ofmarket
power that you believe warrant regulatory intervention. For instance, we do not believe the
possibility of"discrimination," without more detail, would be sufficient.
Moreover, regulations are only the proper response to a problem ifthey result in a net
improvement in the status quo. Ifthey cause more harm than the issue they are trying to resolve,
they should never have been adopted in the first place. Thus, any harm found in your analysis
should be balanced against the harm to investment, innovation, and competition that regulation
would cause.
This analysis is particularly important since your recent status report on the national broadband
plan estimates that the total investment required to achieve universal broadband deployment will
require between $20 billion and $350 billion. Network neutrality rules would make it harder, not
easier, for such investment to occur. A one-size-fits-all Internet where every entity must provide
the exact same levels ofservice and that costs consumers more on average for slower speeds and
less innovation will not be very competitive. Nor will it serve consumers well or draw much
investment for further improvements. Even ifthere is a problem, it does no good to adopt a
regulation ifit performs more poorly than engineers and markets in addressing that problem. For
instance, we caution against either limiting the ability ofnetwork providers to offer managed
services or restricting the use ofthose services only to certain purposes.
Ifafter this analysis you conclude that intervention is necessary, the intervention should be
tailored to your analysis and should be the minimum required to prevent the practices you have
identified as appropriate targets ofregulation. And, ofcourse, you will need to address where in
the Communications Act you find jurisdiction to impose any new regulations.
You say that you have not made any conclusions, that you have an open mind, and that you will
let the facts take you where they may. Following this framework will go a long way to instill
confidence in the process.
Please include a copy ofthis letter in the appropriate dockets. Thank you again for your service
and we look forward to working with you. Ifyou need further information, please don't hesitate
to call our committee counsel, Neil Fried, at 225-3641.
With kind regards, we are
Sincerely,
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United Sates Representative
Marsha Blackburn
United States Representative
Fred Upton
United States Representative
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United States Representative
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Mary Bono Mack
United States Representative
Steve Scalise
United States Representative
00: Commissioner Michael J. Copps
Commissioner Robert M. McDowell
Commissioner Mignon Clyburn
Commissioner Meredith Attwell Baker
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United States Representative
Tim Murphy
United States Representative
Ralph Hall
United States Representative