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Recently, Public Knowledge, Consumer Federation of America, and New Networks Institute filed an amicus brief in the U.S. Court of Appeals for the 8th Circuit requesting the Court to overturn and remand the Federal Communications Commission’s recent Business Data Services deregulation Order. Public Knowledge argues that the agency’s competition analysis, which found that duopoly competition -- real or potential -- is “sufficient” to discipline market power and high prices in the BDS market, is ludicrous. The Commission’s analysis is inconsistent with competition law and unsupported by the record, and the Order will lead to higher prices in the BDS market, which consumers will ultimately pay.
The following can be attributed to Phillip Berenbroick, Senior Policy Counsel at Public Knowledge:
“In 2016, after more than ten years of examining the highly concentrated Business Data Services market, the FCC was poised to reign in anti-competitive pricing in the BDS market to provide enterprise customers, government agencies, schools, libraries, and hospitals with much needed relief from monopoly rates. In 2017, the Commission illegally reversed course without proper notice and further deregulated the BDS market, leaving consumers at risk of paying up to $20 billion a year in excess charges from monopolistic pricing.
“Public Knowledge’s brief explains that the Commission’s finding that duopoly competition -- or even ‘potential duopoly’ competition -- is sufficient to discipline market power in the BDS market is absurd. The Commission’s analysis and the Order are contrary to the Commission’s prior precedents, the Department of Justice/Federal Trade Commission standard for evaluating market concentration, the record in the proceeding itself, and leading scholarship on market structure and market power.”
The following can be attributed to Mark Cooper, Senior Fellow at Consumer Federation of America:
“The FCC’s theory of ‘sufficient competition’ is not only contradicted by the reality of the BDS market as documented in a massive empirical hearing record and illegal as a matter of substance and process, but also totally lacking in support in the academic and antitrust practice literature.
“The BDS market, with a twenty-year history in which potential competition has failed to prevent pricing abuse or grow into actual competition, is a perfect example of why academics, antitrust authorities and regulators have rejected past efforts to claim that two is enough, or that ‘contestability’ can control market power.
“Three decades of intensive study of potential competition and duopolies shows that they do not create sufficient competitive pressures to discipline the abuse of market power. Under the FCC’s theory, the tens of billions of dollars of excess profits collected from consumers will go on unabated, and the door would be thrown open for a massive and unprecedented merger wave.”
You may view our filing here. You may also view our recent article, “BDS Reform: A No-Brainer for Both Businesses and Consumers,” for more information.