Washington Center for Equitable Growth Launches Antitrust Paper on Digital Communications

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Today, the Washington Center for Equitable Growth launched a new antitrust paper, “A Communications Oligopoly on Steroids: Why antitrust enforcement and regulatory oversight in digital communications matter,” by Public Knowledge President and CEO, Gene Kimmelman, and Consumer Federation of America’s research director, Mark Cooper.

The paper reviews the importance of digital communications platforms as well as their business dynamics and natural incentives for their owners to overcharge consumers. The authors argue that these increasingly anti-competitive digital business practices drag on our nation’s economic growth, causing consumers to overspend on these services far beyond what is necessary to induce any increased productive investments.

The following can be attributed to Public Knowledge President and CEO Gene Kimmelman:

“Our extensive telecommunications and media work gives us a clear sense that antitrust has been and can be critical to preventing consumer abuse, so it's time to call for enforcers to continue the work started in the last eight years. Unless the Trump Administration shifts course on regulatory policy and commits to aggressive antitrust enforcement, billions of dollars in annual consumer savings will be thrown out the window and the opportunity to shrink bloated cable and broadband monthly bills will vanish.

“But that is not enough: We need Congress to strengthen antitrust to prevent today's small group of internet, telecommunications, and media giants from slowing down or eliminating the growing potential competition from new internet video streaming services. By shifting the burden of proof under Section 7 of the Clayton Act from the government to the parties seeking to merge, effectively creating a presumption that mergers in the most concentrated markets are harmful to competition unless the merging parties can prove otherwise, it would be possible to guarantee that emerging competition to today's cable and broadband monopolistic markets has a better chance to survive, innovate, and drive down prices for consumers.

“Yet antitrust is not enough to bring consumers the full fruits of the digital economy. Our research demonstrates that antitrust alone cannot deliver the freedom to access and surf the internet without interference, the protection of our personal data and private information, or the full diversity of voices we need to fuel our democracy. In communications policy, Congress has given the Federal Communications Commission the task to protect these critical consumer values, and when the agency and antitrust officials have failed to do their jobs, our basic freedoms are compromised and our pockets get picked by cable and broadband monopolies. Currently consumers are paying about $45 per month or more than $500 per year too much for essential communications services. The Trump Administration should tackle and end this massive consumer ripoff.

“Finally, our experience with essential communications services and the economics of these markets sheds light on the current debate about the enormous growth of the technology firms that drive today's social networks and digital platforms. Our call for vigorous antitrust enforcement and tightened scrutiny of both horizontal and vertical mergers may offer some protection against the exploding digital markets tipping toward monopoly. However, experience tells us that antitrust may not be the best or even the right tool to use in markets where economic forces drive toward concentration, or where it is vital to protect non-economic values, such as free expression and personal privacy.

“Whether focused on Google or Comcast, AT&T or Amazon, we must evaluate what kind of competition, innovation, convenience, and choice we want from the digital economy before deciding the appropriate role that antitrust and other policy tools can and should play to deliver the marketplace that best balances these factors for consumers.”

You may view the paper here.

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