The National Association of Realtors policy enabling traditional brokers to block their web-based competitors’ customers from having full online access to all Multiple Listing Services (MLS) listings, and the antitrust lawsuit that was filed yesterday in the U.S. District Court in Chicago by the Department of Justice, highlight a couple things about proposals to codify a set of network neutrality principles and give the FCC new enforcement authority. One is that the universe of players having an incentive and an ability to control what customers can see and do on the Internet is much larger than communications network providers. No network provider is involved here, and none of the net neutrality proposals would have been of any use. Another is the availability of an antitrust remedy, with penalties that really hurt. A violation of Section 1 of the Sherman Act, under which the complaint was brought, is a felony. Penalties for individuals include imprisonment. A plaintiff can seek treble damages.
Vonage could have brought an antitrust suit against Madison River Communications, but it thought that the FCC would be more convenient. Vonage CEO Jeffrey Citron now claims that there is “no law that prohibits (blocking), so you can’t adjudicate against it.” Tell that to the realtors, who stand accused of “suppressing technological innovation” and “reducing competition on price and quality.”
Madison River Communications, like all telephone companies, has common carrier responsibilities that arise from the common law. These duties existed prior to the Communications Act of 1934 and will survive a telecom re-write. Antitrust enforcers built upon the common carrier principle in lawsuits against AT&T, which established a duty to interconnect with competitors. The availability of easy recourse to the FCC has meant that antitrust law has not developed as fully in telecom as it has in other sectors of the economy. The solution is to limit FCC enforcement and let antitrust bloom. As the precedents, which will be based on actual — not hypothetical — conduct, accumulate, competitors like Jeffrey Citron will get the certainty he and others like him crave.
The FCC is too small and too limited in both expertise and orientation to protect the online activities of consumers, as this case demonstrates. “Nothing grander than the common law is even practical anymore,” writes Peter Huber (1997). “The telecosm is too large, too heterogeneous, too turbulent, too creatively chaotic to be governed wholesale [by a commission].”