Sidak & Teece Debunk Net Neutrality Regulation

WASHINGTON, December 21, 2010 - The economic reasoning underlying network neutrality regulation expected
to be adopted this week by the Federal Communications Commission is
fundamentally flawed, according to Professors J. Gregory Sidak and David J.
Teece. In an article in the Journal of Competition Law & Economics, published
by the Oxford University Press, Sidak and Teece explain that the FCC's
proposed regulations would have the effect of banning or restricting optional
business-to-business transactions between broadband Internet service
providers (ISPs) and content providers for enhanced delivery of packets over
the Internet. The proposed "nondiscrimination" rule would have the ironic
effect of actively discriminating against any kind of content or application
that is differentiated by its need for greater assurance of higher quality
transmission across the Internet (known as quality of service, or QoS) than
undifferentiated best-effort delivery can offer. This result not only would
reduce static efficiency by encouraging higher consumer prices, but also
would reduce dynamic efficiency by retarding innovation.

For text of the full article, please visit
papers.ssrn.com/sol3/papers.cfm?abstract_id=1593761.

J. Gregory Sidak is the chairman of Criterion Economics, L.L.C.
(www.criterioneconomics.com) in Washington, D.C. and the Ronald Coase
Professor of Law and Economics at Tilburg University (TILEC) in The
Netherlands.

David J. Teece is the chairman and Principal Executive Officer of the
Berkeley Research Group LLC (www.brg-expert.com) and the Thomas W.
Tusher Professor in Global Business at the Haas School of Business at the
University of California, Berkeley.

Both are internationally recognized experts on antitrust, intellectual
property, regulation of network industries, and complex economic litigation.

Allison Crowley, +1-202-518-5120, acrowley at criterioneconomics.com