Innovations in Mobile Broadband Pricing

The FCC’s net neutrality rules sought to limit interference by broadband service providers in markets for Internet-based content and applications. But to do so, the Commission significantly reduced the amount of innovation possible in the broadband service market. Within limits, broadband providers may offer different plans that vary the quantity of service available to customers, as well as the quality of that service. But they generally cannot vary the service itself: with limited exceptions, broadband providers must offer customers access to all lawful Internet traffic, or none at all. This Article explores the way in which this all-or-nothing homogenization of the American broadband product differs from innovative experiments taking place in other countries. In various parts of the world, customers are offered several alternatives to the unlimited Internet model, including social media plans, feature phone partnerships, bundled apps, and free premium content. It also examines the positive role that vertical agreements may play when promoting innovation and competition within a market. Undoubtedly, the FCC can and should intervene to stop anticompetitive practices, including anticompetitive vertical foreclosure. But these determinations should be made on a case-by-case basis based on proof of market power and consumer harm. This approach would allow wireless providers to experiment with new and different Internet business models without risking an unnecessary regulatory response. † Associate Professor of Law, Boston College Law School. This paper was funded in part by grants from the Mercatus Center at George Mason University and from the BC Law School Fund, support which is gratefully acknowledged. Special thanks to Jerry Brito, Joe Kennedy, Roslyn Layton, Crystal Lyons, Geoff Manne, participants at TPRC 42, and two anonymous commenters for their helpful comments and suggestions, and to Jonathan Hu for invaluable research assistance. File: Vol92_Issue3_Lyons_12_32_2015_FINAL_PRINT.docx Created on: 1/17/16 11:56 AM Last Printed: 1/17/16 12:17 PM 454 DENVER UNIVERSITY LAW REVIEW [Vol. 92:3