Digital communications platforms, whether offered by a cable company, a telecommunications firm, or an Internet services provider, deliver the most important text and video content that powers our economy, educates our citizenry, and fuels our democracy. Yet the business dynamics of these platforms and the natural incentives of platform owners to overcharge consumers for their goods and services create enormous opportunities for competitive abuse—harming consumers and exacerbating economic inequality—unless vigorous public oversight corrects significant and pervasive market imperfections. These increasingly anti-competitive digital business practices also are a 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 by firms in this key industry.

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Under U.S. law, antitrust enforcement is one critical element necessary to protect consumers and the competitive process. Yet antitrust by itself is not enough to ensure the marketplace benefits and potential progressive societal advancements that digital communications platforms offer. Antitrust enforcement can prevent the creation of monopolies and actions that diminish competition, but these laws are not designed to maximize competitive options or promote social policies such as expanded employment, equitable access to content, and overall freedom of expression. Only with appropriately focused regulatory oversight alongside strict antitrust enforcement can the service providers in the cable, telecommunications, wireless, and broadband industries be driven to offer competitive, nondiscriminatory, innovative, and socially beneficial video and broadband services that maximize consumer value and choice in both the economic market and the marketplace of ideas. These steps, in turn, will boost demand for these goods and services in the broader economy and spark more investments in innovation and new infrastructure.

This paper details the state of these communications industries in the first dozen years after enactment of the 1996 Telecommunications Act, which opened the door to lax antitrust enforcement and excessive deregulation and led to highly concentrated oligopolistic markets that result today in massive overcharges for consumer and business services. ¹ Prices for cable, broadband, wired telecommunications, and wireless services have been inflated, on average, by about 25 percent above what competitive markets should deliver, costing the typical U.S. household more than $45 per month, or $540 per year, for these services.² This stranglehold over these essential means of communication by a tight oligopoly on steroids—comprised of AT&T Inc., Verizon Communications Inc., Comcast Corp., and Charter Communications Inc. and built through mergers and acquisitions, not competition—costs consumers in aggregate almost $60 billion per year, or about 25 percent of the total average consumer’s monthly bill.

The paper then examines the efforts by the Obama administration to arrest this uncompetitive trend by launching numerous regulatory interventions and enhanced antitrust enforcement.³ These efforts resulted in a change in course that was strongly positive for U.S. consumers and the economy. Alas, these actions could not address all of the structural harms caused by previous policy mistakes. What’s more, these ongoing antitrust problems in the communications sector are unlikely to be addressed by the new Trump administration, which has signaled that it will seek to reverse many of the gains to consumers achieved under the Obama administration.

Potential remedies, however, remain within reach of policymakers in Congress, at the Federal Communications Commission—the chief telecommunications regulatory agency in this business arena—and at the other two key federal antitrust enforcers, the Federal Trade Commission and the U.S. Department of Justice. In the pages that follow, this paper will explain these complex antitrust and regulatory processes in the telecommunications sector, trace how antitrust and regulatory actions have performed since the enactment of the 1996 Telecommunications Act, and then showcase a number of efforts made by the Obama administration to protect consumers and strengthen competition in the various communications industries—efforts that were partially successful but are now under threat under the new Trump administration.

Recent calls to revive antitrust enforcement in the U.S. economy, and particularly in the digital communications industries, in light of evidence of increasingly concentrated markets and broader dangers to society are long overdue. But sometimes these concerns are portrayed in too simplistic a manner. While some idealized version of antitrust actions may be theoretically capable of handling all competitive issues as well as the consequences of increased economic inequality and stunted economic growth in today’s economy, neither current antitrust jurisprudence nor contemporary economic analysis supports this simplistic vision. What’s also required—and what Congress has provided—are regulatory tools to promote both competition and other economic goals, in which case antitrust enforcement can work in tandem with targeted regulation to achieve many of the goals needed to create a more equitable and competitive marketplace in communications products and services.⁴

Most antitrust analysis is backward-looking, involving observed market outcomes that are considered to be the result of insufficient competition leading to conduct that is harmful to consumers. Structure is examined as the context that makes the conclusions about conduct more plausible. The lack of competition due to high levels of concentration, for example, makes it more likely that dominant sellers will be able to set prices above costs to earn excess profits, but antitrust tools generally are triggered only when abuses can be demonstrated.

Antitrust reviews of corporate mergers reverse this analytical flow because it is the one area where antitrust is forward-looking. That’s because structural analysis is central to the complaint that a merger will so greatly increase market concentration as to pose a threat to competition and raise the potential for the abuse of market power.

In both classic antitrust cases and merger reviews, however, the antitrust authorities prefer structural remedies such as divestiture of assets to shrink market power, rather than remedies that require them to regulate the conduct of companies in the marketplace. This means that market structure, conduct, and performance are focal points, yet basic market conditions receive less attention. In fact, antitrust enforcers do not generally address basic market conditions because they are beyond their policy reach.

Some characteristics of an industry make it unlikely that private investment and market forces will produce socially optimal outcomes.⁵ In some cases, investors cannot project or capture the benefits of the production of a good—public goods such as emergency call “enhanced 911,” or E-911, numbers or infrastructure, such as roads or communications networks that make an area much more functional. In other cases, consumers cannot project the benefits of more output, such as a so-called network effect, which makes the network more valuable to consumers, who can reach more people, and to producers, who can identify niches to expand output. As a result, supply or demand may be too little.

In other cases, economic characteristics lead to very large firms that boast strong economies of scale or scope, such as adding consumers or services, which spread costs across a larger base and make building two networks redundant and costly. The number of firms that the market can support may be very small—the minimum efficient scale is very large compared with the size of the market—resulting in weak competition and the threat of abuse of market power. These and other basic market conditions are mostly outside the purview of antitrust enforcers because they are not forward-looking in scope.

In these areas, regulation is necessary because it tends to be forward-looking.⁶ Legislation declares specific goals, often broadly defined, and grants a regulatory agency specific powers to pursue them. The Communications Act of 1934 gave the Federal Communications Commission, or FCC, substantial regulatory flexibility, and the courts have granted it deference as the expert agency. In merger reviews, for example, the FCC is charged with promoting competition—not just protecting it—and the public interest, which enables the agency to take a proactive role across a wide range of policies that address precisely the basic market conditions, structural factors, and performance goals that antitrust does not tackle effectively. This is very different from the purview of the two traditional antitrust enforcement agencies, the Federal Trade Commission and the U.S. Department of Justice, which are directed solely to prevent the loss of competition.

As discussed below, the Telecommunications Act of 1996 was an effort to strike a new balance between the market and regulation that went awry because the act and those implementing it underestimated the continuing power of the fundamental, problematic characteristics of the industry. The benefits of injecting more competition could have been achieved without many of the negative consequences of the abuse of market power that was unleashed by lax regulation and antitrust enforcement.

The unique nature of digital communications and the role of antitrust enforcement and regulation

Infrastructure industries such as communications and now digital communications have long been recognized as unique from the point of view of U.S. economic and social policy. Although competition and markets have been the preferred form of industrial organization for economic activity, the extreme importance of infrastructure to a broad range of economic activity and the tendency for there to be very few providers of infrastructure services have led to additional oversight of these industries.⁷ Yet antitrust enforcement, even in its “golden age” of trustbusting in the first half of the 20th century, has never been seen as enough.⁸

In the communications sector, competition to connect wired and wireless services to homes and businesses cannot be counted on to prevent the abuse of market power because the number of firms in any market is small and barriers to entry are high.⁹ Because of its public goods value and powerful network effects, private facility owners cannot foresee or capture the value of diffuse benefits or externalities, so they will underinvest, harming consumers and economic competitiveness and growth. Seamless interconnection between communications networks and nondiscriminatory access to these networks may not develop or may not be sustained because the private interests of network owners are better served by blocking or charging very high prices for access and usage.

Communications has other characteristics that make it an even more unique concern in terms of fostering competition that boosts economic growth and lessens economic inequality. Whether it is the landline telephone of 100 years ago or the wireless and broadband of today, these are necessities with relatively low elasticities of demand and few or no substitutes. But basic market conditions mean that companies do not or will not deliver services to large and significant groups and areas because providing service is not profitable where costs are high or incomes are low. These characteristics lay the basis for conduct that abuses market power. In short, market imperfections and failures may weaken the effect of competition. As the leading text Economics of Regulation and Antitrust puts it:

If we existed in a world that functioned in accordance with the perfect competitive paradigm, there would be little need for antitrust policies and other regulatory efforts. All markets would consist of a large number of sellers of a product, and consumers would be fully informed of the product’s implications. Moreover, there would be no externalities present in this idealized economy, as all effects would be internalized by the buyers and seller of a particular product.

Unfortunately, economic reality seldom adheres very closely to the textbook model of perfect competition. Many industries are dominated by a small number of large firms. In some instances, principally the public utilities, there may even be a monopoly. Not all market failures stem from actions by firms. In some cases, individuals can also be contributing to the market failure.¹⁰

Here, it is important to note that the concern about the abuse of market power applies to both buyers and sellers—monopsony power is as big a concern as monopoly power. If one firm gains sufficient market power as a purchaser to depress the price it pays for inputs, such as content or equipment, then innovation and the supply of products can be diminished. In U.S. communications networks, Congress, regulators, and antitrust authorities have taken action to prevent the abuse of monopsony power given communications companies’ control over access to customers and the lack of competition. The concern about the ability of network owners to function as economic monopsonists is reinforced by their ability to control what they communicate and also is the cornerstone of democratic discourse.

The Telecommunications Act of 1996 was designed to give a strong push for competition but in a manner that was cognizant of the underlying difficulty of sustaining competition in the communications industries. Regulations were to be lifted only where competition had rendered them no longer necessary in the public interest. And a number of policies were instituted to try to promote and support competition, such as network sharing—or “unbundled telecommunications network elements” in industry parlance—and the removal of prohibitions on the entry of telephone and cable companies into each others’ markets.

These efforts to boost competition worked in some areas, but they left a great deal to be desired in others. The reason: After the 1996 act became law, policymakers unfortunately invoked the theory of competition where little real competition existed, and they prematurely removed regulatory protections in areas where they needed to remain in place. These decisions sparked a wave of mergers within and across segments of the industry, eliminating or frustrating “intramodal competition”—the head-to-head competition between firms using similar technologies—under the false hope that intermodal competition would be sufficient to protect consumers.¹¹

The eight regional telephone monopolies that emerged from the government’s breakup of the old AT&T national monopoly in the 1980s merged into two dominant wireline and wireless giants—Verizon and AT&T—that not only acquired the “Baby Bells” created by the breakup in 1984 of AT&T but also swallowed the large independent companies that had existed from the early days of the industry, such as the old General Telephone and Electronics Corporation, and the largest long-distance potential competitors. Similarly, local cable monopolies combined into regional powerhouses—Comcast and Charter—and developed cozy relationships with a similarly consolidating content industry. Lax antitrust enforcement combined with weak regulatory oversight resulted in the growth of what we call a “tight oligopoly on steroids.” By the standard definitions of antitrust and traditional economic analysis, a tight oligopoly has developed in the digital communications sector.¹² (See Figure 1.)

Figure 1

The figure above shows the national levels of concentration based on the so-called Herfindahl-Hirschman Index, or HHI, which antirust enforcers use to gauge concentration. The current threshold for finding a market highly concentrated is 2,500—until 2010 it was 1,800—so even at the national level, these markets are all highly concentrated.¹³ The markets are even more concentrated at the local level, which is where most market power is exercised, since consumers are dependent on local companies for access to communications services.

The figure above shows the local four firm concentration ratios based on the market shares of the dominant four firms in the market for each product. All are above the level—60 percent—at which markets are considered to be tight oligopolies.

The existence of such high levels of concentration indicates a strong possibility of the abuse of market power. The figure shows earnings before interest, taxes, and depreciation and amortization, or EBITDA, as a measure of profitability. This is the financial indicator frequently used by financial analysts.¹⁴ While EBITDA for segments of a business vary, the national average of just under 15 percent is considered healthy, so the EBITDA in these sectors are not merely supranormal, as defined in economic analysis, but they are astronomical.

The conditions for the exercise of market power do not stop with highly concentrated markets. The market division strategies that the dominant firms chose to pursue—and got away with after the 1996 Telecommunications Act—have resulted in a tight oligopoly on steroids for each of the services at the local level. They all started with local franchise monopolies, when the 1996 act was passed, and refused to enter new markets to compete head to head with their sister companies. Cable companies never overbuilt cable and never entered the wireless market. Telephone companies never overbuilt other telephone companies and were slow to enter the video market. Each chose to extend their geographic reach by buying out their sister companies rather than competing. This means that the potentially strongest competitors—those with expertise and assets that might be used to enter new markets—are few. This reinforces the market power strategy, since the best competitors have followed a noncompete strategy.

Regulatory policy was equally lax, deregulating services that were far from competitive based on the hope or hype that competition would grow in areas such as access to broadband services, specialized higher-speed connections for businesses—business data services—and mobile wireless.¹⁵ Inaction stalled progress on important economic goals to reduce inequality of access to affordable new Internet services as well as key social goals such as enhanced privacy, where the Federal Communications Commission took no action.

As a result, today these four firms enjoy geographic separation, technological specialization, and product segmentation that makes it easy to avoid competition. They cooperate—via TV Everywhere subscriber authentication—collaborate—via the Verizon-cable joint venture—or engage in reciprocal reinforcing conduct—via the purchase of out-of-region special access and political action—rather than compete. While some markets are slightly more competitive than others, the dominant firms are deeply entrenched and engage in anti-competitive and anti-consumer practices that defend and extend their market power, while allowing them to overcharge consumers and earn excess profits.

The consequences for consumers and the economy of this abuse of market power

As outlined in the Merger Guidelines—a set of federal rules governing antitrust enforcement—the antitrust authorities review mergers with an eye toward price increases, applying what’s referred to as the “small but significant, non-transitory price increase” standard.¹⁶ This standard, which defines small but significant as at least 5 percent and defines nontransitory as lasting at least two years, serves as a good baseline benchmark for evaluating pricing. By this standard, our analysis shows that the communications markets have performed poorly for the entire period since the passage of the 1996 Telecommunications Act.

The pocketbook impact is rising prices for buyers and falling costs for sellers. In truly competitive markets, a significant part of cost reductions would be passed through to consumers. Based on a detailed analysis of profits—primarily EBITDA—we estimate that the resulting overcharges amount to more than $45 per month, or $540 per year, an aggregate of almost $60 billion, or about 25 percent of the total average consumer’s monthly bill.¹⁷ (See Figure 2.)

Figure 2

The impact of this abuse of market power on consumers is clear. According to the most recent Consumer Expenditure Survey¹⁸ by the U.S. Bureau of Labor Statistics, the “typical” middle-income household spends about $2,700 per year on a landline telephone service, two cell phone subscriptions, a broadband connection, and a subscription to a multichannel video service.¹⁹ The new digital services, broadband and wireless, account for about two-thirds of the total. Adjusting for the “average” take rate of services in this middle-income group, consumers spend almost twice as much on these services as they spend on electricity.²⁰ They spend more on these services than they spend on gasoline. Consumer expenditures on communications services equal about four-fifths of their total spending on groceries. (See Figure 3.)

Figure 3

Given this massive overcharging, companies that have the market power to overcharge also lack the incentive to invest in customer service, we would expect consumers to be less than thrilled with these services. Indeed, the 2016 American Customer Satisfaction Index, which ranked 47 industries, shows that the services provided by the telephone company half of the tight oligopoly on steroids ranks 41st for wireless and 42nd for landline, while the half supplied by cable ranks 44th for video and 45th for Internet service. (See Figure 3.) Among 350 individual companies with rankings in 2015 or 2016, AT&T ranks 284th and 313th, depending on the service. Verizon is ranked equally poorly at 290th and 305th, while Charter Communications, ranked 333rd and 338th, and Comcast, ranked 340th and 340th, are even worse. (See Figure 4.)

Figure 4

The Obama administration made a 180-degree reversal of direction in antitrust enforcement and regulation. Seven mergers in the telecommunications sector were considered and either rejected or approved subject to extensive conditions.²¹ Simultaneously, ambitious regulatory initiatives sought to redress past missteps and ensure that the benefits of platforms that both cooperate and compete (co-opetition) and positive externalities, flowing from a well-regulated communications infrastructure sector could be realized.

On the merger front, the Department of Justice and the Federal Communications Commission blocked two mergers—AT&T Inc. and T-Mobile US Inc. (the U.S. subsidiary of Deutsche Telekom AG), and Comcast Corp. and Time Warner Inc.—and jawboned another out of existence (Sprint Corp. and T-Mobile). The two antitrust enforcers also imposed extensive conditions on several approved mergers, among them Comcast and NBCUniversal Media LLC, AT&T and DIRECTV LLC, Charter Communication’s acquisition of Time Warner Cable and Bright House Networks LLC, and the cable joint venture Cellco Partnership Inc. between Verizon Communications and Comcast and Time Warner and Bright House. See the following sidebar for a closer look at the three different types of mergers—horizontal, vertical, and geographic extension—dealt with by the antitrust agencies during the Obama administration.

The FCC also shifted its attitude toward regulatory policy in the communications sector, seeking to promote competition and consumer welfare wherever possible.³³ The agency sought to address the problems caused by excessive market power and concentration instead of wishing them away. The agency, for example, concluded that the deployment and adoption of broadband service was not adequate, as defined by the Communications Act, and issued rules to transform the universal service “affordability” program from one that supported only 20th century voice communications to one that supports 21st century broadband. And in two cases, the agency successfully turned to Title II of the Communications Act to remedy abusive market power. Specifically, the FCC:

• Declared broadband Internet access service to be regulated under Title II, making these services partially subject to common carrier obligations, even when they were provided by companies such as Comcast that had not been common carriers. This activated the language of the act that prevents dominant communications companies from imposing unjust, unreasonable, or discriminatory rates, terms, and conditions, although other common carrier obligations, like funding universal service were not activated.
• Concluded that under Title II, broadband consumer privacy required greater protection, and issued rules to prevent the customer proprietary information that broadband network service providers needed to operate the network efficiently from being used for other commercial purposes.

The importance of Title II in both of these situations is worth a short, deep dive.³⁴

As communications have become more important in the economic, social, and political life of Americans, network owners have argued that the regulatory structure of the Communications Act has become outdated, in part because services that were once sold by separate firms using separate networks have converged onto broadband networks. Arguing that they are all just information services, which are, at best, very lightly regulated by the Communications Act, they would like to have regulation driven to the lowest common denominator, which is almost zero. Indeed, in many respects, they just want to do away with the Communications Act and rely solely on the antitrust laws.

Yet it became clear over the past decade that technological innovation and convergence are no guarantee against the abuse of market power. Under conditions of lax merger review and weak regulation, technological convergence leads to increased concentration and enhanced market power. The fundamental conditions of communications technology and the lack of competition that have long made it important to apply the dual oversight of antitrust and regulation are reinforced, not weakened. The stakes are huge in terms of the economic and social values that the United States has embraced for more than a century.

The following three cases show how the Obama administration decided that it would be more appropriate to continue the regulation of communications networks and converge regulation to the highest common denominator, Title II. The 1996 Telecommunications Act specifically preserved the definition of telecommunications—subject to the highest level of oversight—regardless of the technology used. Thus, Title II enforcement would continue to recognize the unique importance and market structures of the voice and video markets, even as those services are delivered over broadband.

Economic abuses

At issue before the Obama administration’s FCC was nondiscrimination in the provision of telecommunications services and efforts to misclassify services by the industry.³⁵ And informing the actions of the agency were the widely recognized decisions in prior decades that promoted competition and ensured nondiscriminatory access to networks and seamless interconnection, which played a critical part in creating the conditions for the success of the Internet and wireless revolutions.³⁶ These decisions were a mixture of regulatory and antitrust policy.

In the 1990s and 2000s, network owners offering Internet access service resisted the obligation to provide nondiscriminatory access.³⁷ They initially sought classification of Internet access service as a cable service under Title VI of the Communications Act, which has no such obligation.³⁸ They continued to resist being subject to a weak form of oversight—ancillary authority under Title I.³⁹ Moreover, whenever network owners think that they might not be subject to strong rules on nondiscrimination, they have repeatedly engaged in aggressively discriminatory practices.

During the early days of this open access debate, Time Warner imposed a series of demands on independent Internet service providers that would have strangled competition. After it became obvious that network neutrality was at risk, the FCC in 2004 put forward a list of “Four Freedoms” that had little market impact due to a perceived lack of enforceability.⁴⁰ For more than a decade, network owners repeatedly violated this approach to nondiscrimination, and the courts expressed concern about the use of FCC authority.⁴¹

The increasing importance of broadband Internet access service in the communications sector led the FCC in 2015 to classify this service as a Title II telecommunications service.⁴² Yet the agency restricted its own authority to a narrow subset of the Title II obligations and took a flexible approach to enforcement. This convinced the courts that this was the appropriate way to achieve the goals of the Communications Act.

Privacy and consumer abuse

Concerns about privacy have been a constant issue since mass market use of the Internet expanded in the mid-1990s.⁴³ The Federal Trade Commission studied the problem repeatedly, and in 2008, the FTC and the U.S. Department of Commerce finally admitted that numerous, significant, and persistent market failures afflict privacy in the digital marketplace.⁴⁴ Yet all three agencies failed to move aggressively to address the problems, with their powers limited under existing statutes.

Then, in 2017, the FCC—using the power under Title II to protect customer proprietary network information under the Communications Act—took action to prevent the abuse of consumer privacy by broadband network operators. The FCC concluded that the network operators have a uniquely powerful position from which to gather such information because they see everywhere the consumer goes—information that then can be sold to third parties. Using its new authority over broadband providers under Title II of the Communications Act, the agency made mandatory an existing voluntary FTC framework as the basis of its approach to protecting the privacy of broadband users.⁴⁵

This effort of the FCC to protect consumer privacy was later overturned by the incoming 115th Congress earlier this year, using the Congressional Review Act procedures.⁴⁶ The move by the new Congress exposed consumers to having their valuable personal information collected, monetized, and sold by the very Internet service providers that those same consumers must use to access essential services and content.

Premature deregulation of a vital service

The FCC at the end of the Obama administration also was considering rules to control network operators’ abuse of market power in the increasingly important and rapidly growing business data services market.⁴⁷ High-speed, high-capacity communications services for businesses—called “special access” and later “business data services”—were long regulated as Title II common carrier services. Many of these connections were first built by the original telephone monopoly companies. They were among the first services deregulated after the passage of the 1996 Telecommunications Act, under the theory, or hope, that competition would develop to make close regulation of rates, terms, and conditions unnecessary.⁴⁸

Business data services today are a pervasive input to the delivery of a wide range of goods and services, not just the communications services that consumers pay for directly. They are the high-speed, always-on connections that businesses have come to rely on for their routine communications, including mobile broadband and phone service; small, medium, and large businesses need much more capacity than a single telephone line, as do branch networks such as ATMs, gasoline stations, and the emerging Internet of things, all of which have many nodes that need to be online all the time.

The central role of business data services in the communications economy is matched by the high level of concentration for these services and the pattern of abusive conduct that developed when these services were prematurely deregulated starting in 1999.⁴⁹ In fact, the FCC compiled the largest data set in its showing of the history of abuses in the business data services market. It shows that about three-quarters—at least 70 percent and as much as 80 percent—of consumers purchase business data services under the conditions of an absolute monopoly.⁵⁰

Unfortunately, the FCC was unable to finalize reform of this market, and the intervening change of FCC leadership and the new Trump administration make robust action to remedy the effects of this uncompetitive market less likely. In fact, FCC Chairman Ajit Pai’s plan to roll back net neutrality protections⁵¹ is likely only to make matters worse, not better. Nevertheless, this issue demonstrates that targeted regulatory action can address competitive shortcomings, even if it is no guarantee that this regulatory action will occur. Indeed, the market abuses in the telecommunications sector that these changes in policy direction were intended to correct or prevent and the benefits of doing so are now at risk of being cut off by the Trump administration.

Antitrust enforcement and regulatory policy in the communications sector over the past 20 years demonstrate both the potential benefits of effectively aligned interventions and the enormous costs resulting from failed industry oversight. In such markets where historical monopolies, capital-intensive investments, and generally high levels of market concentration have only recently been challenged by policy adjustments and technological breakthroughs, there is very little margin for error if policymakers want to harness the full economic potential of the communications sector in ways that boost sustainable economic growth that is fair and equitable.

Early “hands off” antitrust and regulatory policy prevented new potential competitors from experimenting, solidified the dominance of telecommunications incumbents through regional expansion, and ossified the natural economic tendencies in these markets—thereby leading to massively inflated prices for consumers. More recently—and especially under the Obama administration—more aggressive intervention in proposed mergers and parallel regulatory actions designed to expand competitive opportunities for wireless, broadband, and broadband-delivered video services broke some of the price-inflating cycle, unleashed substantial innovation in the video streaming market, and started to police against new potential abuses of dominance in data and transmission bottlenecks.

The challenge in telecommunications and network industries that was recognized a century and a quarter ago remains relevant today. These industries benefit from immense economies of scale and scope that lead to large size and the threat of market power. We call them platforms today. They impact a wide range of economic and social activities that ride on these platforms and public policy should not destroy the economic benefits while it prevents the abuse of the inherent market power. The Progressive Era response was a nuanced mix of regulation and antitrust enforcement. The more dynamic the sectors of the communications industry, the more difficult and important is the need to find the right mix.

The key lesson in the communications sector is that vigorous regulation and antitrust enforcement can create the conditions for market success. But balance is the key. Technological innovation and convergence are no guarantee against the abuse of market power, but the effort to control the abuse of market power should not stifle innovation. If the Trump administration jettisons the enforcement practices of the past eight years, then the telecommunications sector is likely to see a wave of new consolidation and a dampening of the price cutting and innovative wireless and broadband services that have been slowly emerging. These markets will not remonopolize, but they will become a tighter oligopoly on stronger steroids even more dominated by two or three vertically integrated giants charging vastly inflated prices and asserting excessive power over the marketplace of ideas.