FCC Tries (Again) to Be Lord of the Internet

FCC Tries (Again) to Be Lord of the Internet
May 18, 2014

S.T. Karnick

S.T. Karnick is director of research for The Heartland Institute. Before joining Heartland, he... (read full bio)
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The Federal Communications Commission this week voted 3-2 to establish new net neutrality rules that would prevent broadband networks from selectively blocking traffic, but allowing those companies to enter into deals with content providers for preferred access to their networks in “commercially reasonable” ways.

Scott Cleland, policy advisor for The Heartland Institute and chairman of NetCompetition, says this development indicates the FCC is moving ever closer to regulating broadband under “Title II” — as if it were a utility, such as telephone service.

“The primary problem of Title II regulation is it would abruptly decelerate the fast-speed of Internet business to the slow-speed of government,” Cleland said. “At core, Title II is a ‘Mother may I?’ regulatory regime that is as slow as its slowest part. What could take hours or days to accomplish in business time could take several months or even years in FCC Title II time.

“Practically, Title II regulation would require every business decision of consequence to be approved by the FCC – i.e., changes in services, prices, terms, conditions, or infrastructure,” he added. “Ironically, the obvious unintended consequence here would be to put the American part of the Internet in the slowest lane filled with interminable speed bumps, potholes, stop lights, and inspection stations.”

Matthew Glans, Senior Policy Analyst for The Heartland Institute, agreed, noting that putting broadband under Title II would “stifle” the growth of the digital economy.

“The Internet has thrived due to its open and market-based nature. Imposing a vast new array of government regulations under Title II would stifle what has made the Internet one of the biggest growth sectors of the economy,” Glans said. “Title II regulations are a throwback to a system which no longer exists and is ill suited to regulate the dynamic internet and broadband markets of today.

“To ensure the growth of our nation's broadband infrastructure and the growth of the digital economy, any changes to how the Internet and broadband is regulated need to look away from outdated regulatory models and instead focus on policies that do not hinder innovation and growth,” he added.

Jim Lakely, co-director of the Center of the Digital Economy for The Heartland Institute, noted that the FCC doesn’t have the authority to impose rules on broadband networks.

“Watching the FCC attempt to construct net neutrality regulations to lord over the Internet is a bit like watching a child build a sand castle and declare himself king of the beach,” Lakely said. “Neither has really created a kingdom, but at least the latter is cute.

“Despite what he thinks, FCC Chairman Tom Wheeler does not have the power to regulate broadband networks as if they are telephony systems because Congress has not granted that power,” Lakely said. “Several federal court decisions have upheld that fact, yet every few months a partisan majority on the FCC persists in playing micromanager of the Internet. If broadband providers want to start charging Netflix and Google for hogging all the bandwidth, that is their right as the owners of those networks.

“Market forces are moving the digital economy in that direction, and rightly so – without arbitrary ‘reasonable pricing’ guidelines from bureaucrats who can’t possibly know what a ‘reasonable price’ is,” he added.

“The push to enforce net neutrality via the FCC is, and has long been, a solution in search of a problem. Free markets have brought the world the wonders of the modern digital age, solving privately the inevitable conflicts and problems that have arisen,” Lakely explained. “It is incumbent upon federal regulators to at least wait until there is an actual problem before moving in to ‘fix’ it. A failure of humility on the part of the FCC will only end up creating problems – and possibly crises – where none currently exist.”

Bruce Edward Walker, a policy advisor on telecom and technology policy for Heartland, compared the FCC’s decision to that of the Biblical Solomon:

“Whereas Solomon employed characteristic wisdom when he suggested splitting the baby, the Federal Communications Commission employs its equally characteristic dithering with its latest net neutrality plan,” Walker said. “Yes, the plan stops (just) short of Title II reclassification and allows fast lanes for delivery of high-bandwidth Web sites, which angers progressives. Conversely, it angers conservatives and free-market proponents by granting near complete control of the Internet on a case-by-case basis.

“Furthermore, such broad rule-making smacks of the last two failed FCC attempts to implement net neutrality,” Walker said. “A modern-day Solomon would recognize only Congress possesses the constitutional ability to pass such laws, not a regulatory agency prone to arbitrariness, inconsistency, and favoritism.”

The FCC’s proposed rule can be viewed here. Comments from the public are welcome through July 15, 2014. Leave yours here.

S.T. Karnick

S.T. Karnick is director of research for The Heartland Institute. Before joining Heartland, he... (read full bio)