FCC’s “New Rules” for Net Neutrality Still Harmful Like the Old Ones

President Obama announces nomination of Tom Wheeler to run the FCC

The Taxpayers Protection Alliance (TPA) has warned against ‘net neutrality’ and increased regulatory measures on the Internet and stressed the point that the Internet has continued to thrive as government has kept a light regulatory touch on the Internet. Quick reacting business and free market forces will continue to keep the Internet thriving, and slow unresponsive government bureaucracies are clearly not the way forward as innovation continues to be a hallmark of the Internet. A new regulatory regime for the Internet would stifle that innovation and cost taxpayers millions of dollars tied up in a newly-created bureaucracy.  With the abysmal failure of the federal government to create one website for Obamacare, there is no reason why taxpayers should think that the federal government would do any better regulating the whole Internet, that currently has more than 800 million websites.

Just a few months ago, TPA applauded major parts of a D.C. Circuit Court of Appeals decision in Verizon vs. the FCC, which threw out the net neutrality rules imposed by the Obama Administration. TPA noted that:

“The ruling by the D.C. Circuit Court of Appeals is a major victory for individuals who use the Internet everyday. The net neutrality rules struck down by the court were nothing more than government overreach under the guise of ‘public interest’ with no real rationale.“

Unfortunately, it appears the Federal Communications Commission (FCC) and the Obama Administration were not going to give up on net neutrality simply because they lost in the courts. The current chairman of the FCC, Tom Wheeler, recently announced that he is drafting a new set of rules for net neutrality and is seeking approval from commissioners and comments from the public, all while promising that these new rules will pass the test in the judicial system:

In the new draft, Mr. Wheeler is sticking to the same basic approach but will include language that would make clear that the FCC will scrutinize the deals to make sure that the broadband providers don’t unfairly put nonpaying companies’ content at a disadvantage, according to an agency official. The official said the draft would also seek comment on whether such agreements, called “paid prioritization,” should be banned outright, and look to prohibit the big broadband companies, such as Comcast Corp. and AT&T Inc., from doing deals with some content companies on terms that they aren’t offering to others.

Now while Commissioner Wheeler states that the directives will only focus on “broadband providers,”  that doesn’t mean the regulatory net (no puns intended) won’t be cast wide. FCC Commissioner Michael O’Rielly detailed this exact concern in a piece for the The Hill last week:

Regulatory creep usually starts with calls for “regulatory parity.” The mantra will be, if you are going to impose certain regulations, then it is only fair to stick it to all market participants equally. We have already seen such arguments made in the context of the Text-to-911 rule-makings. And while ensuring a “level playing field” is a compelling argument and can be sound policy (albeit, in most instances, we should seek to ratchet down regulations not impose new burdens on everyone), it means that the wrath of government regulations could be coming for edge providers next.

Proponents of net neutrality are eager to push the FCC toward reclassifying the Internet as a ‘public utility’ and thus subjecting it to increased regulation. As of now, there is no indication that this will happen, but with the open comment process there will certainly be those who will push for such action. Providers have voiced loud opposition to such a move noting that any reclassification would severely harm investment and innovation. Phil Kerpen with American Commitment pointed out that there is a reason why the classification of the Internet has remained unregulated for such a long time:

The FCC has subsequently gone on to affirm the treatment of broadband Internet as an unregulated information service at every opportunity, including cable modem service in 2002, DSL in 2005 and mobile broadband in 2007. It worked. The unregulated Internet flourished into a remarkable engine of economic growth, innovation, competition, and free expression. Such triumph makes a compelling argument for continuing the long-time hands-off policy.

The real question now is how the FCC will move forward after the comment period is over and when these new rules are likely fought in the courts. Nobody knows for sure, but if history has shown anything, it is that the Internet does not need a regulatory apparatus in order to fulfill the needs of the market in a responsible manner.

The fight over net neutrality has been played out for nearly a decade, and as Holman W. Jenkins, Jr. pointed out in the Wall Street Journal, it is clear that net neutrality is a losing proposition:

Since 2004, the government’s efforts to impose regulation on the Internet have been consistently mired in political stalemate and litigation. Five bills have been defeated in Congress since 2004. Twice the D.C. Circuit Court of Appeals threw out attempts to impose net-neut rules by administrative fiat. With each passing year in which no rules have been in force, more ridiculous have become net-neut warnings about the impending “death of the Internet” at the hands of big business. In that time, the Internet has thrived.

The FCC will hold an open commission meeting on Thursday, May 15, 2014 and TPA as well as other groups who have been involved in the fight over net neutrality will be paying close attention to the vote.  The actions regarding the new rules may also pave the way for regulatory overreach on other issues the FCC has jurisdiction over, including wireless spectrum. Former FCC official Angela Giancarlo noted in a panel discussion on wireless spectrum yesterday (hosted by the Alliance for Innovation and Development) that “the reason why our (US) wireless sector is the best in the world is because of the light regulatory footprint” the government has imposed upon it for decades.

TPA shares in the sentiments praising the path of least regulation. The way forward on the Internet should be one of encouraging innovation and expanding commerce, not embracing regulation. The best way to continue the thriving nature of the Internet is to keep net neutrality and it’s harmful regulatory reach as far away from the web as possible.