Net Neutrality – No Need for Internet Regulation

On June 3, 2011 the Taxpayers Protection Alliance (TPA) wrote about the Federal Communications Commission (FCC) coordinating with supporters of net neutrality to advance the new regulation.  On Friday July 8, 2011, the FCC sent the proposed regulations to the Office of Management and Budget (OMB), which begins a 30 day comment period for the new regulations.  After that 30 day time period, the new regulation will go into effect 60 days later.  Any regulation of the Internet is unnecessary and potentially expensive for taxpayers.  There are also some who believe that the FCC does not even have jurisdiction to regulate the Internet.

“Net neutrality,” which is loosely defined as a system that allows information on the Internet to move freely without regard to content is in reality, a not so subtle attempt to regulate the Internet.

On December 21, 2010 the Federal Communications Commission (FCC) released three rules for an open Internet, which include:  transparency, no blocking, and no unreasonable discrimination.  According to the FCC, “The first rule requires transparency by broadband providers, who must disclose information regarding their network management practices, performance, and commercial terms of their broadband services so that their subscribers can make informed choices regarding those services, and so that edge providers can continue to develop content, applications, and services. The second rule provides that fixed broadband providers (such as DSL, cable modem, or fixed wireless providers) may not block lawful content, applications, services or non-harmful devices. Mobile broadband providers may not block lawful websites, or applications that compete with their voice or video telephony services. The difference between the rules that apply to fixed and to mobile broadband providers is discussed below, and in the Open Internet Rule & Order [R&O].  The third rule establishes that fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service.”

According to the FCC, “The Open Internet R&O provides that consumers and edge providers may file a complaint regarding any perceived violation of the open Internet rules pursuant to Section 1.41 of the Commission’s Rules. Consumers interested in filing a complaint are encouraged to do so.  Under the open Internet rules, any person may also file a formal complaint with the Commission. The procedures for filing a formal complaint are explained in the Open Internet R&O at Section V.B.”

Even though the three rules seem innocuous there are concerns.  First, the term “perceived violation” should alarm anybody who is afraid of regulatory overreach since this would create a situation where anybody could report a company that they think is violating open internet rules.  Imagine the bureaucracy that will have to be built, and paid for, to enforce this.  And, if certain groups have influenced the creation of the rule it is logical to think that they will be the ones reporting the perceived abuses and potentially influence the decision makers on punishments.

Any new regulations will expand the existing bureaucracy at the FCC and the folks at the FCC haven’t been that accurate (or truthful) in compliance costs.  According to the National Journal, “The FCC estimated in its submission to OMB that complying with the disclosure mandates will take the average phone or cable company 32 hours per year.  That is triple the FCC’s previous estimate of 10 hours, which broadband providers said was too low….”  There is no telling what the cost to taxpayers will be and how much that 32 hours per year will increase.

The biggest (and probably the most important) question is the FCC’s jurisdiction and legal authority to regulate the Internet.  According to an April 6, 2010 article on MSNBC.com, “The U.S. Court of Appeals for the District of Columbia ruled that the FCC lacks authority to require broadband providers to give equal treatment to all Internet traffic flowing over their networks. That was a big victory for Comcast Corp., the nation’s largest cable company, which had challenged the FCC’s authority to impose such ‘network neutrality’ obligations on broadband providers.”

The truth is that the Internet has thrived because government has, up until now, kept a light regulatory touch on the Internet.  Quick reacting business and free market forces will keep the Internet thriving, not slow unresponsive government bureaucracies.  A new regulatory regime for the Internet will stifle innovation and cost taxpayers millions of dollars in a newly created bureaucracy.

TPA urges all citizens to contact the Office of Management and Budget (click here) and tell them that net neutrality regulations will be harmful to consumers and taxpayers.