Unpacking the FCC’s Latest Net Neutrality Order

The Federal Communications Commission (FCC) announced it would hold a vote later this month to reinstate onerous Title II regulations on the internet. These rules are more commonly known as “net neutrality” regulations. Since its inception, the internet has been classified as a Title I information service, with the government having a light-touch regulatory footprint. Title II regulations – briefly in place from 2015 to 2017 under the Obama administration – would classify the internet as a “common carrier.” This would open the door for more direct and onerous FCC regulations.

This move makes little sense. One of the primary reasons the internet was able to grow from a mere idea to the mainstay of American life is due to the government’s willingness to step back and let it grow.

The Phoenix Center for Advanced Legal and Economic Public Policy Studies found that investment into broadband infrastructure dropped by 20 percent to 30 percent between 2011 and 2015. This is the period when President Obama took office and then FCC began seriously discussing the Title II reclassification, before passing the Open Internet Order four years later. Restoring Internet Freedom Order repealed that classification in 2017, after President Trump took office and installed Ajit Pai as chairman.  

Given the disastrous results last time Title II was applied to the internet, there is no excuse to make the same mistakes again. No one can claim ignorance as to the adverse economic effects. Investment will drop once again. Further, the true costs may never truly be known because of the innovations that will likely never occur because of these regulations.

The FCC’s announcement includes more than just the restoration of so-called net neutrality. Among the other new powers the Commission desires to arrogate to itself is to “provide oversight of broadband outages.” The FCC claims a Title II reclassification will “bolster its ability to require [telecommunications] companies to address internet outages.” In reality, this means bullying internet service providers (ISP) for issues that may be outside of their control. The FCC provides no rationalization for why an ISP would decline to attempt to restore service during an outage.

The announcement also claims Title II regulations will “boost security of broadband networks.” The Commission laments its present inability to direct foreign-owned companies “to discontinue any domestic or international broadband services.” This subjective designation could limit competition, which would slow the growth of broadband access in America and dissuade competitors from investing in American broadband infrastructure, knowing the FCC could (on a whim) dismiss certain companies.

The Commission also claims it will be able to “incorporate updated cybersecurity standards into network policies.” The nation should not want the FCC to be the beat cop on cybersecurity best practices. As experienced with such disastrous legislation as the deceptively named Open App Markets Act or the American Innovation and Choice Online Act, the federal government does not know the best methods of enhancing cybersecurity. Rather, private industry has a strong incentive to secure its networks. Industry best practices should not be dictated by bureaucrats who lack expertise.

Further down in the order, the FCC asserts this new regulatory order will benefit consumer privacy. It would bar the sale of “sensitive” data. However, data collection practices by tech and telecom companies are a new-era way of conducting market research. The FCC should steer clear of creating new rights with its regulatory authority. Any data privacy standard ought to be set in Congress, where it is not subject to bureaucratic whims – as the entire debate over Title I vs. Title II has demonstrated is the norm at the FCC.

Lastly, the Commission claims this new order is essential to create a national standard. Without it, they say, states will create a patchwork of regulatory standards. While it is true that this regulation of fundamentally interstate commerce needs to be accomplished at the federal level, the FCC’s claims reflect a misunderstanding of recent case law. To claim the courts allowed states to promulgate their own regulations that conflict with the Restoring Internet Freedom Order is false. While the D.C. Circuit Court, in Mozilla v. FCC (2019), rejected prima facie federal pre-emption of state net neutrality regulations, the FCC can pre-empt any state regulation that directly conflicts with the current Title I classification on a case-by-case basis. The door is not, in fact, wide open for myriad conflicting state regulations.

This new order amounts to a massive power grab for the FCC. Thankfully, the American public has the benefit of hindsight in this case since this is not the first time this has been tried. No one need wonder how it will go. The results will be mass uncertainty, lower investment, and missed innovation. The results may even be magnified, as the scope of the FCC’s power grab, in this instance, is much broader. This should be stopped before it can begin again.