The FCC's Threat to Internet Freedom
'Net neutrality' sounds nice, but the Web is working fine now. The new rules will inhibit investment, deter innovation and create a billable-hours bonanza for lawyers.
By ROBERT M. MCDOWELL
WSJ.com
Tomorrow morning the Federal Communications Commission (FCC) will mark the winter solstice by taking an unprecedented step to expand government's reach into the Internet by attempting to regulate its inner workings. In doing so, the agency will circumvent Congress and disregard a recent court ruling.
How did the FCC get here?
For years, proponents of so-called "net neutrality" have been calling for strong regulation of broadband "on-ramps" to the Internet, like those provided by your local cable or phone companies. Rules are needed, the argument goes, to ensure that the Internet remains open and free, and to discourage broadband providers from thwarting consumer demand. That sounds good if you say it fast.
Nothing is broken and needs fixing, however.
The Internet has been open and
freedom-enhancing since it was spun off from
a government research project in the early
1990s. Its nature as a diffuse and dynamic
global network of networks defies top-down
authority. Ample laws to protect consumers
already exist. Furthermore, the Obama
Justice Department and the European
Commission both decided this year that
net-neutrality regulation was unnecessary
and might deter investment in
next-generation Internet technology and
infrastructure.
Analysts and broadband companies of all
sizes have told the FCC that new rules are
likely to have the perverse effect of
inhibiting capital investment, deterring
innovation, raising operating costs, and
ultimately increasing consumer prices.
Others maintain that the new rules will kill
jobs. By moving forward with Internet rules
anyway, the FCC is not living up to its
promise of being "data driven" in its
pursuit of mandates—i.e., listening to the
needs of the market.
It wasn't long ago that bipartisan and international consensus centered on insulating the Internet from regulation. This policy was a bright hallmark of the Clinton administration, which oversaw the Internet's privatization. Over time, however, the call for more Internet regulation became imbedded into a 2008 presidential campaign promise by then-Sen. Barack Obama. So here we are.
Last year, FCC Chairman Julius
Genachowski started to fulfill this promise
by proposing rules using a legal theory from
an earlier commission decision (from which I
had dissented in 2008) that was under court
review. So confident were they in their
case, FCC lawyers told the federal court of
appeals in Washington, D.C., that their
theory gave the agency the authority to
regulate broadband rates, even though
Congress has never given the FCC the power
to regulate the Internet. FCC leaders seemed
caught off guard by the extent of the
court's April 6 rebuke of the commission's
regulatory overreach.
In May, the FCC leadership floated the
idea of deeming complex and dynamic Internet
services equivalent to old-fashioned
monopoly phone services, thereby triggering
price-and-terms regulations that originated
in the 1880s. The announcement produced what
has become a rare event in Washington: A
large, bipartisan majority of Congress
agreeing on something. More than 300 members
of Congress, including 86 Democrats,
contacted the FCC to implore it to stop
pursuing Internet regulation and to defer to
Capitol Hill.
Facing a powerful congressional backlash,
the FCC temporarily changed tack and
convened negotiations over the summer with a
select group of industry representatives and
proponents of Internet regulation.
Curiously, the commission abruptly dissolved
the talks after Google and Verizon, former
Internet-policy rivals, announced their own
side agreement for a legislative blueprint.
Yes, the effort to reach consensus was
derailed by . . . consensus.
After a long August silence, it appeared
that the FCC would defer to Congress after
all. Agency officials began working with
House Energy and Commerce Committee Chairman
Henry Waxman on a draft bill codifying
network management rules. No Republican
members endorsed the measure. Later,
proponents abandoned the congressional
effort to regulate the Net.
Still feeling quixotic pressure to fight
an imaginary problem, the FCC leadership
this fall pushed a small group of
hand-picked industry players toward a
"choice" between a bad option (broad
regulation already struck down in April by
the D.C. federal appeals court) or a worse
option (phone monopoly-style regulation).
Experiencing more coercion than consensus or
compromise, a smaller industry group on Dec.
1 gave qualified support for the bad option.
The FCC's action will spark a billable-hours
bonanza as lawyers litigate the meaning of
"reasonable" network management for years to
come. How's that for regulatory certainty?
To date, the FCC hasn't ruled out
increasing its power further by using the
phone monopoly laws, directly or indirectly
regulating rates someday, or expanding its
reach deeper into mobile broadband services.
The most expansive regulatory regimes
frequently started out modest and innocuous
before incrementally growing into
heavy-handed behemoths.
On this winter solstice, we will witness jaw-dropping interventionist chutzpah as the FCC bypasses branches of our government in the dogged pursuit of needless and harmful regulation. The darkest day of the year may end up marking the beginning of a long winter's night for Internet freedom.
Mr. McDowell is a Republican commissioner of the Federal Communications Commission.