22 Different Reasons Why the FCC Should Avoid Imposing Net Neutrality Regulations

by Mike Wendy on November 30, 2010

Why should the FCC avoid unilaterally imposing Net Neutrality regulations?  I’ll tell you why…in 22 different ways:
  • A super-majority in the present House, representing members from both sides of the aisle (including over 70 Democrats), “have indicated that the questions raised in the net neutrality rulemaking are better left to Congress.”  Why piss-off these guys, as well as your new bosses coming in for the 112th Congress?
  • But, if one wants to go ahead and piss ‘em off, here’s another reason why not to – Representative Darrell Issa and his zest for oversight hearings.
  • And then here’s another reason why one would want to work with Congress instead of unilaterally imposing regulations – the yearly appropriations process.
  • As Adam Thierer believes, it’s just plain antidemocratic, explaining that “to the extent regulation is deemed necessary and that regulation governs such a massively important portion of the American economy, that determination should definitely be made by elected leaders in Congress and not delegated to bureaucrats who would ram through regulations with 3 votes and sketchy plan for reordering that sector.”
  • The midterm elections cried out: “America wants jobs and less government!”  Admitting as much, staunch Net Neutrality lobbyist Gigi Sohn says she would “*love* voters to vote on telecommunications policy issues, [but] they don’t.” That’s because “they vote on issues like jobs, the economy, immigration, wars, you know, stuff like that.”  Net Neutrality regulation is not about creating jobs, and it is most certainly not about less government.  It is at best a third-tier issue that failed to stir up even its most ardent supporters – its progressive base (as can be seen in the 0 for 95 routing of progressive candidates for congressional office).  If it doesn’t register with voters, and the party’s own base doesn’t even care, what can the Commission gain, if not a black eye and an irreparable ding to its ongoing legitimacy?
  • Congress has decreed that “information services” shall not be regulated.  By reclassifying “only the transmission element” of broadband as a Title II common carrier service, the FCC is creating a legal fiction that will indirectly yet significantly regulate information services.  But, “Chevron deference” only goes so far.  With no market breakdown, or clear delta in the underlying factual scenario, the agency’s action will more than likely be found to be “arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with the law” if / when the regulations are challenged in court.
  • Title II / Net Neutrality regulations open the door up to the “nuclear option” – i.e. price controls (among other evils) – which distort markets and the service provided therein, ultimately undermining investment in sustainable facilities-based competition.
  • Net Neutrality regulations will not only undermine the private property and speech rights of network providers, they will likely also effect content providers, too, as can be seen in the Fox / Cablevision retransmission dispute and Commissioner Michael Copps’ declaration that the event was “yet another instance revealing how vulnerable the Internet is to discrimination and gate-keeper control absent clear rules of the road.”
  • 95% of America has access to broadband; and 80% have more than two different options.  These numbers continue to grow.
  • An example of this continued growth can be seen in today’s Washington Post, with writer Cecilia Kang proclaiming: “Within weeks, some of the biggest wireless companies will offer super-fast Internet connections for cellphones that rival the speeds delivered to desktop computers. As competitors follow suit with their own juiced-up networks geared for the Web, consumers can expect a cornucopia of new services – along with new charges.”
  • Actual consumer harm does not exist. By even the FCC’s own admission, its rules are designed to “preserve” the presently open, and implicitly well functioning, Internet.  The question is not so much are consumers harmed (they aren’t), but rather how satisfied they actually are with their service.  Illustrative of this, a recent FCC study shows 95% of businesses were “very” or “somewhat satisfied” with their broadband Internet service.  Another similar survey shows that 71% of Americans are “very satisfied” with their home broadband services, compared to just 3% who are not.
  • The overwhelming lion’s share of so-called Net Neutrality breakdowns are specious, as outlined here and here by CATO’s Julian Sanchez.
  • The FTC and DoJ already have the ability to police anti-consumer and anticompetitive behavior on the Internet.
  • As the GAO, NTIA and DoJ have noted (implicitly and directly), broadband uptake may be more of a factor of demand / complementary inputs – i.e., socioeconomic, race, age, disability, culture, lack of IT skills, lack of access to IT, actual perceived need or desire, and cost – than actual lack of broadband access.
  • Demand-sided efforts – such as “Lifeline & Linkup”, and other needs-based efforts – have not been adequately explored or retooled for broadband uptake.
  • In the DoJ’s filing to the FCC on its National broadband Plan they note: “Between the ongoing deployment of wireline broadband networks, the geographic expansion of wireless broadband services (hopefully spurred by the availability of additional spectrum to broadband wireless services), and increased transparency, the Department is hopeful that the vast majority of American households will benefit from significant competition in their local markets. Put differently, most regions of the United States do not appear to be natural monopolies for broadband service…Although enacting some form of regulation to prevent certain providers from exercising monopoly power may be tempting… care must be taken to avoid stifling the infrastructure investments needed to expand broadband access.”
  • Title II regulation is based on 19th Century ideas of natural monopoly.  Nearly a decade ago that monopoly effectively ended.  Today, instead of the local phone company providing one’s only means of networked communication, technology has enabled up to 7 different types of broadband communications providers in any given market – e.g., DSL, co-ax, fiber, 3G, 4G, satellite, and BPL.  Other technological advances develop daily.  In many cases, what’s holding up the outlay of more competitive options is not end-user demand or geographical constraints, but rather deficient government policies, such as those that relate to tower sites and rights-of-way, release of new wireless spectrum, and traditionally high taxation of communications plant and services.
  • Since 2005 (when, after SCOTUS’ Brand X decision, information services were fully recognized as “unregulated”), economist Bret Swanson notes more than a half-a-trillion dollars of communications infrastructure investment has been poured into U.S. broadband networks.
  • Economists Rob Atkinson, Daniel Castro and Stephen Ezell suggest that with every $10 billion in broadband investment, nearly 500,000 total additional jobs (direct and indirect) are created.
  • The iPhone, which could not have been introduced under strict Net Neutrality regulations.
  • Even ardent Net Neutrality advocate Google (for the most part) thinks heavy-handed Net Neutrality regulations will hurt the further development of Internet networks and services.
  • Because anti-corporate group Free Press says it’s the “right” thing to do.

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