Caveat Emptor Is No Way to Make Sound Public Policy

by Mike Wendy on January 13, 2011

Just before the FCC released it controversial Net Neutrality Order late last month, FCC Commissioner Robert McDowell opined that the (then still hidden) details of the Order would leave little room for debate among industry insiders: The regulations coming out of the FCC were actually onerous Title II regulations disguised as benign Title I rules.

After the Order’s release, McDowell elaborated, stating in his dissent:

“In another act of legal sleight of hand, the Order claims that it does not attempt to classify broadband services as Title II common carrier services.  Yet functionally, that is precisely what the majority is attempting to do to Title I information services, Title III licensed wireless services, and Title VI video services by subjecting them to nondiscrimination obligations in the absence of a congressional mandate.  What we have before us today is a Title II Order dressed in a threadbare Title I disguise.  Thankfully, the courts have seen this bait-and-switch maneuver by the FCC before –and they have struck it down each time.”

Contrary to McDowell’s point of view, as the Order was announced, FCC Chair Julius Genachowski put his spin machine in full motion for his new rules.  At the public meeting announcing the Order, Genachowski blithely noted that the new regulations were simply high-flying rules of the road, which were appropriately balanced, and which avoided government overreach by eschewing overly restrictive proscriptions.

Baloney.

I have to say that in looking at the Order – from its redefinition of unregulated information services into essentially regulated common carrier services, and then on down the line – I think Commissioner McDowell is right on the mark. On December 21st, a massive bait-and-switch occurred before America’s eyes. The Commission’s regulations, ostensibly designed to promote transparency, and to prevent blocking and unreasonable discrimination, have the look and feel of ossified, 75-year-old rules based on 19th Century thinking.

They are essentially plain old telephone regulations, unsuited to the challenges of today’s – let alone tomorrow’s – Internet.  Moreover, they fly in the face of the Internet’s immense success, which has been driven in no small measure by the absence of such regulations.

Though the Order’s new regulations and dicta are not called Title II, they have clear analogues in Title II of the Act, and, in many respects, appear functionally similar to statutory language within:

§201 – regulating services, practices and charges

§202 – prohibiting unreasonable discrimination

§203 – regulating publication of charges

§204 – allowing hearings as to lawfulness of charges

§205 – enabling the FCC to prescribe just and reasonable charges

§206 – creating liability of carriers for violations of the Act

§208 – creating the FCC’s complaint process

§211 – requiring the filing of carrier contracts and arrangements with the FCC

§213 – enabling the FCC to know of construction and use changes

§214 – approving extension and decommissions of lines and services

§215 – enabling the FCC to know transactions relating to services

§218 – enabling the FCC to know management practices and technical improvements

§219 – requiring carriers to report on all questions needed answering by the FCC

I guess it’s all in the marketing of the end product.  Good job, Julius.  Of course, the average consumer gets hauled into the action, too.  The Order’s Title II proscriptions mean less innovation at the core level, which will also negatively affect the entire Internet ecosystem, including the development of edge services, content, apps and devices.

Though the Commission, in its clairvoyance, thinks its new regulations make controlling the Internet as easy as duck soup, they will most certainly be arbitraged toward innovation-killing ends well beyond the agency’s auspices and control.

A prescient example of this can be seen in Free Press’ (et al) just-filed complaint alleging that MetroPCS’ new 4G service is somehow violating the Order’s Net Neutrality requirements.  Heck, as Adam Thierer and Jim Delong point out, the ink isn’t even dry yet, with the rules not officially in effect, but these groups are already bringing actions before the Commission on supposed infractions.  The fact that such pro-consumer choice offered by MetroPCS is even an issue does not bode well for Julius Genachowski’s “non-over-reaching” rules.

But this is as expected.  Notes Larry Downes in CNET:

“…even FCC Chief of Staff Ed Lazarus acknowledged that the December vote, which came on the heels of a new Congress decidedly less friendly to Net neutrality than the last one, was only the first step in a long process. ‘We addressed the problems we saw,’ he said. ‘We’ll stop there for now. If other things come up that pose anticompetitive or consumer problems, then we’ll revisit.’”

True dat.  Any dummy could have seen that coming.  The Commission’s new rules of the road will make its return visit (as well as that of its proxies) that much easier.  Again and again and again…

Sadly, I expect a bait-and-switch from the Dollar Store.  I should not expect that from my public officials.  Caveat emptor is not a way to make sound public policy.

Julius?  Where’s the Service Department?  I’d like to make a return.

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