Utility Regulation Will Make the Internet Rusty

by Mike Wendy on October 10, 2014

No one loves their public utilities. They’re slow, unresponsive to change, and only just good enough for government work, which isn’t saying much.

If you’d talk to progressives working in the Internet space, though, you’d hear a different story. They think that utilities, and the 19th Century regulation used to control them, are the greatest things since sliced bread.  You see, they want to make private U.S. broadband providers public utilities, and radical groups like Free Press, Public Knowledge and MoveOn.org have pulled out all of the stops to get the Federal Communications Commission to do so.


Clearly, the Internet is one of the greatest communications tools ever. And broadband providers – such as cable, fiber, DSL, wireless, satellite and Wi-Fi operators – allow users to access the Internet.  Though broadband has exploded with growth and innovation these past 10 years, the Left believes the Internet is simply too important to be left to corporate access providers to develop it any further.

U4In their view, the FCC should turn all 1,700 private U.S broadband providers into public utilities to “protect” the Internet’s “openness” and development. Not only would this indenture them to government servitude, it would make Internet access a general-purpose tool where all who use it – from the biggest corporations down to the Average Joe – move at the same “fair” speed, without “discrimination,” no one ahead of the other.

Good idea, eh?

Well, not really.

First of all, the Internet exploded precisely because regulators decided not to regulate it like a utility. Each year, U.S. broadband providers pour approximately $70 billion into upgrading Internet access, totaling well over $1 trillion of investment since 1996. Consequently, choice abounds.  And that choice doubles in speed and quality every three years without increase in price.  Can your water, gas, electricity providers do that?  Didn’t think so.  That’s because they’re regulated to death as utilities.

Second, the Left wants to flat-out ban so-called “discrimination” of content, applications, services and devices, making everyone suffer with the same undifferentiated Internet experience that treats all traffic “equally,” without any priority. But we should want reasonable discrimination. It is a well-accepted business practice employed in every segment of our economy to improve consumer welfare. It means providers can differentiate their offerings from their competitors, bringing new value to Internet users and the ecosystem. Reasonable discrimination actually makes the Internet better.  Banning it would end a constantly evolving Internet.

Finally, we’ve tried utility regulation before with our communications laws, and all it succeeded in doing was delaying by decades the rollout of cellular, digital and other important communications infrastructure to “protect” the provision of plain old telephone service. Similarly, broadband infrastructure advancements would decelerate because utility regulation greatly limits profit and flexibility, dampening incentives to invest and innovate.  Moreover, once such regulation has been unleashed on broadband providers, regulators will eventually use that to regulate well beyond, to companies like Google and Netflix. This, of course, would further devastate the entire Internet ecosystem.  Having to ask permission to innovate and invest would slow the Internet’s development down to government speed.

When has that ever been good?

The Internet is the very opposite of government speed, or just good enough for government work.  It does not ask for permission to innovate, help consumers, or change society.  It just does it and waits for us to decide.  This has resulted in tremendous consumer and societal benefit.  Not just for Americans, but for the entire world, too. It will stay that way to the extent it remains unencumbered by government-mandated utility regulation.

No one loves their utilities. Why put the Internet in with such terrible company?

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