Obama’s Net Neutrality Rule Cost American Taxpayers up to $4.16 BILLION to Develop and Enact

by Mike Wendy on January 10, 2017

The other day in The Hill, John Davis – an ostensibly well-connected IT contractor who wants to help the federal government manage its data during rulemakings – claimed:

“…it ended up taking nine months and an estimated $50 million for the FCC to consider the entire [Net Neutrality] comment dataset…” (emphasis and brackets added by me)

That’s huge. But, could it be?

Boring down into the details, it appears that Davis’ figure was built on some shaky assumptions. It focuses mainly on “considering” the comment dataset, making an overly-broad calculation that all of the FCC’s “700” lawyers, among others, were working exclusively from May 2014 (the beginning of the comment period) to February 2015 (the issuance of the ObamaNet Net Neutrality rule), and nothing else, to pour through the comments.

That simply could not have occurred.

First of all, other “lawyer work” was going on at the agency during this period – a good bit, such as on Universal Service, spectrum, consumer protection, broadcasting, cable, public safety, etc., split among the agency’s fewer than 600 (not 700) lawyers. Yes, Net Neutrality sucked the air out of the room, but all agency work did not stop in favor of that needless rulemaking.

Moreover, though approximately four million Net Neutrality comments did pour into the Commission during this period, only about 1,000 were substantive / unique, demanding real analysis by FCC personnel. The rest was a counting exercise because it was either form letters sent in via digital grassroots campaigns, or simply junk, having nothing to do with the proposed rule itself.

I believe Davis’ calculation doesn’t hold water. An FCC spokesperson I contacted concurred, stating in an e-mail to that the “number is not remotely accurate.” In a follow-up, however, I asked the official what the cost to develop the rule actually was – a broader question beyond just digesting comments.

After repeated requests, he failed to offer any number.

All this begs the question: What was the cost to the American taxpayer to develop the final Net Neutrality rule?

If viewed as simply being the result of a couple of fiscal years’ of work, the program costs associated with the Net Neutrality / Title II rulemaking could have cost up to $22 million. Significant on its own, but hardly $50 million.

But, I believe a far broader equation is needed.

Obama’s rule, which comes at the end of his two terms, represents the apogee of nearly eight years of work by the Obama White House, aided by its partners in crime, the FCC and NTIA. President Obama campaigned heavily on it both elections. The FCC merely was the last stop before that dream was realized; it didn’t matter who made the law, only that it happened before the President left office. To isolate the rule’s cost to just two fiscal years (e.g., FYs ’14 and ’15), and then only to the FCC’s work, massively underscores what it eventually cost the American taxpayer to enact Net Neutrality into law. It’s all the same work and agenda.

Consequently, I think the cost to develop the final Net Neutrality / Title II rule could be as high as $4.16 Billion.

Yep, you read it right – up to $4.16 BILLION.

What does my calculation include? Well, the Administration put our taxpayer money where its mouth was (funny how that works) through a near constant drumbeat of statements in full support of the concept, such as:

  • Passage of the American Recovery and Reinvestment Act of 2009, which imposed Net Neutrality requirements for its $4.7 billion in broadband handouts, and which eventually resulted in 120+ Net Neutrality-compliant, NTIA-administered broadband infrastructure projects across America (from Feb 2009).
  • The program costs associated with administering the NTIA’s ARRA broadband infrastructure projects (for fiscal years 2010 – 2014).
  • The program costs associated with promoting broadband at the FCC (for fiscal years 2009 – 2015).
  • The FCC-commissioned and approved Berkman Center “Next Generation Connectivity” Report, which set the stage for the first Obama FCC to begin aggressively advocating for Net Neutrality regulatory policies, calling for, among other things, utility-styled Internet openness (Feb 2010).
  • The National Broadband Plan, which furthered the march toward utility-like Net Neutrality regulation of ISPs (March 2010).
  • The FCC’s failed Comcast Net Neutrality appeal, which added increased urgency to develop sustainable “cop on the beat” Net Neutrality rules under former FCC Chairman Julius Genachowski’s tenure (April 2010).
  • The FCC’s 14th to present Wireless Competition Reports, which failed to conclude that the wireless marketplace was “effectively competitive,” supporting the narrative that “more” was needed to reduce the gatekeeping control of the top U.S. mobile broadband providers (from May 2010).
  • The FCC’s 6th to present Broadband Progress Reports, which have all concluded that broadband is not being deployed to all Americans in a reasonable and timely fashion, thus justifying (in the agency’s view) utility-styled Net Neutrality regulation of U.S. ISPs. (from July 2010).
  • Julius Genachowski’s first Net Neutrality Order (Dec 2010).
  • FCC approval of the Comcast / NBC merger, which included numerous Net Neutrality / Internet openness “voluntary agreements” unrelated to the transaction at hand (Jan 2011).
  • The FCC’s Broadband Map, which has been used to “prove” that U.S. ISPs remain uncompetitive gatekeepers in need of regulatory intervention, such as utility-styled Net Neutrality (from Feb 2011).
  • Genachowski’s losing appeal of his Net Neutrality Order (Jan 2014).
  • The White House’s “shadow FCC,” which allegedly ordered FCC Chairman Tom Wheeler to impose utility-styled Net Neutrality regulation on ISPs, causing Wheeler to change direction and rewrite his almost completed Net Neutrality Order to comply with the President’s “request” (Feb 2015).
  • President Obama’s final Net Neutrality Order (March 2015).
  • Obama’s appeal of the current Net Neutrality Order (June 2016).

Of course, this does not include other related work that was either used to move Net Neutrality toward final completion, or boost the narrative that regulation was needed and justified, such as: The NOIs and NPRMs leading to the above-mentioned reports and orders; public events, workshops and speeches; legislative, interagency and other governmental cooperation to spread the gospel; congressional testimony and responses to congressional inquiries; external PR outreach; the Universal Service Fund; the push for new set-top-box regulation; and the push to preempt states on their municipal broadband rules and its failed Federal court appeal, among other efforts.

Why does this matter? I mean, what’s $4.16 billion to develop a simple rule, right?

Quite frankly, it was always a “solution” for a “problem” that did not exist. There were only ever just four Net Neutrality “violations.” That is, maybe four…

…among trillions of bytes crossing over the ‘Net.

Talk about fake news swinging an issue. The Administration trafficked in this spurious narrative for eight years. Spurious, because the marketplace thrived. Technology was booming. The ecosystem prospered. Consumers got what they wanted. And the tools to fix any real harm – if it ever occurred – already existed, either through marketplace dynamics, or law then on the books.

Even if you back-out the costs associated with the NTIA infrastructure projects, you’re still looking at over $500 million of taxpayer funds to make a statement that quite simply was NEVER needed.

You know, it took Apple an estimated $150 million and about three years of development to come up with the first iPhone. Amazing, groundbreaking innovation.

Contrast that to Uncle Sam. It took the Federal Government $4.16 billion and eight years to develop a bogus propaganda campaign for Net Neutrality, which resulted in a 400-page paper tiger that helped only Google and Silicon Valley. Amazing waste, to say the least. I’m not even mentioning decreased investment by the ISPs since the rule became law – the very companies the FCC said would be spurred to invest more by Net Neutrality / Title II.

No wonder Net Neutrality reportedly is on the chopping block for the new administration. This is billions of dollars we’ll never get back. But in cutting it, it will unleash, yet again, the entire Internet ecosystem from the choking grip of government bureaucrats and cronies.

And this will make consumers, not Silicon Valley billionaires, great again.

{ 1 comment… read it below or add one }

Arthur Rhodes January 11, 2017 at 4:17 pm

You mean it costs money to pass bills and regulations? I am stunned! We shouldn’t pass another law or regulation ever, just think of the savings to the us government!

This pales in comparison to the price gouging rates we all pay our ISP’s, but that is of no concern to you is it? Is part of your lobbying contract with them that they give you free/discounted service?

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