Daniel Berninger: SCOTUS Must Address OIO & End FCC’s Reclassification Ping Pong

by Mike Wendy on October 18, 2017

Daniel Berninger is Founder of VCXC, and was an intervenor in the appeal to overturn the FCC’s 2015’s Open Internet Order. Earlier this month, he asked the Supreme Court to take a look at the OIO. Berninger believes the OIO is specious and is especially offensive to the the First Amendment, which he notes the Commission turned on its head in order to regulate the previously non-regulated Internet. He hopes the Supreme Court agrees with him, and in doing so, end the FCC’s reclassification ping pong game once and for all.

I was able to catch up with Berninger last week, and below is a video (along with a transcription) of that discussion.

The value proposition of communication has exploded during the period of non-regulation, at least of the Internet, from 1995 to 2015. Literally about a thousand-fold expansion of the value proposition – whatever it is you got in 1995, you’re getting a thousand-times that for the same dollar in 2015. I don’t know any sector of the economy anywhere, even just computing, that has improved that much in a period of 20 years in the planet. In the history of the planet, has that ever happened where the value proposition expanded a thousand-fold in 20 years?

The smartphone service that you have today, like an LTE service on a smartphone, if you had that in 1995 as a regulated service, it would’ve been $10,000 a month. So, here we are getting something for 100 bucks a month, and the regulators say, “Wow, as a non-regulated service, you’ve done such a great job, we now need to regulate that to protect it.”

The net is of that is that it becomes so important that we’re not just talking about washing machines and toasters. When you give somebody something that is a thousand-times more powerful, they’re that more attached to it. And so, when somebody comes up and says, “Oh, aren’t you afraid of something happening to this,” it works. And again, fear, the dialogue of fear and vilification of the phone companies sort of pushes reason away. Nobody pauses and says, “Well, wait a minute. 20 years of non-regulation to get me a 1000-fold expansion in value. Why is it that I need regulation?”

The Commission, which was essentially put out of business by the Internet, is struggling to have a business. So in the private sector, when you lose all your customers, you go out of business. But not in the case of government. The FCC essentially lost all the customers for the telephone network by 2015, and so they just simply declared, “Well, we own the Internet.” One thing people have to do go back and read the Constitution. And the Constitution, in addition to the First Amendment, says that Congress makes the laws. And so, in order for the FCC to claim that it has a role to play in the Internet, it essentially had to legislate. It essentially had to invent a role because there is nothing; certainly in 1934 nobody wrote in a law that said the FCC should control the Internet. And even in 1996 when they did the update, they were emphatic in the plain language of the Act, “Stay away from the Internet. We don’t need you.” So, literally, the FCC had to invent, and with the help of the the DC Circuit in some cases, just entirely made up the reasons and rationale to regulate the Internet. And everybody admits it had never really been a problem. There’s trillions and trillions of interactions over the Internet over a period of 20 years, and they can only find a handful of even just anecdotes. And so, it turns out if you want to get the government to regulate something, pick something that doesn’t exist and pursue it. It’s sort of like Big Foot – we’re still not sure if Big Foot exists or not, and you just can’t talk people out of it.

The problem is we’re unhinged from the Constitution, we’re unhinged from the First Amendment, and that’s leading to this ping pong of reclassification. And so, there are some really fundamental questions now, after 15 years, that the Supreme Court can and should intervene on rather than waiting for yet another cycle and reformulation. So we’ll see.

As dysfunctional as Congress is, the one thing that’s a fact is they will not get involved in communications so long as the FCC apparently can do whatever it wants. In other words, there’s no reason for Congress to act if it turns out that the FCC can go, and in the words of Justice Scalia, go on a voyage of discovery. Congress doesn’t need to take the risk to put a stake in the ground and fight the political battles if it turns out that the FCC can do whatever it wants. So, the end of this process really has to be the Supreme Court saying, “No, we don’t see anywhere here where the FCC is allowed to regulate the Internet. And even aside from the FCC, if government wants to regulate the Internet, it needs to follow the First Amendment.” And what they’ve done with the Open Internet Order was invert that, turn it over. And they’re saying, “Government will protect freedom of speech and all the freedoms.” One of the things I say these days is that Orwell is in charge of word definitions. And so, as we approach the Orwellian tyranny, all the words turn upside down and become the opposite. So war is peace. The whole initiative is government claiming, “Hey, we’re going to be the referee to make sure everything’s going to be OK on the Internet.” But again, if you notice what the original First Amendment was, it was a negative impairment for a reason that since the beginning of civilization governments have not been your friend in communications.

The grand history of communications and what people don’t realize is their anxiety about phone companies is really an anxiety about government’s support of phone companies and intervention. So, if you hate the government, or if you hate a telephone company, you need to go examine why. And go back in history and see where government was making innovation illegal. You were not allowed to attach anything to the phone network, and that was government that did that. However big and evil the individual telephone companies might be, having government as a controlling entity there – now that is a world class, unaccountable monopoly. You’re not doing yourself any favors by trading a private sector monopoly or somebody who supposedly has market power for government. The long history proves that, and until it proves something else, we need to presume and follow the Constitution, Separation of Powers and follow the First Amendment. The First Amendment says government shall not screw with my communications. And hopefully the Supreme Court will affirm that next year.

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