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Consumers expect internet companies to operate and innovate at nimble, digital speed, not the sluggish pace dictated by the 1930s era Title II utility law.
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| When Donald Trump campaigned for president, his raison d'être was to "make America great again" and "drain the swamp."
There's no better place to start than the internet sector, which plays an increasingly central role in our lives and economy, and which was a primary target of Obama Administration overregulation and crony capitalist meddling.
Now, the Federal Communications Commission (FCC) under the leadership of new Chairman Ajit Pai stands poised to restore internet freedom by undoing an Obama FCC attempt to classify broadband internet access service as a “telecommunications service” under Title II of the Federal Communications Act.
That reversed twenty years of successful federal policy. During the first two decades following the Telecommunications Act of 1996, under the Clinton and Bush Administrations and multiple FCC chairs, the internet flourished under a pro-growth, light-touch regulatory strategy that encouraged private investment and innovation by treating broadband internet access service as an “information service” under Title I of the Federal Communications Act.
Entire new industries developed as a result of that light-touch regulatory climate. Over the ensuing two decades, the internet went mobile, and became a hub of social, cultural and economic activity far beyond what anyone could have predicted during its early days. Streaming music and video services fundamentally changed how Americans find and enjoy entertainment, and education, employment and government services all moved online.
But then the Obama Administration decided to upend two decades of successful internet policy. In its final months, Obama's FCC under Tom Wheeler employed Title II of a 1930s utility regulation intended for copper-wire telephone service, immediately putting the internet's technological revolution and innovation at risk.
The great software, website and device companies of Silicon Valley don’t operate under the kind of regulatory straitjacket imposed by Obama's FCC. Rather, they famously enjoy “permissionless innovation” – the freedom to bring new products and services to market and to innovate at will.
Broadband providers must continue to possess that same freedom and incentive to innovate and improve their products and services, without being smothered beneath the wet blanket of federal micromanagement. Consumers expect internet companies to operate and innovate at nimble, digital speed, not the sluggish pace dictated by the 1930s era Title II utility law.
Unfortunately, the negative consequences of the Obama FCC decision were immediate and dramatic.
Title II regulation has already suppressed investment and dampened the vibrancy of the internet ecosystem. One recent study found that it reduced investment below the level it otherwise would have reached by 20% to 30% a year, or $30 to $40 billion annually. Additionally, a survey of utility regulation in Europe predicts that comparable Title II regulation could depress broadband investment in the U.S. up to 50%, or $44 billion a year.
Those dollars should be going to lay new fiber, connect new communities, close the digital divide, innovate new products and upgrade and enhance service for everyone online. Instead, in the wake of the Obama FCC's decision, they are laying fallow, as broadband companies navigate the strictures and regulatory suffocation of Title II. The internet sector cannot afford to have the private sector investment that has fueled the growth and success of the internet for the last twenty years constricted or cut off.
It's also important to emphasize that, contrary to liberal internet activists' sloganeering, this is not a question of net neutrality, which protects consumers online and ensures the free flow of information and ideas on the World Wide Web. Title II and net neutrality aren't synonymous, and rescinding the costly and destructive Title II classification should not be taken as opposition to neutrality principles or the need for a free and open internet. Net neutrality should be protected on its own without the damaging overhang of Title II.
The simplest and most ideal scenario is for Congress to pass a straightforward net neutrality law that protects the open internet and brings certainty and stability to this area after years of debate and regulatory whiplash. Congress can pass such a law without the jurisdictional contortions that led the Obama FCC to invoke Title II, and a Congressional statute would be permanent and secure from future regulatory fiat and court challenge.
The stakes are too high to allow this threat to fester. The internet sector needs regulatory simplicity, certainty and freedom, not micromanagement from Washington, D.C., bureaucrats.
Until Congress acts, however, the FCC under Chairman Pai is doing the American public a service by eliminating the flawed Title II regulation classifying the internet as a public utility, and allowing the private internet sector to resume the investment, growth and innovation to which we've become accustomed. |
