Democracy & Technology Blog The problem with ‘Net Neutrality’

Congressman Rick Boucher (D-VA) wants Congress to codify a set of Network Neutrality principles and “bestow clear authority” on the FCC to enforce them. Net Neutrality is code for re-regulation. It is a recipe for overturning the Supreme Court’s decision in NCTA v. Brand X Internet Services and for allowing the FCC to apply heavy-handed regulation to every broadband Internet access competitor. Though it may be hard to envision such an outcome under current FCC Chairman Kevin Martin, commissioners and chairmen come and go.

Proponents point to the fact that a telephone company in Mebane, NC recently tried to block its customers from accessing the services of a company which offers cut-rate phone service by exploiting regulatory loopholes. The FCC acted swiftly to enjoin the North Carolina phone company. Yet that didn’t stop Boucher from claiming there is a “significant gap in our regulatory structure which will undoubtedly be exploited again.” The “gap” refers to the decision of the FCC to cease regulating broadband Internet access provided by phone companies as a “telecommunications service” under Title II of the Communications Act. How will the FCC regulate? There is always Title I of the Act. Although the FCC has rarely needed to invoke it, Title I provides that the FCC “may perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this Act, as may be necessary in the execution of its functions.” It doesn’t take a lawyer to realize that those are hardly words of limitation.

The debate over Net Neutrality is nevertheless in danger of boiling down to whether the FCC should be directed to issue detailed new regulations or whether it should be granted more explicit authority to intervene if another abuse ever occurs. The distinction is slight. Either way, new uncertainty and new regulatory transaction costs would be introduced just when some of the most serious barriers to investment have finally been lifted in a belated recognition that the market is highly competitive. Broadband requires massive continuing investment, which will never occur if politicians who think they can predict how the market will behave join hands with activists who think that broadband ought to be free, or at least that no one should be allowed to profit from it.

A better approach would be for the industry to demonstrate that it has the will and the capability to self-regulate, such as U.S. Internet Industry Association President and CEO David P. McClure has proposed.

In the hands of the current FCC, the Net Neutrality principles may seem relatively harmless. The danger is that they could be used to justify pervasive regulation. Not too long ago, many saw little likelihood that the unbundling provisions of the 1996 Telecommunications Act could or would ever be transmogrified into one of the most destructive regulatory experiments ever conceived. Under former Chairman Reed E. Hundt, that’s what happened.

Hance Haney

Director and Senior Fellow of the Technology & Democracy Project
Hance Haney served as Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute, in Washington, D.C. Haney spent ten years as an aide to former Senator Bob Packwood (OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee during the deliberations leading to the Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a B.A. in history from Willamette University and a J.D. from Lewis and Clark Law School in Portland, Oregon.