The Internet's 51 New Regulators - The FCC goes ahead with its plan to control Web pricing.
The Internet's 51 New Regulators
The FCC goes ahead with its plan to control Web pricing.
May 15, 2014 7:31 p.m. ET
Federal Communications Commission Chairman Tom Wheeler
went ahead with his proposal on Thursday to give his agency the power to decide
whether the terms and prices of broadband Internet services are
"reasonable." That's bad enough as political discretion, but
according to dissenting Commissioner Ajit Pai, regulators from every state will
also be able to get into the act.
Mr. Wheeler's goal is to satisfy the "net
neutrality" supporters demanding that every broadband customer receive the
same deal, no matter how much bandwidth they consume. Backed by two other
Democrats, Mr. Wheeler said he prefers the "reasonable" pricing
standard. But he also suggested another, even worse option to regulate
broadband prices: reclassifying Internet connections as "telecommunications
services."
For two decades Congress has wisely refused to give the
FCC the same power over the Internet that it holds over the telephone system.
And for two decades the Internet has enabled a gusher of creativity that was
unimaginable over a century of regulated telephony. Mr. Wheeler's brainstorm to
change all this is simply to pretend the Internet is a phone network.
This would apply to today's broadband networks
common-carrier rules that were designed for monopoly telephone companies—and
created decades before the inventors of smart phones and social media were even
born. Since this designation would automatically impose myriad obligations that
have nothing to do with current customer needs—and that many modern firms could
not possibly fulfill—the commission would then have to issue a flurry of
exemptions ("forbearance" in FCC parlance) to prevent chaos in the
market for Internet connections.
Think of this as ObamaCare for the Web: enact an
unworkable system and then get busy issuing waivers to prevent the new system
from operating as designed.
GOP Commissioner Michael O'Rielly, who also dissented,
notes that the FCC's net-neutrality campaign "rests on a faulty foundation
of make-believe statutory authority." But even if the FCC can persuade
federal courts to accept one of its methods to assert control over the
Internet, that still doesn't mean the agency can satisfy the net-neutrality
crowd.
That's because for all the complexity and lawyering the
new regulations would bring, no law has ever said carriers can't charge
different prices for different services. If Google and Netflix want to push a
lot of content over the Internet and ensure its smooth delivery to customers,
they will need to pay more than the start-up sending the occasional packet of
data.
Yet net-neutrality supporters have cast their campaign as
a cause on behalf of start-ups. The fear is that big broadband companies will
block access to small websites. Mr. Wheeler's FCC claims "there are no
rules on the books to prevent broadband providers from limiting Internet
openness by blocking content or discriminating against consumers and
entrepreneurs online." But this is false. As former FCC Commissioner Robert
McDowell has noted, the Federal Trade Commission already has ample authority to
go after businesses that mistreat customers, online or off.
The one sure result if telecom regulation is applied to
the Internet is that fewer new networks will be built, and fewer start-ups will
even try. The FCC will now await public comment on its two regulatory
alternatives before it writes a final rule. As wireless Internet entrepreneur
Brett Glass tweeted after the FCC vote: "May need to try selling my business
before anything like this can be enacted."
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