Dec 14 2017
Earlier today the FCC voted to reverse a major impediment to a free and open Internet: The Title Two Internet regulations that were imposed under President Obama in 2015.
These regulations are commonly called “Net Neutrality,” so for the sake of convenience that is what I’ll call them.
I want to congratulate FCC Chairman Ajit Pai for this brave accomplishment. He has fought for what he knows is right in the face of tremendous pressure.
I also want to use this opportunity to correct the record about what the FCC actually has accomplished.
Because there is an astonishing amount of misinformation and hyperbole surrounding this matter.
If you believe the passionate voices defending these regulations, then you may think the FCC just jeopardized the Internet that we all know and love—and sometimes loathe.
These activists paint a scary vision of America without Net Neutrality.
. . . A vision where large Internet Service Providers prey on ordinary consumers and startups.
. . . Where Internet access would be rationed or bundled up in expensive packages.
. . . One viral tweet even suggested that Google would start charging two bucks apiece for Internet searches!
These are falsehoods, and they will be exposed as such over the next few months, when the Internet hums along like usual and the skyscrapers in all our major cities remain standing.
We will look back on these dire predictions as hysterics, like Y2K or the Mayan Apocalypse of 2012.
But in the present, these exaggerations have real-world consequences besides scaring the public.
In the last six months, Chairman Pai and his family have been attacked in the grossest terms.
Even his children have been singled out for intimidation.
These kinds of attacks have no place in our discourse.
So why don’t we tone down the rhetoric and see if we can’t get to the truth about Net Neutrality.
We can start with a little background.
In 2015, the Democrat-controlled FCC issued the so-called “Open Internet Order.”
This order made dramatic changes to how the Internet was classified for purposes of regulation.
Until 2015, broadband Internet was classified as an “information service.”
As such, it was subject to “light-touch” regulations that allowed innovators to build without seeking permission from the government.
This classification was common sense and reflected the intent of Congress.
The Internet is a fast-moving information superhighway.
If slow-moving government regulators got involved decades ago, it could have inhibited innovation that keeps service fast and prices low for all Americans.
Not only was this a common-sense arrangement, it facilitated a “virtual renaissance” of innovation and discovery.
This renaissance gave us things like smartphones, ride-sharing, and super-fast fiber optic Internet. It gave us 3G . . . then 4G . . . and soon 5G wireless service!
And yes, this period also gave us Twitter. So it wasn’t all good.
But overall, the light-touch regulatory arrangement worked pretty well—for ordinary users, big companies, and entrepreneurs just starting out in their garages.
Contrary to Net Neutrality’s rabid defenders, the Internet of 2014 was not some sort of hellscape. It was actually pretty awesome.
The FCC threatened all that in 2015, when it reclassified broadband Internet as a “telecommunications service.”
This innocuous-sounding change subjected the Internet to a host of regulations that were originally meant for New Deal-era telephone monopolies like Ma Bell.
In essence, the government imposed 1930s-style regulations on 21st-century technology.
This outdated arrangement has worked about as well as we would expect: Broadband Internet investment has fallen significantly since the Net Neutrality regulations were proposed in 2011.
Dr. George Ford of the Phoenix Center estimates that between 2011 and 2015, just the threat of regulation scared off $200 billion in investment.
And since the regulations were imposed in 2015, broadband Internet investment has declined by 5.6% —that’s billions of lost dollars over just two years.
As Chairman Pai has noted, this is the first-ever decline in broadband investment outside of a recession. And this recession just so happens to be self-imposed!
It may not seem like a big deal to you that government is squeezing out billions in Internet investment. But it hurts you and your fellow citizens in material ways.
Less investment means less fiber-optic cable . . . fewer towers and Wi-Fi hotspots.
And this translates into spottier coverage and slower speeds for Americans—especially those living on the periphery of society, in poverty or in rural areas.
FCC regulations make it harder for these Americans to have equal access to the Internet.
These regulations also have entrenched the market power of large Internet Service Providers while hurting their smaller competitors.
By their very nature, regulations impose conformity on a market. They limit companies’ ability to distinguish themselves from their rivals by offering innovative services.
This works out fine for the companies at the top. They’ve already made it. They can kick back without worrying about some young punk coming along and changing the game.
It works out less well for the young punks—the startups that want to win customers away from old-school companies.
That’s how it works in theory, at least. And there’s good evidence that’s what is happening in practice.
Small ISPs have been far more critical of Net Neutrality regulations than large ISPs.
A group of two-dozen small Internet providers recently wrote that the regulations hang “like a black cloud” over their businesses, “slowing” or even halting their deployment of new technology.
Likewise, 19 municipal Internet providers told the FCC that they “often delay or hold off” on introducing new services because they cannot afford a potential complaint.
Internet providers that serve predominantly rural areas have voiced similar concerns, reporting that they have reduced network expansion in parts of the country that are already underserved.
These examples show that Net Neutrality regulations are harming competition and increasing the consolidation of power in the Internet industry, not decreasing it.
Internet regulations have in effect sheltered large ISPs from competition and from the need to change. Be sure to think about that the next time you’re on hold with customer support.
As Americans chart a path forward in the coming years, we will face an important choice: Do we want an Internet run by regulators, or an Internet run by innovators?
The innovators have a strong track record over the last thirty years, so I know who I’m siding with.
How can we empower them? And more importantly, how can we empower the millions of families who rely on fast and reliable Internet service each and every day?
The FCC did its part today by repealing Net Neutrality and returning to the regulatory framework that governed the Internet successfully until 2015.
This move reclassifies the Internet as an information service, but it goes beyond that as well.
The FCC will require every ISP to disclose information about their network management practices.
If these companies block or throttle Web traffic, rest assured the public will know about it.
And importantly, this order restores enforcement power to the Federal Trade Commission to protect consumers from “unfair or deceptive” practices.
The FTC had policed the Internet successfully for years prior to 2015. Now the cop is back on the beat.
The FCC’s action today is a return to normalcy for the Internet.
But we should not rest easy. A future administration could undo all Chairman Pai’s hard work at a moment’s notice, if Congress does not act to solidify his accomplishment.
Over the summer, I introduced the Restoring Internet Freedom Act, which would prohibit the FCC from imposing utility-style regulations on the Internet ever again.
Passing this act would give companies the regulatory certainty they need to invest in improvements for their customers.
We should not discount how important Congress can be in determining the success—or failure—of things like the Internet.
In 1996, President Clinton and Congress inaugurated the “light-touch” regulation of the Internet. They wanted the information superhighway to be “unfettered by Federal or State regulations.”
They were rewarded with a tremendous outpouring of innovation that has improved the lives of practically every American.
I say we emulate their wise example, and see what free men and women can invent in the next twenty years.