Wednesday, December 22, 2010

Why we should be worried about "net neutrality"

The FCC's decision yesterday to grab for itself the power to regulate the internet through so-called "net neutrality" rules is the latest grab for federal government power over private industry. There wasn't any big demand for such regulation. The internet has grown from the small source it was in the beginning to be the wonderful source that it is today through private companies investing and competing with each other. But that isn't good enough for the Democrats on the FCC. They want more control.
U.S. companies are sitting on $2 trillion in cash, and the Obama Administration has just made telecommunications a less attractive place to invest. To health care and financial services, add one more industry that the federal government has drawn into that huge gray cloud called "economic uncertainty."

Yesterday's action is breathtaking: At a stroke, the Democratic-controlled Federal Communications Commission circumvents Congress, defies the courts and declares itself overlord of the Web.

Under the "net neutrality" rules adopted by FCC Chairman Julius Genachowski and two fellow Democrats on the five-member panel, Verizon, AT&T, Comcast and other Internet service providers will have less say over how they manage their networks and serve customers going forward.

The rules prohibit Internet providers from blocking legal websites, a principle the industry already voluntarily adheres to. More problematic are rules that would allow the FCC to determine if an Internet service provider is engaged in "unreasonable" discrimination in terms of prioritizing traffic on its network. Republican Commissioner Robert McDowell, who voted against the new regulations, noted in a statement yesterday that "reasonable" is not only a subjective term but "perhaps the most litigated word in American history."
They took this arrogant step in the face of a federal court decision saying that they did not have this power and urging from over 300 members of Congress to desist. This was a problem in search of a solution and, when government gets involved, that solution is always more regulation and control.
There is no compelling reason to subject the Internet to more regulation. New devices and applications proliferate. Competition among broadband providers is robust, barriers to market entry low, and evidence of market failure nonexistent.

What the FCC has done here is a naked lunge for political power. It forces every player in this crucially important industry to first clear what they can and can't do with their Washington masters. Minimizing the inevitable damage ought to be a top priority of the next Congress.
John Fund explores the back story on who is behind this. It's the same groups that were so eager to stifle freedom of speech through campaign finance reform plus some of the same people who would like to restore the Fairness Doctrine. Cleverly, the FCC commissioned its study on the need for net neutrality by asking the same groups that had already been advocating for net neutrality to produce reports about how the FCC had to regulate the internet to ensure net neutrality. Now that is interconnectivity!