Analysis: FCC Regulation Plan for Internet Is Misguided

Published May 13, 2010

Federal Communications Commission Chairman Julius Genachowski has announced he wants to place the fast-moving broadband and Internet industry under a regulatory regime designed for monopoly-era telephone service.

The chairman’s plan, announced May 6,  is as misguided as it is puzzling—and it’s representative of a government bureaucracy searching for a problem that doesn’t exist.

Is my Internet service provider (ISP) perfect? Is yours? Of course not. We all have complaints about Comcast or AT&T or whichever company provides our access to the Internet. But will more government regulation make your Web surfing experience better, faster or cheaper? Not a chance.

Genachowski’s Plan
Genachowski said FCC lawyers have found a way for the commission to impose strict net neutrality rules on ISPs—a main goal of the chairman, and President Obama, that is reflected in the National Broadband Plan the agency released in March.

The commission required a new legal strategy to impose stricter regulations on the Internet in the wake of the April 6 Comcast v. FCC decision by the United States Circuit Court for the District of Columbia. The court ruled the FCC needed to get explicit authority from Congress to impose net neutrality rules—authority that Congress has not yet granted.

Genachowski admitted “the Comcast decision has created a serious problem,” but he insists the FCC still has the power to regulate ISPs with what the chairman promises will be a “light touch.” But Genachowski’s plan risks slowing investment and innovation in broadband, meaning consumers could face slower Internet speeds and higher prices.

Problems with Net Neutrality
At first blush, the idea that ISPs should be required to give every application equal treatment, one of the main motives behind “net neutrality,” sounds fair. But let’s look at some of the implications for consumers, starting with Internet browsing.

The FCC wants to limit or prevent ISPs such as AT&T and Comcast from differentiating a customer who downloads large, network-hogging videos all day from someone who simply browses news websites and sends e-mail. In this net neutrality world, the big, bulky downloads and applications will end up eating up most of the bandwidth space and stifling access to smaller, less-bandwidth-intensive applications.

Thus the very access for everyday people and small Web sites that activists say they want to protect will actually be diminished.

Wireless Regulation Coming?
The FCC also wants more control over your cell phone, and more regulations will arise as the Internet increasingly goes mobile through devices like the iPhone. The FCC wants a say in what Apple does, what Google does, and how apps work together or with your phone—in essence, where and how an ISP and application provider work together.

That level of micromanagement from government bureaucrats is a disaster in the making for an always-changing, rapidly evolving tech industry.

Regulatory Mission Creep
There are countless other ways the FCC is about to get involved in our lives.

Away from home and want to use your laptop to set your DVR to record the finale of Lost? It won’t be easy, the way it is now, if the FCC places restrictions on how cable companies can link set-top-box features to broadband Internet connections.

Want to turn on your house alarm remotely with your cell phone? Not if the FCC prevents or regulates service bundling or co-branding between broadband ISPs and alarm companies.

These are just two examples of consumer-friendly services available today. They arose out of the unregulated broadband ecosystem that could now be subjected to FCC intrusiveness if the agency gets its way.

Stifling Investment, Innovation
There’s no telling where else the government might demand jurisdiction. Going forward, when an ISP wants to develop and introduce an Internet service or feature it will have to be concerned about whether it will run afoul of or draw scrutiny from the government minders at the FCC.

More tech regulation inevitably means higher costs for the industry. As a result, many tech companies will be less likely to innovate and will build less broadband infrastructure.

So instead of Internet speeds continuing to grow, the government’s net neutrality plans could stall future advancements and lead to deteriorating broadband infrastructure in some parts of the country.

Ultimately, any costs tech companies and ISPs incur from FCC meddling will be passed on to us, the end users. So we can probably expect higher bills—and perhaps all those surcharges and administrative fees found on phone bills will apply to our Internet service, too.

Pending Policy Disaster
Here’s the bottom line: No matter what the information, the faster it is allowed to move—and the easier it is for people, businesses, and government agencies to link it together to produce value—the better it is for everyone.

Until May 6, even the FCC expressly understood and endorsed this approach.

Telephone service is about one-to-one connection. Broadband is about many-to-many interconnections. That’s why the FCC separated the two to begin with.

Constraining broadband with rules that applied to what is now, in technical terms, an ancient technology, can’t help but end up as a policy disaster.

Steven Titch ([email protected]) is a telecom policy analyst at Los Angeles-based Reason Foundation. This column first appeared at Reprinted with permission.