FCC Resolves to Implement Net Neutrality Regs

Published June 9, 2010

Federal Communications Commission Chairman Julius Genachowski’s announcement the FCC intends on applying what he calls “Third Way” net neutrality regulations to the Internet after a period of public comment has sparked renewed debate over whether the FCC should be allowed to assume such authority over the Internet.

Genachowski stated the FCC will be “reorienting the Universal Service Fund to support broadband in rural America, to adopting focused consumer protection and competition policies, to promoting public safety in a broadband world…. [I]n particular, it would allow broadband policies to rest on the Commission’s direct authority over telecommunications services while also using ancillary authority as a fallback.”

Opponents such as Ralph Benko, a technology expert and principal with Capital City Partners in Washington, argue Genachowski’s Third Way approach will cost telecommunication jobs and slow investment in U.S. broadband networks.

Economic Fundamentals Ignored
Federal regulators such as Genachowski are demonstrating a lack of understanding of basic economics, Benko said regarding the FCC director’s May 6 announcemet.

“The real issue is whether the cable and phone companies who have spent billions of dollars to wire up our houses and compete for our business ought to be allowed to charge a few customers who use up a huge amount of the capacity more than they charge the vast majority of their customers who use it just for email and web browsing and use hardly any capacity,” he said. “To prohibit the providers from charging piggy customers more than the rest of us is like the government dictating to restaurants that they have to charge a flat fee for all you can eat . . . to everyone. Good way to drive a lot of restaurants out of business; good way to slow our Internet service to a dead crawl.

“The providers are doing a good job of providing reliable, affordable service to hundreds of millions of customers,” Benko continued.

“What makes some congressperson or agency employee, who doesn’t even know what TCP/IP stands for, think that they are smarter than the people who invented it, built it, and manage it?”

Cover for Price Controls?
Benko says net neutrality proponents are really price control advocates.

“The net neutrality advocates just wish to impose price controls but are embarrassed to come right out and admit it because pretty much everyone knows that price controls degrade service and destroy jobs and have had that effect every time they have been tried, going back to Jimmy Carter, Richard Nixon, the Soviet Union, and the Roman Empire,” he explained.

“The phrase ‘net neutrality’ reminds me of a very witty greeting card I have up in my office, showing a dog looking at a metal box and saying ‘the Internet is an amazing thing,’ as the cat on the floor retorts, ‘That’s the microwave.’ Only someone with no real grasp of what the Internet is could think that net neutrality actually means anything. It sounds like it should, but it is totally meaningless,” he added.

Rep. Cliff Stearns (R-FL) agrees and has introduced the Internet Investment, Innovation, and Competition Preservation Act (H.R. 5257) in the House. H.R. 5257 would prohibit the FCC from regulating the Internet.
“I see no reason for [this kind] of Internet regulation,” Stearns said. “Yet, if there is ever a cause for regulation, it is a decision to be made by Congress—not the FCC,” Stearns said in a prepared statement.

Congress Opposes FCC Plan
Scott Cleland, chairman of NetCompetition.org, says close to a majority of Congress opposes federal regulators’ attempts to regulate the Internet and these federal regulators may be violating U.S. law.

“The important thing to remember here is that now 245 members of Congress oppose the FCC’s decision, a strong, bipartisan majority of the House of Representatives has spoken—171 representatives,” he said.

“The FCC is going to have a problem because it is pursuing Congress’ job without the Congress’ blessing,” he added. “The bottom line here is the FCC cannot do anything it wants; it has to operate within the bounds of legal authority and general political consensus. If the FCC proceeds with regulating the Internet and imposing net neutrality, there will be a race to the courthouse to see who can sue first and fastest. [The federal regulators] are creating a circumstance which will lead to enormous litigation and regulatory uncertainty. It threatens job creation in America.”

Cleland says the FCC is following a special-interest agenda.
“Google and its allies here simply do not want to pay their fair share of Internet usage. Google uses the Internet enormously. Their broadcast online unit, YouTube, uses vastly more Internet capacity than other Internet companies,” he said.
Thomas Cheplick ([email protected]) writes from Cambridge, Massachusetts.