Obama to the FCC: Go Ahead and Break the Internet

Published December 10, 2014

President Barack Obama’s recent call to the Federal Communications Commission to strictly regulate broadband networks could be the death knell for the open, free, and prosperous Internet that has become one of the key engines of the American economy. That engine is not broken, but bureaucratic meddling will surely do the trick.

In 1996, Congress classified broadband as an “information service” under Title I of the Telecommunications Act, a light regulatory touch that allowed the digital economy to bring us the marvels of the modern age. Unburdened by onerous regulation, telecommunications companies motivated by (gasp!) potential profits took risks and invested heavily in new technology. This is why in 2014 even the poor in America have the world in the palm of their hands, and have fast access to just about any form of media and information on-demand.

Title II, in contrast, is an anachronism; a strict and controlling “common carrier” regulatory regime designed for old style copper-wire telephone networks developed during the Great Depression. It has as much place in today’s vibrant, high-speed broadband world as a hand-crank telephone on the wall of a general store.

Title II classification would give a small, unelected bureaucratic body widespread power and control over the Internet economy – allowing the FCC to play traffic cop and paymaster by controlling rates, infrastructure, mandating levels of access, and interfering with how Internet service providers (ISPs) operate.

Scott Cleland, policy advisor at The Heartland Institute and chairman of NetCompetition, correctly refers to Title II as a “Mother may I?” regulatory regime. It would create a world in which ISPs would need to ask permission from FCC overlords to introduce new products, modify current products, or introduce and deploy new technologies. This would irreparably harm the Internet economy by slowing the pace of business and innovation to the snail’s pace of government.

Closely related to the push for Title II regulation is the debate over net neutrality: the concept that ISPs treat equally all the traffic moving through their broadband networks, not block access to any legal online content, and play no favorites by prioritizing one content provider over another.

For years, this has been a voluntary arrangement regulated by market pressures, and worked well in the dial-up and early broadband days. Having invested billions in their networks, ISPs want to please as many customers as possible. As broadband networks have gotten faster, the popularity of bandwidth-hogging services such as video streaming have skyrocketed – to the point that at peak hours of broadband use in North America, about half of all traffic on the Internet is consumed by just Netflix and YouTube. Half. In light of such unequal use of broadband, the concept of treating all traffic equally is not only impractical; it is a sure-fire way to degrade the digital experience for everyone.

Yet supporters of shoving the square peg of modern broadband into the round hole of Title II regulation would do so to ensure the FCC could strictly enforce net neutrality – replacing the flexible, efficient decisions of millions of people in a free market with the strict-yet-uninformed dictates of a handful of Washington bureaucrats. The user experience would suffer as investment would slow to a crawl, costing all of us the pace of innovation in the digital economy we have come to take for granted.

It is human nature to take for granted the status quo. It is dangerous to think government attempts to “improve” the status quo will do anything of the sort. The Internet is not broken. There is no problem for the FCC to fix. But it will create plenty if it heeds President Obama’s call to apply an early 20th century regulatory regime to the digital wonder of the 21st century.

Jim Lakely ([email protected]) is co-director of the Center on the Digital Economy at The Heartland Institute. Matthew Glans ([email protected]) is a policy analyst at The Heartland Institute.