Research & Commentary: Beware Federal Meddling in the Internet

Published June 18, 2009

The Senate Commerce Committee on Tuesday urged President Barack Obama’s pick for chairman of the Federal Communications Commission, Julius Genachowski, to “fix” what many in Congress see as a dysfunctional agency. And Genachowski’s vow at his confirmation hearing to make the FCC “a model for transparency, openness, and fairness” is encouraging—and likely will suffice for him to breeze on through the full Senate.

But Americans should be wary of allowing such a powerful federal agency to start defining what “openness” and “fairness” mean when it comes to regulating the Internet. Genachowski is a firm believer in “net neutrality,” a concept that would shift the management of Internet traffic out of the free market and into the hands of bureaucrats. Net neutrality is a policy in search of a problem to solve—and one that would put barriers in front of a vibrant market that is successfully and quickly meeting the needs of consumers. The market punishes Internet service providers who manage their networks poorly because consumers have a simple recourse: They can pick another ISP. When government starts regulating the flow of Internet traffic in ways that degrade the Web experience, consumers will find the FCC is not so responsive.

Genachowski also will be spearheading a federal effort to spend billions to increase broadband penetration in the United States—another solution in search of a problem. The FCC’s latest report on high-speed Internet access notes “nearly 100 percent of the ZIP codes in the United States” have access to broadband. The report also shows that unless one lives in the remotest of rural areas, at least four market competitors are fighting for customers. A government push to bridge the mythical “digital divide” is not only a waste of taxpayer money, but it distorts market efficiencies and competition that keep broadband prices moving downward while speeds increase.

Genachowski may mean well, but attempts to micromanage the broadband market from Washington will serve only to choke innovations that have produced the ever-improving Internet experience Americans have come to take for granted. An “open” and “fair” Internet is one where the market, not government, leads the way.

The following publications from The Heartland Institute highlight some of the important information technology and telecommunication issues that will face Julius Genachowski and Congress in the years to come.

Research & Commentary: Net Neutrality
When it comes to property rights and a free market, net neutrality is not “neutral” in any sense of the word. Net neutrality legislation seeks to expand the Federal Communications Commission’s regulatory powers over the Internet through new mandates that would define and regulate access to the Internet.

Research & Commentary: Internet Sales Taxes
State legislators are desperate for new tax revenue to plug massive deficits without cutting spending. The solution, however, is not to impose new taxes on Americans, but to reduce government to handle only its core functions.

Research & Commentary: State & Local Broadband Initiative Failures
As the federal government begins an unprecedented expansion into financing broadband deployment, it’s important to recall how previous state and local attempts failed to bring high-speed Internet to the masses.

Research & Commentary: Universal Access Fund Reform
Federal and state Universal Access and Service Funds (UASFs) have become an inefficient and unnecessary use of taxpayer money.

Research & Commentary: A La Carte Cable Pricing
If consumers would truly be attracted by a la carte pricing, and if such a system were financially sustainable for a cable provider, then an enterprising company has much to gain by offering it, but no government mandate of a la carte cable pricing is needed.

For further information on the subject, visit the Telecom Issue Suite on The Heartland Institute’s Web site at

Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, you may contact Heartland Research Fellow Jim Lakely, managing editor of InfoTech & Telecom News, at 312/377-4000 or [email protected].