Don’t Cry for Me Argentina!

“Facts by fiat power” isn’t a new concept, but I’d like to think its popularity has waned in the digital age.  But maybe not.

Some Argentine economists have concluded that the country’s inflation rate is not 10% as reported in government statistics, but over 20%.  But it is an election year, so Argentinian leadership has begun to fine and prosecute its economist and other experts whenever their numbers don’t line up with those of the current authorities.  North Korea has taken it a step further and created its own alternate reality. Surely those models of governance have much to learn from us.  But maybe not.

The FCC’s model of ‘regulate twice, measure once’ is starting to look eerily similar to these regimes.  Once net neutrality has been codified and its enforcement begins, American leadership’s willful ignorance of the advice of experts might rival any in the world.

Report after report by the nation’s leading experts have been written and the facts are in: a federally enforced net neutrality rule would cause immense economic harm, decrease GDP, harm consumers, and disproportionately affect small and medium-sized businesses.

A study on the Economic Effect of Network Neutrality was released less than one year ago by Frost & Sullivan.  The independent research firm concluded that net neutrality would likely mean an upcharge of as much as $55 per month to the consumer, in addition to current charges.  The authors write that net neutrality “seeks to manage competition by influencing the investment decisions of operators could have a significantly negative impact on consumers, job growth and the economy generally.”

New York University faculty took to examining how investors might be impacted by the fiscal implications of net neutrality regulations.  The NYU study concludes that net neutrality would cost the U.S. economy $62 billion and eliminate 502,000 jobs over the next five years.  To put this in perspective, the jobs lost to this one policy could be more than a tenth of the jobs lost in the entire recent recession.

It’s easy to get sucked in by the media framing of net neutrality as the battle between big corporations like Comcast and the little guy at home on his computer.  But it’s small businesses that will feel the pinch.  In fact, the United States Small Business Association funded one study by W. Mark Crain that concludes federal regulations produce a significantly higher cost burden for small and medium sized businesses than on big businesses.  The net neutrality regulations will certainly be no different, putting the most amount of stress on new entrants and small or struggling firms.

The Obama administration continues to push for policies that bridge the “digital divide.”  In fact, that mission was a central plank when dolling out money under the stimulus package.  Even this goal, a central tenet of the Obama administration, would be set back by the new regulations.  A 2007 report titled “Unintended Consequences of Net Neutrality Regulation” found the policy “would be detrimental to the objectives that all Americans seemingly should want-namely, the accelerated construction of next-generation networks, and benefits of lower prices, broader consumer choices, and innovations these networks would bring.”

A collection of reports like these and many more is synthesized well in our very own“The Consequences of Net Neutrality Regulations on Broadband Investment and Consumer Welfare” where the authors “remind us of basic economic principles and explore the implications of those principles for policymaking.”  There is simply no doubt that when we explore those principles and how they relate to the digital economy, net neutrality is a threat to our economy.

Despite growing stacks of reports like these on Chairman Genachowski’s desk, comments in the Commission’s inbox, or experts to testify at their disposal, the pseudo-populist cause of Internet regulation marches on.

So why does the FCC continue to move forward with a plan so widely regarded as flawed amongst experts conducting studies?  Most likely because these studies don’t match up with the ideological bent of those at the FCC, many of whom are determined to see an Internet governed and regulated by a bureaucratic government body.  Organizations like Free Press and companies like Google and Netflix have lobbied the FCC for years in an attempt to impose their beliefs, and today’s FCC represents the fruits of their toil.

It seems the FCC might have forgotten its real purpose. The Radio Act of 1924 said that the Commission has the authority to act, in a limited way, but only “as public convenience, interest, or necessity requires.”

Nothing is in more blatant disregard to this principle than ignoring the advice of experts in order to push forward a political agenda.  Unless the FCC can renew its vow to act in public interest, it represents a massive threat to economic stability and consumer freedom. If the FCC can’t put its political and ideological bias aside and start looking at the numbers, the plight of Argentinian economists doesn’t look far off.

 

Zack Christenson is a Chicago-based digital strategist who writes on tech policy and blogs for the American Consumer Institute.

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