Internet Command and Control Regulation

As many observers know by now, the FCC is contemplating reclassifying the Internet under Title II of the Communications Act, which would make the Internet a public utility rather than its current classification of Title I, which applies to information services. The FCC’s reply comments for this proceeding ended this Wednesday.

Though net neutrality proponents have lost in the courts, they’re now pushing the FCC for these new rule changes, effectively giving government command and control over how the Internet operates.

As the Internet was coming into being in the early 1990s, the Clinton Administration, though then-FCC Chairman William Kennard, was the first to decide that the Internet shouldn’t be regulated as a public utility. Republicans and Democrats came together in a bipartisan decision, understanding that to let the Internet flourish, it was necessary to have an Internet that was largely free of government intrusion and regulation.

This has been the case for the past 20+ years, with the Internet providing a platform for millions of business and supporting millions of jobs—and spurring well over a trillion dollars in investment along the way. Without the freedom that the Internet has had, it’s unlikely we’d have the same Internet we see today.

The Internet as we know it today is littered with thousands of businesses, large and small, that wouldn’t exist without the Internet. From e-commerce sites like Amazon to video sites like YouTube and Netflix to giants like Google—none of it, and the jobs and commerce they all generate—would not be possible without the explosive growth and innovative qualities of the Internet over the past few decades.

According to a report from McKinsey, the Internet accounts for 3.4% of GDP amongst G8 countries. Another group, Boston Consulting Group, says the Internet economy of G20 nations will be valued at $4.2 trillion by 2016. Technology companies such as Apple would be putting out far less innovative products—the iPhone, along with the iTunes store, would be much less interesting products without the Internet. And think about the thousands of ancillary jobs that these products have created—thanks to the iPhone and iTunes store, over 500,000 jobs have been created by the app economy.

Having the government reclassify the Internet under Title II would be a huge detriment to the future of the Internet, essentially ceding control of the Internet to the government. This new regulatory apparatus would certainly result in slower Internet services with reduced investment—and thus, less job creation.

Currently, 92% of homes in the US have access to a broadband connection, a much higher rate than Europe. Internet providers are pouring billions into upgrading their networks every year, with $1.2 trillion being spent since 1996. And many new players are getting into the game, with Google Fiber being laid in several cities and many other smaller startups doing so as well.

Would this investment happen if companies were forced to undergo the scrutiny and regulatory processes of public utilities? Unlikely. Reclassification of the Internet to 1930s-style monopoly controls would surely mean reduced investment in broadband networks, with fewer companies competing for market share.

The irony is that this reclassification would do little to stop what its proponents are so keen on happening—stopping Internet fast lanes. What it would more likely do is stop Internet providers from slowing down traffic for certain sites—something that isn’t happening now and hasn’t really ever happened on a large scale. The market has done its job of seeing that consumers get the Internet they want at speeds they want.

Applying onerous command and control regulations is not the answer.  Reclassifying the Internet as a public utility would do less to help consumers.

Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization.  For more information, visit www.theamericanconsumer.org.

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