The disaster that is this Administration’s growing effort to regulate the Internet will be on full display at tomorrow’s Congressional hearing. FCC Chairman Tom Wheeler will no doubt put the best face possible on these policies, which include overregulation of the Internet’s private networks, impending price regulation of business broadband and cherry-picking winners at next year’s spectrum auctions.
Last February, following a video delivering their unprecedented marching orders from the White House, the Commission voted to repeal America’s hands-off Internet policy and begin regulating the Internet under 1930s-era public utility-style rules (referred to as Title II regulations). Since then, an overwhelming amount of evidence has piled up showing not only that the policies are harming the consumers they were promised to protect.
Start with the harm to private sector broadband investment. As Commissioner Pai documented, Internet providers in St. Louis, Indiana, Illinois, Washington State, Virginia and Arkansas have all testified under oath that the cost and legal uncertainty of Title II regulations have forced them to curb broadband deployment. Worse, most of these ISPs are in rural and underserved areas. In fact, recent financial data show that industry capital expenditures has declined sharply, as much as 29% for one internet provider, since the imposition of onerous internet regulations.
Question #1 for Chairman Wheeler:
Since the FCC released its National Broadband Plan, it is supposed to be primarily concerned with expanding high-speed broadband in rural and underserved areas. Are you concerned that so many ISPs are stating under oath that the Title II policies you championed are causing harm to consumers in those areas?
Next, look at the latest discoveries about Title II’s costs. Someone has to pay for expenses relating to the litigation and regulatory uncertainty. At a hearing last month, Rep. Bob Latta offered the example of Amplex, an Ohio ISP that uses fixed-wireless to provide broadband access. As Amplex put it, “The [FCC’s] ruling does such a poor job of defining what the FCC actually intends that many years of expensive litigation will result before we know exactly what the FCC costs are going to be.” (The Amplex comment is at 16:22).
Question #2 for Chairman Wheeler:
Who do you expect will pay the additional compliance costs incurred by Amplex and other ISPs?
Beyond litigation costs, there’s an even bigger consumer expense lurking on the horizon: Under Universal Service Fund rules, Title II rules explicitly open the door for the FCC to a 16.7% tax on interstate revenues. As a Los Angeles Times headline put it last April, “FCC’s net neutrality rules open door to new fee on Internet service.”
Question #3 for Chairman Wheeler:
Will you promise Congress unequivocally that for the rest of your term at the FCC, you will oppose any and all new taxes and fees on Internet access, including levying taxes on Internet access relating to the USF?
Another area for Congress to probe involves the FCC’s own understanding of Title II rules. The Title II order states that the Commission will “watch, learn, and act as required . . . a process that is sure to bring greater understanding to the commission.” The order makes clear that decisions will not be made at Internet speed: “We decline to adopt fixed, short deadlines for resolving formal complaints.”
Questions #4 and #5 for Chairman Wheeler:
Wouldn’t it be better for the FCC to “learn” and gain “greater understanding” before it decided to onerous internet regulations? And since last March, when the FCC’s General Manager told Congress that defending Title II would not be “costless,” has the FCC estimated the costs of defending and implementing its Title II rules?
A couple of months ago, the FCC released new rules that will slow the ability of telecommunications companies to transition from legacy copper networks to advanced “all IP” networks. Effectively, until they receive FCC approval, these telecommunications companies are required to maintain two costly networks – the old copper-based network and the new fiber-based network. In his decent, Commissioner O’Rielly referred to the new rules as impeding progress and adding bureaucracy.
Questions #6 and #7 for Chairman Wheeler:
How do consumers benefit from slowing the introduction of better and faster services? How will these rules keep consumer costs affordable?
If the Committee starts probing the areas mentioned above, it should be an interesting hearing. Stay tuned.
Note: this article was published in Forbes on November 17, 2015.