Mercatus Scholar: Net Neutrality Would Be a Mistake

After the President’s announcement Monday morning on net neutrality, Mercatus research fellow Brent Skorup, who specializes in telecom issues, provided initial reaction.

“It does not require a law degree to question the wisdom of imposing eighty-year-old rules intended for the government-blessed monopoly telephone network on the competitive, dynamic Internet.

“If the FCC—an independent regulatory agency—does what the President envisions, the change will represent a stark reversal of decades of deregulatory Internet policy pursued by Congress and FCC commissioners of both political parties. The application of Title II—sometimes called utility or common carrier regulation—would result in value-destroying government oversight of the Internet. Among other damaging effects, broadband Internet would be subject to rate regulation, taxes, and fragmented regulation by state commissions.

“Further, many advocates who cheer this announcement have made no secret that their aims stretch beyond economic regulation of the Internet. They also seek government oversight of media, websites, and political speech online. To that end, Title II instantly politicizes the Internet and puts significant power over this dynamic technology in the hands of unelected FCC officials, lobbyists, opportunistic industry players, and well-funded activists.

“Market participants in Silicon Valley and at technology companies would increasingly rely on their risk-averse regulatory compliance officers instead of their creative engineers and designers. The complex Title II proceedings that ensue will be largely invisible and unintelligible to the public and their representatives in Congress.

“It would be a mistake to apply Title II’s stultifying provisions to one of the few bright spots in U.S. economy—technology and Internet services. The President’s announcement is puzzling because the political consensus is that the 1934 Communications Act should be retired in favor of modern, flexible laws that place consumers—not industries—at the forefront. Title II would impair the creative destruction that makes the U.S. technology sector a boon to consumers and the envy of the world.”