August 30, 2017

In the Matter of Restoring Internet Freedom

rule details

Agency: Federal Communications Commission
Proposed: May 18, 2017
Comment period closes: August 30, 2017
Submitted: August 30, 2017
Docket ID: WC 17-108

The Technology Policy Program of the Mercatus Center at George Mason University is dedicated to advancing knowledge about the effects of regulation on society. As part of its mission, the program conducts independent analyses to assess agency rulemakings and proposals from the perspective of consumers and the public. Therefore, this reply comment does not represent the views of any particular affected party but is designed to assist the agency as it explores these issues.

It is welcome news that the FCC is considering the repeal of Internet regulations and revisiting the classification status of Internet access. Since at least the 1970s, the Federal Communications Commission and Congress have sought to reduce the reach of Title II burdens through forbearance and by narrowing the scope of “common carriage.” The majority of commissioners in 2015, however, reversed years of precedent to regulate “broadband Internet access service” (BIAS) as a “telecommunications service,” thereby subjecting Internet services and content to vague Title II obligations and political pressures. A reversal is needed.

Ever since the 1920s, many US communications regulations that are nominally about technical issues have been abused by political actors. This was apparent when the Fairness Doctrine—a programming nondiscrimination requirement for broadcasters, derived from the existence of “spectrum scarcity”—was in effect. The FCC penalized radio stations for “throttling free speech.” The FCC declined to give certainty about its vague rule: “No single or exact rule of thumb for providing time, on a nondiscriminatory basis, can be stated for application to all situations which may arise in the operation of all stations.” Predictably, broadcasters used these nondiscrimination rules to punish political opponents and unwanted speech by, for instance, filing of tens of thousands of fairness complaints annually in order to impose crushing regulatory costs on political opponents.

The Open Internet Order (OIO) is a similar FCC regulatory scheme that is notionally about networks but will be abused by future regulators and activists to chill speech, shape culture, and hinder innovation. For this proceeding we need only consult the coiner of “net neutrality,” Professor Tim Wu, who told members of Congress that these Internet regulations were needed so that the FCC would have the ability to shape “media policy, social policy, oversight of the political process, [and] issues of free speech.”

There was nothing “broken” about the Internet or American online innovation before 2015 requiring a drastic change in regulatory philosophy. The United States is a global leader in broadband subscriptions, and—more importantly—its firms are the primary source of new Internet-based services and applications. As Marvin Ammori wrote in 2014, before Title II regulation, “[T]he cost of running a basic Internet application fell from $150,000 a month in 2000 to $1,500 a month in 2011. It continues to fall.” The United States became the global leader in technology and Internet application development in the absence of common carrier regulations.

As was made clear after investigations by the Wall Street Journal and a majority report from a Senate committee, the FCC’s 2015 decision to ground rules in Title II of the Communications Act of 1934 was made hastily after pressure in November 2014 from the “ersatz FCC” of policy advisers within the White House to classify broadband access under “Title II of the Telecommunications Act [sic].” 

Given that about-face by the then chairman to use Title II of the Communications Act, the result was a legally deficient Open Internet Order. While the OIO’s legal and factual errors and omissions are too numerous to catalog here, some of the OIO’s most significant problems and its unforeseen negative effects are discussed below. This reply comment makes the following points:

  1. Internet access is best classified as an information service.
  2. Classifying Internet access as a telecommunications service renders other statutory provisions meaningless.
  3. The Open Internet Order poses significant First Amendment issues.
  4. The Open Internet Order gives Internet service providers an increased incentive to filter content and violate open Internet norms.
  5. The Open Internet Order and Title II regulation chill innovation.

The deficiencies of the OIO cannot be remedied with mere tweaks, and the OIO and reclassification rules should be totally rescinded.