FCC ‘Net Neutrality’ Rules Endanger a Truly Open Internet

FCC ‘Net Neutrality’ Rules Endanger a Truly Open Internet

Watchdog Group Warns Against Internet Regulation, Urges “Agency Neutrality” in FCC Filing

Washington, D.C., January 14, 2010 – The Federal Communications Commission is planning new rules to dictate how Internet providers can manage the information that flows over their private networks. These rules would foreclose the evolution of innovative, pro-competitive network and business models and, worse, would inject politics into the governance of Internet networks, the Competitive Enterprise Institute warned in a public comment submitted to the FCC today.

“America’s challenge is not for FCC to ‘do something’ in the communications and Internet realm, but rather to dismantle and move beyond earlier regulatory impediments that have limited our creative freedoms in expanding infrastructure and content access,” explained Wayne Crews, CEI Vice President for Policy.

The FCC’s proposed net neutrality rules rest on the fallacy that government action is needed to ensure a vibrant, innovative Internet. In reality, today’s Internet is as free and innovative as ever, while consumer choice among broadband providers is at an all time high. Net neutrality rules, announced late last year by FCC Chairman Julius Genachowski, would empower a heavily politicized federal agency to dictate the outcomes of otherwise-private disputes over network access and pricing, and will also likely extend to the content sectors now advocating the rules.   

“Banning proprietary business models is just the opposite of true ‘openness,’” said Crews. “The FCC seems to be forgetting that not every network has been built yet, and tomorrow’s networks and business models need not resemble those that prevail today. The FCC is wrong to assume that today’s politicians and regulators know what’s best for companies not yet created, networks not yet deployed, and business plans not yet formulated."

Key Points to the FCC:

• FCC needs to bring something to the table apart from an appetite for regulation.
• The "Agency Neutrality" proposed here would mean regulators must not be allowed to “discriminate” and choose sides (content over infrastructure) in any market confrontation.
• At stake is less today’s ground-level dispute, but rather the principle of proprietary control vs. the principle of collective control in the creation and management of infrastructure and communications wealth decades hence.
• When liberalizing a heavily regulated segment of a mixed economy, the gauge of the impending reform’s appropriateness is simple: The body of private activity subject to regulation must decline rather than increase.
• It is important to appreciate the significance of the fact that the FCC is unwilling to even affirm that it will leave “managed” and “specialized services” alone.
• The deliberate conflation of competition with government-defined openness and a penchant for compulsory access (and the attendant government role in price and entry regulation) colors the entire proceeding.
• Pricing and access freedom would result in a constant escalation in the basic capabilities of the network, an intensification of the “background hum” of the Internet as a whole, much as we’ve already witnessed without neutrality mandates interrupting the process over the past decade.
• The principle of neutrality should be replaced by a new principle, that of fostering competition in the creation of networks. Today’s task is one of lowering transactions costs of building infrastructure.

> Forthcoming -- CEI comment to the FCC