the FCC's Christmas Gift For The Internet: Net Neutrality Regulation

From The Heritage Foundation:

FCC’s Christmas Gift for the Internet: Net Neutrality Regulation


Posted December 1st, 2010 at 12:37pm in Enterprise and Free Markets with 0 comments Print This Post



Should bureaucrats in Washington, D.C., set rules for the Internet? Julius Genachowski, the chairman of the Federal Communications Commission (FCC), thinks so. In remarks today, he stated that he had developed a new plan to impose so-called “net neutrality” rules on Internet service providers, setting a vote on the issue for December 21.



Details of the plan are yet to be released, but the chairman indicated that the plan was based on a legislative proposal floated a month ago by Representative Henry Waxman (D–CA). That plan, however, was soundly rejected by Congress. Genachowski’s plan—which the FCC would adopt without specific approval by Congress—should be rejected as well.



The Waxman proposal would have banned Internet providers such as Verizon and Comcast from managing the flow of traffic on their networks in a way that “unjustly or unreasonably” discriminates against particular types of content. The new rules would have been enforced on a case-by-case basis by the FCC. This plan was an improvement from earlier calls by regulation proponents to ban nearly all types of traffic management. But the case-by-case approach leaves vast discretion in the hands of the FCC: Could a provider take steps to limit “bandwidth hogs” who are consuming vast amounts of available capacity? Could it offer “priority service” to willing content providers for a fee? These questions are left for the commission to handle at its discretion. Such discretion is not only dangerous, but it is hardly likely to create the consistent regulatory atmosphere necessary to encourage needed investment in the Internet.



Moreover, the approach would no doubt encourage gamesmanship by businesses of all sorts. That was shown earlier this week, when communications provider Level 3, in a business spat with Comcast over how much it would pay Comcast—if anything—for Comcast to handle traffic from Level 3’s network. Such negotiations are common among networks, and the longstanding system of private interconnection agreements has worked quite well. Yet Level 3 now claims that Comcast’s request for payment to carry Level 3’s traffic violates net neutrality rules. The argument is hogwash, but it has caused a political stir that promises to help Level 3 in its ongoing negotiations.



Whatever happens on December 21, the net neutrality issue is unlikely to be settled anytime soon. To start with, the FCC has no apparent statutory authority to regulate the Internet at all. Nothing in the Communications Act explicitly gives the FCC power to regulate, and just this spring a federal court firmly rejected the FCC’s argument for “ancillary” jurisdiction. It will take some fancy footwork for FCC lawyers to find an alternative argument.



At the same time, Congress seems dead set against such regulation. The Waxman proposal, for instance, got nowhere fast, and the new Congress will certainly be more skeptical of such regulation.



Yet it appears that Genachowski intends to ignore the courts—and ignore Congress—in order to impose regulation. Hopefully, wiser heads among the five members of the FCC will prevail. If not, Congress should use its power to intervene