Five political appointees could determine the Internet's future and most Americans don't care

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Article Highlights

  • There isn't an intellectual consensus that there is market failure necessitating net neutrality

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  • Good policy should be informed by social interest not special interest

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  • The public doesn't have a measured interest in or support for net neutrality

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On May 15, the Federal Communications Commission (FCC) voted 3-2 to proceed with the notice of proposed rulemaking (NPRM) on protecting and promoting the open Internet, giving the public some 120 days to comment. Leading up to the decision, a group collectively calling themselves “Occupy the FCC” camped outside of the agency’s office. At least two protestors were removed during the FCC’s proceedings. Journalists were pleased that the normally sleepy telecom policy world had some excitement. One tweeted, “This is really the most excitement seen in this building in a long time.”

But as the Pew Research Center reports, net neutrality is not likely to be the topic of dinner conversations. Outside of the many blogs and trade media that have covered the issue, two-thirds of the mainstream coverage has been made by just 6 newspapers, not counting the Wall Street Journal. TV coverage has been even more limited.

One could deduce that there is a conspiracy by certain media not to report on the issue. More likely, the issue, largely partisan, is simply not important to many Americans. There are just two national public opinion polls on net neutrality. A 2006 poll by the Senate Commerce Committee conducted with 800 registered voters found that in many parts of the US only 5% of voters even knew what net neutrality was. In December 2010, a Rasmussen poll of 1000 voters found that just 21% want the FCC to regulate the Internet and most fear regulation would promote a political agenda. Both polls have been rejected by organizations that support net neutrality.

Organizations such as Free Press and the New America Foundation have built coalitions in support of net neutrality, but these coalition are not necessarily representative of America, nor is it clear that the coalition members even understand net neutrality. A cursory look at some of the signers of the New America Foundation’s petition in support of net neutrality to the FCC in January 2014, such as MomsRising.org and Adios Barbie – “the body image site for everybody” – did not return any results on their web pages for the “open Internet” or “net neutrality”.

One of the two dissenting votes of the FCC Commissioners, Ajit Pai observed, “every American who cares about the future of the Internet should be wary about five unelected officials deciding its fate.” Indeed regardless of the merits of net neutrality, the recent outcry begs the question of which entity is responsible for regulating the Internet. If it is a decision to be made by the American people, then it is in the domain of Congress, not an agency led by political appointees.

In fact, net neutrality rules have been proposed at least six times by Congressional Democrats since 2006, but none has been compelling enough to come to a vote. Counteractions by Republicans have appeared on at least five occasions. Two were brought to a vote. One failed to proceed, and the other, a Joint Resolution disapproving of the FCC’s 2010 Open Internet Report & Order, passed the House with a vote of 240 to 179. Moreover, the Court of Appeals has twice struck down the FCC’s rulemaking on net neutrality.

Net neutrality supporters have dispatched brilliant legal minds to find loopholes and technicalities in the court’s rulings and the communications statutes which could legitimize net neutrality rules. They found possibilities in section 706 of the 1996 Telecommunications Act as well as reclassification of broadband services under Title II of the 1934 Communications Act, but these are controversial.

The other dissenting FCC Commissioner, Michael O’Reilly, warned, “706 could be used to justify any number of regulatory interventions and could ultimately impact not just broadband providers, but also edge providers,” and that the FCC’s NPRM “explores upending years of precedent and investment by reclassifying broadband Internet access as a Title II service. That is, the Commission examines applying monopoly era telephone rules to modern broadband services solely to impose unnecessary and defective net neutrality regulations.”

In May 2010 representatives of both parties in the House and Senate Republicans sent letters to then FCC Chairman Julius Genachowski criticizing his attempts to regulate the Internet. House Democrats wrote, “we have serious concerns about the proposed new regulatory framework for broadband and Internet . . . The significant regulatory impact of reclassifying broadband service . . . should not be done without additional direction from Congress.”

Indeed on May 28 Ohio Congressman Bob Latta introduced a bill to ensure that the Internet is protected from government interference noting, “At a time when the Internet economy is thriving and driving robust productivity and economic growth, it is reckless to suggest, let alone adopt, policies that threaten its success.”

It would seem that any law regarding the future of the Internet should entail some empirical and scientific investigation, not just proceed on the lamentations of demonstrators. Commissioner Pai made a reasonable suggestion to solicit the expertise of distinguished economists and technical experts during the FCC’s investigation. However, the 10 most cited academic works on net neutrality disagree about whether net neutrality promotes consumer welfare. There is hardly an intellectual consensus that there is a market failure necessitating net neutrality.

What supporters call keeping the Internet open and free, others consider needless regulation of a system that flourished precisely because of a lack of regulation. The Internet makes up 5% of America’s economy. Digital goods and services are now the third largest American export, and broadband and the related IT industry directly support nearly 11 million jobs in the United States. The US, just 4% of the world’s population, accounted for a quarter of the world’s investment in communication networks in 2013, nearly $70B, according to Infonetics. Fifteen of the world’s top 25 Internet companies come from the US. The history suggests that a laissez-faire approach has spurred the Internet, incentivizing consumers and broadband, content, and application providers. It’s hard to justify that a new regulatory regime will correct or improve the experience to date.

Internet policy should be built on more than technicalities and loopholes, and the modern digital economy should not be governed by the regulatory siloes conceptualized in 1934. Therefore it’s encouraging that a bi-partisan Congressional effort is underway to update the Communications Act with a key goal to review of the FCC and its responsibilities. American Enterprise Institute scholars provide a review of how the Act could be improved to streamline the FCC’s responsibilities, strengthen consumer protection under the Federal Trade Commission, and to improve the allocation of spectrum, essential for the future of the mobile Internet. America’s wireless carriers don’t even have 16 percent of the airwaves that are best suited for mobile broadband today.

Given their lack of success in Congress, it’s not surprising that net neutrality groups have lobbied the FCC heavily. It’s easier to influence a captured federal agency with five politically appointed commissioners than a popularly elected Congress. Make no mistake; many of the net neutrality advocacy organizations are highly sophisticated and well-funded by large Internet companies. Nevertheless good policy should be informed by social interest, not special interest.

Research Assistant James M. Cunningham at the American Enterprise Institute contributed to this article.

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