Ajit Pai, the chairman of the Federal Communications Commission, has responded to criticism about his plan to revoke the net neutrality rules adopted in 2015. His position is based almost entirely on the presumption that the prior regulatory regime was sufficient to regulate the industry and was just fine. He is wrong.
The chairman states that his plan will simply restore internet freedom by bringing back the legal framework that previously governed the internet, which is referred to as “light” regulation. But nowhere does he rebut either the need for or the arguments in support of the rules.
In 2005 the FCC adopted four principles for the internet: consumers are entitled to access lawful content, to run applications of their choice, to connect devices of their choice and are entitled to competition.
Two years later, Comcast was caught slowing or “choking” internet traffic to sites which competed with its cable services. The commission concluded that “Comcast’s practices … have significantly impeded internet users’ ability to use applications and access content of their choice.” But the FCC was unable to enforce its decision because the principles it had adopted had not been lawfully enacted. Thus, even though Comcast had violated the principles the FCC sought to enforce, it was unable to do so. Simply said, the “light regulation” advanced by the present chairman didn’t work.
So for the next six or seven years, the commission debated the need for enforceable rules which would prohibit the internet service providers (ISPs) from engaging in discriminatory and harmful practices. That process ended in 2015 with the adoption of the net neutrality rules, which the chairman incorrectly describes as “heavy-handed” regulation.
All the rules primarily do is prohibit discrimination and traffic choking by the ISPs. Heavy-handed regulation would be approving the rates the ISPs could charge their customers because the companies would have to present detailed and complex data to support their rates. The net neutrality rules do nothing of the sort and are not heavy-handed regulation.
The argument that the rules apply inappropriate 19th-century regulation to 21st-century services is simply false. Prohibitions on unreasonable business practices are prevalent among our laws because of the insidious effects they have on commerce. The Sherman Antitrust Act is a 19th-century statute that is robustly enforced today.
The chairman also fails to acknowledge that similar non-discrimination rules have applied to the cellular industry since its inception in the 1980s. Did these rules stifle investment? No. Were these rules “heavy-handed” regulation? No. The ubiquitous existence of cellular service is proof the rules were not harmful to industry growth. Similarly, the net neutrality rules will not inhibit real internet growth.
Finally, the Chairman says nothing about the consolidation in the industry that has occurred in recent years: Comcast acquired NBC and AT&T acquired DirecTV and is seeking to acquire Time Warner. The industry is not the same today as it was in the 1990s, to which the chairman refers. It has evolved to a mature industry dominated by a few major players.
Repealing the net neutrality rules will further solidify and entrench the already dominant ISPs. New enterprises will be at a disadvantage because they won’t be able to pay the fees a Netflix or Amazon does for faster internet lanes to reach customers. Users may not be able to access the content of their choice. And prices will rise as they do in all concentrated markets. The chairman’s actions, regrettably, are political and neither supported by historical facts or good policy.