FCC Adopts Net Neutrality Rules, Neither Side Happy

The Federal Communications Commission is using a statute from the 1930s to try to regulate the technology of the 21st Century. It's a mistake.

Doug Mataconis · · 22 comments

In its first foray into regulating the backbone of the Internet, the Federal Communications Commission decided on a party-line vote to adopt standards requiring Internet Service Providers to allow open access to their networks:

The Federal Communications Commission voted Tuesday to approve its first ever Internet access regulation, which ensures unimpeded access to any legal Web content for home Internet users. The same provisions do not apply as strongly to cellphone users because the agency voted to keep wireless networks generally free of rules preventing the blocking and slowing of Web traffic. The FCC’s three Democratic members made up a majority of votes in favor of the so-called net neutrality regulation, which was introduced more than a year ago by FCC Chairman Julius Genachowski. The rules have sparked intense debate and lobbying over whether such legislation is needed, and are likely to face a legal challenge. Genachowski has argued that Internet access rules would protect companies just starting out on the Web, as well as consumers who are increasingly relying on the Internet for news, entertainment and communications. The agency’s two Republican members voted against the rules, showing support for Internet service providers who say the regulation will impede their ability to create new business plans that expand their roles over the Internet economy. Genachowski said the measure represents a compromise between industry and consumer interests. “I reject both extremes in favor of a strong and sensible framework — one that protects Internet freedom and openness and promotes robust innovation and investment,” Genachowski said.

Like most compromises, neither side in the debate was left happy by the Commission’s decision. On the left, where Net Neutrality has become something close to gospel, Genachowski’s plan is being denounced as a sellout to the corporate interests:

For the first time in history of telecommunications law the FCC has given its stamp of approval to online discrimination. Instead of a rule to protect Internet users’ freedom to choose, the Commission has opened the door for broadband payola – letting phone and cable companies charge steep tolls to favor the content and services of a select group of corporate partners, relegating everyone else to the cyber-equivalent of a winding dirt road. Instead of protecting openness on wireless Internet devices like the iPhone and Droid, the Commission has exempted the mobile Internet from Net Neutrality protections. This move enshrines Verizon and AT&T as gatekeepers to the expanding world of mobile Internet access, allowing them to favor their own applications while blocking, degrading or de-prioritizing others. Instead of re-establishing the FCC’s authority to act as a consumer watchdog over the Internet, it places the agency’s authority on a shaky and indefensible legal footing — giving ultimate control over the Internet to a small handful of carriers.

What this criticism ignores, of course, is the fact that service providers do have legitimate points when they note, for example, that high-volume users of digital video and peer-to-peer fie sharing network use the network at the expense of lower bandwidth users, and that there are legitimate economic and security reasons for allowing them to have the ability to charge differently for different types of services, at least as long as we live in an era where bandwidth is a limited resource.

While the left, complains, Republicans in Congress are already warning the FCC that even this watered down plan faces scrutiny when the 112th Congress convenes in January. Ed Morrissey, for example, passes along this message from Senate Minority Leader Mitch McConnell:

I’m Senator Mitch McConnell, the Republican Leader in the U.S. Senate. The Internet is a platform for innovation. Every day entrepreneurs, including many in Kentucky, offer new services to millions of Americans, like yourself, who use the internet on a daily basis – and are using it right now to watch this video. Our economy has benefited from the rapid growth of the Internet, and that’s due in large part to the lack of government involvement. But that could soon change. The Obama Administration, which has already nationalized health care, the auto industry, insurance companies, banks and student loans, now wants to brazenly control how Americans use the Internet by establishing federal regulations on its usage. This would harm investment, stifle innovation and lead to job losses. I, along with several of my colleagues, have urged the FCC Chairman to abandon this flawed approach. But we need your help. Please share this video with your friends on the Internet. The Internet is a valuable resource and it must be left alone.

Additionally, it looks like the new regulations are likely to face an immediate court challenge:

Multiple sources have told National Journal that Verizon, the nation’s second largest telecommunications carrier, may seek to overturn the historic open Internet rules to be approved by the Federal Communications Commission Tuesday morning. Sources said the option is on the table, but cautioned that no final decision has been made. The company will review the details of the new “network neutrality” rules set for adoption by the agency’s three Democratic regulators to gauge its next move.

The FCC has already been rebuffed by one court in its efforts to extend its regulatory authority over the Internet, and it’s likely to see that happen again. Especially since, as Morrissey notes, the analogies which the Commission is seeking to apply here simply don’t hold water:

Genachowski’s approach equates the Internet to telephone service and the 1934 Communications Act that birthed the FCC and granted it jurisdiction. However, that was a state-approved private monopoly that required regulation in the absence of competition, which the government outlawed prior to breaking up AT&T. The Internet has plenty of competition, especially for end users, who can either get service over the hard wire of their local telephone service, a cable-TV network, or wireless access. In that competitive environment, the FCC has no business dictating the management of private networks.

While it was built on top of the framework of a network developed by government scientists, the Internet, and the network that supports it, has flourished primarily because of the free market. There is neither a need nor a justification for involving the heavy hand of the state in something that is working so well.