You know Washington is on the wrong track with a regulation when even Brussels has a better idea. Witness the latest net-neutrality proposal from European Union leaders, which is smarter than the 300-page blobfish recently imposed by President Obama’s Federal Communications Commission.

In response to demands from the European Parliament for net-neutrality regulations, EU member governments are discussing a Latvian plan that would leave the marketplace scope to set rates for different types of data transmission. While the proposal...