A charging dock for iPads is seen at Martin Luther King Middle School in San Francisco's Bayview District Monday, August 15, 2016. (Jessica Christian/2016 S.F. Examiner)

Net neutrality regulation: Repeal and do not replace

They finally did it. After six months of debate, during which it received more than 23 million public comments, the Federal Communications Commission voted on Dec. 14 to eliminate the network neutrality rules it imposed on broadband network operators during the Obama era.

The vote is a chapter in a story that goes back to the Clinton administration, when FCC chairman Bill Kennard adopted a policy of “light touch” regulation of broadband services. Over the next decade, the FCC tried three times to abandon this market-based policy and to replace it with heavy-handed network neutrality rules.

The first two attempts at this were rebuffed by the courts, which found the FCC had not shown it had authority to regulate broadband services. The third try, adopted in 2015, passed judicial muster. It is this rule that has now been repealed.

Network neutrality can be roughly defined as the principle that a broadband network transporting data from content providers to consumers should do so at the same rate and manner for all users. The 2015 rules tried to enforce this principle by imposing three “bright line” prohibitions on broadband providers: blocking content, “throttling” (slowing) uploads and downloads, and providing prioritized access for a fee.

This sounds fair enough, until you look at what such government-enforced equality means in real life:

— First, the ban on “blocking” could include charging prices that are unaffordable to some, thus blocking them from services.

— Second, throttling — despite its violent connotation — is simply the reduction of download rates for certain users at certain times — a useful tool to discourage “bandwidth hogs” from slowing Internet speeds available to other nearby users.

— Third, “paid prioritization” or more simply, discounted and premium service, is common in just about every functioning market in the U.S. economy. Moreover, the ban on prioritization calls into question the use of pricing to allocate economic resources.

The ultimate goal of all the “bright line” bans seems to have been ending not just market abuses on the Internet, but ending the use of markets and pricing on the Internet, a politically radical — and economically dangerous — proposition.

Despite the dangers presented by these prohibitions, neutrality advocates have pulled out all the rhetorical stops to keep broadband ISPs regulated by the five members of the FCC. The predictions of life without neutrality are almost cartoonishly grim: Competition, choice and innovation will not survive without government limits on broadband ISPs, they warn. Without FCC controls, big cable and phone companies squeeze innovative start-ups from the market. Political discourse will also be dramatically curtailed, as the voices of anyone disfavored by ISPs are stifled. This, they conclude, presents a threat to the very survival of our democracy.

These dire predictions however are not supported by any facts or any theory. As a first matter, it is important to recognize that this is not a simple fight between big guys and little guys. Some of the largest companies on earth, including Google, Amazon and Microsoft, have long and vociferously agitated in favor of neutrality rules. Conversely, firms subjected to neutrality restrictions include firms such as Sprint and T-Mobile, neither of which are in a position to bully anyone, not least a Google or a Microsoft.

Similarly, unregulated ISPs would not be empowered to drive political enemies off the web. And were they to try, consumers would simply switch to provider that did not do so.

In fact, if ISPs could exercise market power in this way, why have they not done so already? The just-repealed rules are only two years old. The entire history of the Internet before 2015 took place without any enforceable neutrality regulation. And that history is a story of constant innovation and growth — not one of monopoly and political censorship.

Lastly, it should be noted that elimination of neutrality rules does not leave the broadband marketplace unregulated. Rather, the marketplace for broadband will now be subject to the same rules that apply to most other sectors of the economy: antitrust law. Regulation through competition law — while not perfect — can provide an important backstop should any anti-competitive practices take hold.

Proponents of neutrality regulation paint a terrifying picture of life without FCC rules that prohibit non-neutral practices. The real threat to the Internet comes not from too little government interference in its management, but from too much. The FCC’s elimination of the Obama network neutrality regulations is a welcome acknowledgement of that fact.

James Gattuso is a senior research fellow in Regulatory Policy at The Heritage Foundation.

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