"Open Internet Order"

On Tuesday evening, Federal Communications Commission Chairman Julius Genachowski released his agenda for the FCC’s upcoming December 21st meeting, with the primary order of business being discussion of – and presumably a vote on – an “Open Internet Order”, a slightly watered-down version of the Net Neutrality policy which certain Internet content providers (Google, eBay, Amazon) and left-wing organizations have been championing for several years.

When last we left this story in April of this year, a unanimous three-judge panel of a federal Court of Appeals struck down an FCC attempt to regulate the Internet under its current authority.  One of the key aspects of the ruling was that the Internet falls under Title I of the FCC code which gives the FCC much less authority than Title II which was designed to allow the regulation of telephone monopolies.

Following the ruling, Genachowski suggested he might try to reclassify the Internet under Title II, but that approach was criticized by a majority of members of the House of Representatives, including over 200 Republicans and almost 80 Democrats, causing the FCC Chairman to back off that particular power-grab.

The result of his subsequent months of pondering just how to implement something, anything, is a set of draft rules which are likely to make neither side of the debate happy – which is perhaps the best that can be said of it.

Genachowski’s press release summarizing his views and the intent of the rules begins by posing his draft rules as the product of bipartisan agreement and “a shared appreciation for the Internet’s wondrous contributions to our economy and our way of life.”

He notes that “the Internet has been a strong engine of job creation and economic growth” – and then proceeds to explain why people should believe his proposed regulations are necessary to guard against “risks” to “the Internet’s openness” despite the fact that evidence of serious risk is far more rare than evidence that the Internet is working extremely well in its current essentially unregulated environment.

The Chairman lays out three basic areas of his regulatory concern. Quoting directly from the press release:

•    (C)onsumers and innovators have a right to know basic information about broadband service, like how networks are being managed. The proposed framework therefore starts with a meaningful transparency obligation…

•    Second, consumers and innovators have a right to send and receive lawful Internet traffic…. Thus, the proposed framework would prohibit the blocking of lawful content, apps, services, and the connection of non-harmful devices to the network.

•    Third…No central authority, public or private, should have the power to pick which ideas or companies win or lose on the Internet; that’s the role of the market and the marketplace of ideas. And so the proposed framework includes a bar on unreasonable discrimination in transmitting lawful network traffic.

The primary focus on “consumers and innovators”, while reasonable as far as it goes, ignores the fact that ISPs spent and spend billions of dollars creating the “pipelines” through which those consumers and innovators access what they want to consume and innovate. When it gets to those broadband providers, Genachowski gives a tentative nod to the need for “reasonable network management.”  But the code word “reasonable” is as always the regulators’ doorway to infringing on a company’s ability to operate freely; notice the word “reasonable” never appears in the Chairman’s description of the “rights” of those who use the ISPs’ property.

The draft rules are focused on traditional (if one can use that term about the Internet) access methods, namely wired networks and their associated wireless access points. However, the real growth of broadband in 2011 is wireless, with streaming everything being sought by consumers. In that sense, these regulations are far less important than they might have been a few years ago. Nevertheless, they are an unnecessary and dangerous intrusion into perhaps the best modern example of the economic value of a truly free market.

Even with a 3-2 Democrat majority on the FCC, it is unclear that Genachowski can get the votes to pass his draft rules.  The Republican opposition is obvious: Commissioner Robert McDowell noted that “This ‘agreement’ has been extracted in defiance of not only the courts, but a large, bipartisan majority of Congress as well.”  Commissioner Meredith Baker puts it succinctly: “We do not have the authority to act.” She adds, echoing similar words from McDowell, that “Just because Title II is even more destructive to investment does not transform Title I into a middle ground.”

But the fact that Genachowski’s proposals do not even more aggressively attack ISPs may cost him the support of far-left Commissioner Michael Copps who wants “the strongest protections we can get” and who “seek(s) to ensure real network neutrality.”

Unfortunately, the ISPs themselves have been cowed into submission to the proposed rules, clearly fearing something even worse.  Comcast, the plaintiff in the case that overturned the FCC’s prior attempt to regulate the Internet offered a disappointing comment “applaud(ing) the Chairman and the Commission” and praising “a workable compromise.”  Verizon is standing somewhat stronger, with their spokesman stating that “In tackling this issue, the FCC is hamstrung by an antiquated communications statute. That’s why this issue should be addressed by Congress” and urging the FCC, if it must pass rules, to make them temporary.

If there is any good news in the reaction to Genachowski’s proposal, it’s that leftist organizations such as the New America Foundation don’t like them.  Clearly, the proposal, while dangerous and unnecessary, is not as bad as it could be.

In any case, the regulations, if passed by the FCC, will be proposed under Title I of the FCC code less than a year after a federal court smacked down only slightly less onerous regulations as impermissible.  They will certainly be challenged in court, with recent precedent weighing heavily against them.

Julius Genachowski’s inability to reclassify the Internet under Title II corralled his regulatory abilities, but he is clearly a man in search of a legacy of passing Net Neutrality much in the same way that his boss, Barack Obama, was in search of the legacy of passing socialized medicine.  The questions regarding any passed Net Neutrality regulations and Obamacare remain similar as well: Will any such rules be repealed? And, if not, will the impact of the policy be worse than the issues it claims to address?


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