FCC Restores Market Freedom To the Internet

Net Neutrality repeal jettisons Obama-era regulatory meddling.

The Federal Communications Commission has jettisoned the heavy-handed regulatory burden placed on a free and open Internet during the Obama administration. The FCC voted 3-2 on December 14th, along party lines, to repeal the so-called “net neutrality” rules adopted by the regulatory agency in 2015. The Obama-era rules had prohibited Internet service providers, such as AT&T, Verizon and Comcast as well as smaller Internet service providers, from blocking, slowing access to or charging more (priority pricing) for fast delivery of content above some specified threshold of high bandwidth usage. High-speed delivery of Internet services will no longer be heavily regulated on par with a common carrier utility monopoly service. However, the Internet service providers will have to disclose to the FCC changes to their access policies, which can consider any alleged abuses on a case by case basis. The Federal Trade Commission, which shares antitrust enforcement responsibility with the Department of Justice, will be tasked to take action against any anti-competitive behavior. 

FCC Chairman Ajit Pai, who championed getting rid of the misleadingly named “net neutrality” rules, said that the net neutrality rules purported to fix something that was not broken when they were adopted in 2015. "Following today’s vote, Americans will still be able to access the websites they want to visit. They will still be able to enjoy the services they want to enjoy," FCC Chairman Pai said. "There will still be cops on the beat guarding a free and open internet. This is the way things were prior to 2015, and this is the way they will be once again." Chairman Pai noted that with the heavy regulatory hand of FCC micromanagement removed, “Broadband providers will have more incentive to build networks, especially to underserved areas.”

FCC Commissioner Mignon Clyburn, a Democrat and daughter of South Carolina Rep. James Clyburn, condemned the FCC Republican majority for “handing the keys to the Internet" to a "handful of multi-billion dollar corporations.” She had lots of support from the left, which displayed its usual hysteria.

A bomb threat delayed the FCC meeting for several minutes as the room was cleared until the security team dispatched explosive-sniffing dogs to ensure that it was safe for the meeting to proceed. Protesters gathered outside, chanting “Hey hey, ho ho, Chairman Pai has got to go!” 

Consumer activists and some state attorneys general are planning to go to court to invalidate what New York Attorney General Eric Schneiderman called the FCC’s “illegal rollback” of the “net neutrality” rules. “The FCC just gave Big Telecom an early Christmas present, by giving internet service providers yet another way to put corporate profits over consumers,” Attorney General Schneiderman said in a statement. 

Democrat Senator Ed Markey of Massachusetts claimed that overturning the “net neutrality” rules is “like letting the bullies develop their own playground rules.” Announcing his intent in a tweet to “introduce a Congressional Review Act resolution that would restore the Open Internet Order and reverse the FCC’s historic mistake of repealing Net Neutrality," he vowed that the “fight is far from over."

Senator Elizabeth Warren, the other Democrat Senator from Massachusetts, tweeted: “The FCC just voted to hand control of the internet over to giant internet companies, but this isn’t over.”

California Democrat Senator Kamal Harris tweeted that the FCC’s repeal of the “net neutrality” rules handed “a big win to multi-billion-dollar broadband companies.”

Vermont Socialist Senator Bernie Sanders tweeted to his followers, "This is the end of the internet as we know it. In Congress and in the courts we must fight back."

Fake news CNN ran a headline after the FCC vote echoing Senator Sanders’ doomsday prediction that the vote represented the "end of the Internet as we know it."

Hollywood celebrities also got into the act. Chris Evans of Captain America fame, for example, tweeted that the FCC’s repeal decision “benefits no one unless you're a faceless, mega corporation.”

The left would have us believe that the battle over “net neutrality” is between greedy, monopolistic, multibillion dollar Internet service companies and John Q. Public. This is the left’s typical class warfare rhetoric, helped along ironically by multibillion dollar content providers such as Netflix, Google and Facebook that hide behind slogans such as “net neutrality” and “open and free Internet” to obscure their own economic self-interest. Companies the size of Netflix, Google, Facebook, and the new Disney company that may emerge if its purchase of content assets from 21st Century Fox is approved by antitrust officials do not need FCC utility-style regulatory protection from Internet service providers. The FCC should not have placed itself in the position of picking industry sector winners and losers or coming down on the side of content providers, some of whom such as Facebook and Google have substantial market power of their own that allows them to censor content they believe is too controversial.   

Moreover, “net neutrality” may be a nice slogan, but it does not reflect the reality of Internet usage. To understand why this is so requires a brief technology discussion.

Different types of usage place different levels of demand on available Internet bandwidth, which Digital Unite defines as “the rate at which data can be transferred to your computer from a website or internet service within a specific time.” The higher an Internet connection’s amount of bandwidth capacity, usually measured in bits per second, the more data can move through the connection in a given amount of time.  Groups of bits strung together that computers use to represent a character such as a letter, number or an image are called bytes.

The bandwidth capacity is not infinite and often shared by multiple users with different volumes of traffic to be transported that may vary by time of day. As Scientific American explained, “the demand for bandwidth is fast outstripping providers' best efforts to supply it.”

Streaming content can use massive amounts of bandwidth. Watching Netflix on high resolution, for example, can utilize at least 2 gigabytes (i.e., 2 billion bytes) of data. As streaming becomes more and more popular, consuming massive amounts of bandwidth capacity relative to other less volume intensive types of usage, heavy data usage by even a limited number of streaming content providers’ customers, at times and places of competing demands for available bandwidth, can negatively affect the service for all Internet users. There needs to be some means to modulate the level of usage by bandwidth-guzzlers through priority pricing or by placing network management controls (for example, blocking or throttling) over usage above specified thresholds. Otherwise, the guzzlers may negatively affect the Internet experience of other users without incurring the full economic cost of the harm they cause to those other users.  

The economics of supply and demand should be permitted to play out under free market conditions. Internet service providers, just like the large content providers, are not monopoly utilities that require utility-style regulation. That said, there will need to be antitrust enforcement by the Federal Trade Commission to prevent anti-competitive abuses, such as an Internet service providers favoring their own affiliated content providers in terms of quality of service, ease of customer access, or discriminatory pricing. The FCC’s repeal of the overly burdensome “net neutrality” rules in no way undermines the ability of the FCC or the Federal Trade Commission to step in and address any abuses that may arise.

The left detests the free market, whether in the context of the Internet or virtually any other segment of the economy. Government knows best, leftists believe. Fortunately, elections have consequences and President Trump put in place at the FCC someone who understands the benefits of the free market. Under Chairman Ajit Pai’s leadership, the FCC removed the dead weight of intrusive regulation on Internet innovation and investment in infrastructure. It also restored the market freedom under which the Internet has thrived.

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