FCC 'net neutrality' vote won't end regulation debate

The Federal Communications Commission (FCC) voted yesterday to adopt broad regulatory power over Internet Service Providers (ISPs), large companies such as Verizon and Comcast that provide and control access to the web for both consumers and internet content providers.

Advocates of so-called “net neutrality” argue such rules are needed to prevent ISPs from forming monopolies and charging content providers higher rates if they want to reach customers more quickly—establishing what many call “internet fast lanes.”

Opponents of any federal government regulation of the internet argue such graduated pricing mechanisms could actually make internet access faster for everybody and that government control of the internet would potentially discourage innovation and investment in infrastructure.

But yesterday’s passage of the FCC’s net neutrality plan likely won’t end the debate over the role of the federal government in regulating or controlling the internet.

“It’s not going to work,” Rep. Joe Barton, R-Texas, told the Los Angeles Times. “It is going to be tested in court, and it’s going to fail in court.”

Republican lawmakers believe the expected legal challenges to the new rules will make it virtually impossible for to implement the regulations and that Congress should pass legislation to clarify federal law relating to ISP practices.

“I think that the Democrats are going to realize what a disaster this is and will be a lot more anxious to work with us on a legislative solution after tomorrow when the FCC issues their order,” Sen. John Thune, R-S.D., chairman of the Senate Commerce Committee, told The Wall Street Journal on Wednesday.

Democrats in Congress appear to be split over the possibility of legislation. Some are confident the new FCC rules have been written to withstand constitutional scrutiny, while others, including Sen. Claire McCaskill, D-Mo., are open to a legislative solution.

“It would be much preferable for us to hammer out a compromise here in Congress,” she told The Wall Street Journal.

The last time Congress passed legislation governing the internet was the Telecommunications Act of 1996, which was supposed to update the regulatory framework for the internet age by promoting competition and preventing monopolies from forming. The law allowed the FCC to regulate ISPs the same way it regulated phone companies—as “common carriers.” That made some sense when the only way users could connect to the internet was through a dial-up modem on a telephone line. But by 2002, cable broadband was the standard for internet access, and in that year, the FCC ruled cable ISPs were not subject to common carrier regulation because they were an “information service” and not a “telecommunications service.”

Many net neutrality advocates argued the 2002 FCC ruling effectively deregulated ISPs, leading to the formation of natural monopolies. Their solution would have been regulations that reclassified ISPs as “common carriers” under existing telecommunications law.

FCC Chairman Tom Wheeler’s early proposals for net neutrality rules would have used the “common carrier” classification and a fairly light regulatory touch. But the net neutrality rules passed by the FCC yesterday go even further than the common carrier classification and would regulate ISPs as public utilities, like electricity and water providers. President Barack Obama has advocated for such a broad classification and some believe unfairly influenced the FCC, considered an independent agency.

Even longtime advocates of net neutrality regulation are concerned some of the new rules are too vague and might be “a recipe for overreach.” The Electronic Frontier Foundation sent an open letter to the FCC, asking it to rethink its proposal.

Advocates of net neutrality have often pointed to Europe as a regulatory model for the U.S. European internet regulation has focused on regulating services, resulting in lower prices for consumers in the short term but dampening investment in new infrastructure, which benefits consumers over time.

Those who oppose heavy-handed regulation of the internet in the U.S., such as FCC commissioner Ajit Pai, one of two Republicans on the five-panel FCC, point to private sector investment in America’s vibrant and innovative internet ecosystem as evidence the European model is wrong.

“We want to have a strong enough platform for innovation investment and online options as possible, but you won’t get that if the private sector doesn’t have the incentive to risk capital to build those networks,” he told Reason.com. “It’s a pretty tough thing to build the nuts and bolts of the internet, and if the regulatory system is one that second guesses you every single step of the way, regulates your rates, tells you what service plans are allowed or now, regulates the commercial arrangements you have both within users and companies, you’re going to have the European situation essentially.”