FCC Votes to Regulate the Internet – What’s Next?

By at 26 February, 2015, 5:50 pm

Closeup Hammer

by Raymond J. Keating-

The Federal Communications Commission (FCC) has voted to regulate the Internet – both wired and wireless broadband networks – as a utility, absurdly and dangerously trying to apply regulations initially enacted in 1934 for a long-gone Ma Bell telephone monopoly to the dynamic, ever-changing 21st century Internet.

The implications of such a massive government overreach are ominous for investors, network providers, content providers and all entrepreneurs.

As noted by SBE Council President & CEO Karen Kerrigan in a statement following the 3-2 vote on Chairman Tom Wheeler’s regulatory plan: “Treating the Internet as an old-style public utility – with the complex rules, fees, taxes and burdensome red tape that go along with such a regulatory framework – will vastly change the Internet and the pace of new technologies moving forward.”

It’s worth considering points made by tech entrepreneur, investor, Dallas Mavericks owner, and “Shark Tank” star Mark Cuban regarding the ills of net neutrality regulation. He spoke on CNBC on February 26, and to Glenn Beck on February 25. Calling net neutrality a creature of “Silicon Valley group think,” Cuban said: “I don’t think anyone’s thinking this all the way through.”

Nonetheless, three Democrat commissioners voted (with the two Republican commissioners opposed) to move away from a set of light regulatory touch rules that have allowed the Internet to flourish in ways unimaginable not along ago, and instead adopt a highly-regulated model – at the urging, by the way, of President Obama – operated by politicians and their appointees who do not possess the knowledge or incentives to undertake such a monumental task.

The innovation and investment that have made the Internet such a powerful tool for small businesses, for example, as both suppliers and consumers, now face real constraints due to the uncertainty and costs related to government dictating network business models, from managing to pricing network services.

So, what’s next? It will be about Congress, the courts, and the FCC. Again, that’s obviously bad news for networks, content providers and consumers. Despite FCC Chairman Wheeler’s confidence that the new regulations will create “certainty,” they will do anything but that.

As reported on, for example, “[T]hree congressional committees have announced plans to investigate whether the White House exerted improper influence over FCC Chairman Tom Wheeler and the agency as a whole as it considered different net neutrality options… [A] small, dedicated group of Republican lawmakers like Sen. John Thune and Reps. Greg Walden and Fred Upton … have made clear they intend to keep working on net neutrality legislation as an alternative to the FCC rules—a priority that is likely to get wrapped up in an ongoing push to rewrite the Telecommunications Act.”

Indeed, it must be noted that Congress in no way, shape or form ever intended for the FCC to be regulating the Internet. Clearly, the FCC has usurped the power of Congress. So, congressional action aimed at fixing this overreach would be most welcome. But, of course, getting sound Internet policies past a presidential veto, given Mr. Obama’s support for net neutrality regulation, would be a monumental task. noted that “Republicans, including House Energy and Commerce Committee Chairman Fred Upton, R-Mich., have criticized the rules as an overreach of regulation that could discourage investment in the telecom business. The vote in the FCC ‘is just the beginning’ and ‘means an inevitable return to the courts for net neutrality rules, which will lead to more years of uncertainty for consumers and providers,’ he said Wednesday during a hearing of the House Subcommittee on Communications and Technology… AT&T has indicated that it will file such a lawsuit if the rules pass, as Verizon Communications did successfully to overturn the previous rules last year.”

The summed up, “Major phone and Internet companies have long made clear their intentions to file suit, which could drag the issue through the courts for years. ‘To put it briefly, litigation with FCC appeals is a pretty long, drawn-out process,’ National Cable and Telecommunications Association head Michael Powell said earlier this week. ‘I would predict that it’s at least two — and up to five — years before the rules are fully and finally settled.’ In the meantime, congressional Republicans in both chambers are pushing legislation to replace the rules. Proposals to enact some net neutrality protections reflect a major pivot for some GOP lawmakers who have long objected to any net neutrality rules, though those plans aim to scale back the FCC’s authority.”

FCC Commissioner Ajit Pai, who so valiantly fought to try to force the FCC to disclose the plan so the public could view the contents before commission action, hopes that the vote would be viewed as “an aberration” in the future, eventually tossed aside by the courts, Congress, or a future FCC. Indeed, let’s hope that turns out to the case, but that not only is far from certain, it also must be noted that, in the meantime, resources will be wasted battling this grossly misguided, costly overreach by a government agency.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council, Unleashing Small Business Through IP: Protecting Intellectual Property, Driving Entrepreneurship, is available free on SBE Council’s website here.


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