PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

“Net Neutrality” Regulation: Government Control Over Broadband Still a Bad Idea

By at 14 June, 2024, 4:22 pm

by Raymond J. Keating –

The Federal Communications Commission (FCC) is back trying to impose draconian, archaic regulation on broadband service providers. While failing in terms of understanding basic economic, market and business realities, one might be tempted to give points to those who favor so-called “net neutrality” regulation for their persistence. However, in reality, persistence in pursuit of destructive policy measures is not praiseworthy.

In late April, by a 3-2 vote, the FCC approved an order to impose “net neutrality” regulations. That is, a narrow majority voted to impose Title II (of the Communications Act of 1934) controls and regulations written for a 1930s telephone monopoly on the dynamic, innovation-driven, competitive broadband market of today.

The rules are scheduled to take effect on July 22, 2024, though there are court challenges.

Make no mistake, this is a renewed effort to have government – that is, politicians and their appointees – replace consumers as the ultimate decisionmakers as to how the internet operates and develops, with entrepreneurs and businesses competing, investing and innovating to best serve those consumers.

This regulatory effort took off in 2015 when an FCC led by Tom Wheeler inflicted Title II regulation on broadband providers. Thankfully, that was overturned in 2017 under the FCC leadership of Ajit Pai. Naturally, advocates for government controls predicted the sky would fall, but instead, the private sector made investments and innovations that expanded and improved broadband speed, quality and access.

And of course, these investments are vital for startups and small businesses at work in the tech community, and those served by broadband services across all industries.

Unfortunately, imposing government regulations as to how broadband service providers can operate – in effect giving government the ability to dictate business models and pricing – spells trouble for continued robust broadband investment.

Marc Jamison, who is a nonresident senior fellow at the American Enterprise Institute and is concurrently the director and Gunter Professor of the Public Utility Research Center at the University of Florida’s Warrington College of Business, has noted:

“The confluence of theoretical and empirical research findings strongly argues against the application of Title II to broadband providers. The theoretical research underscores the situation-specific sensitivity of net neutrality regulations, advocating for a judicious and flexible regulatory approach. Empirical evidence points to the negative impacts of heavy-handed regulation on fiber investments and broadband performance. The literature is nearly unanimous: Hands-off regulation is more effective than Title II like regulation.”

Regarding the renewed FCC regulatory effort, SBE Council President & CEO Karen Kerrigan correctly pointed out, “Intrusive utility-era regulation of broadband was a bad idea when it was buried several years ago, and it’s an especially horrible idea in the modern digital economy. Sadly, FCC Chairwoman Jessica Rosenworcel has disinterred a costly regulatory concept, which makes absolutely no sense and will only bring uncertainty and diminished investment when our businesses, investors and our economy need policy stability and robust investment in order to stay globally competitive.”

Read SBE Council’s regulatory comments filed with the FCC here.

In the end, “net neutrality” is one of those nice phrases dreamed up in the world of politics to disguise the reality that this is nothing more than a massive government power grab over broadband, with costs being felt far and wide, including by individuals, families, and entrepreneurs and small businesses across sectors of our economy.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.

 

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