“Net Neutrality” is No More. Here’s What You Need to Know.
This week the U.S. Federal Communications Commission (FCC) officially published Chairman Ajit Pai’s “Restoring Internet Freedom” order rescinding onerous Obama-era regulations of the internet.
The order, which the FCC approved in December, has sparked a hysterical reaction from mainstream media outlets and supporters of so-called net neutrality.
A CNN headline soberly announced the “end of the Internet as we know it.” Late night TV host and social commentator Jimmy Kimmel lobbed insults at Pai and declared “big corporations are about to take full control of the internet.” Even Burger King weighed in with an ad that unconvincingly attempted to explain net neutrality in terms of ordering hamburger.
It’s time to end the hysterics.
Pai’s order does not mean the web will be unregulated. Rather, it reverses a serious misstep his predecessor took that vastly expanded the power of Washington bureaucrats to meddle with the web.
In 2015, President Barack Obama’s FCC issued an order to regulate internet service providers (ISPs) as a “utility” under Title II regulations of the Communications Act of 1934. The deceptively named “Open Internet Order” empowered the federal government to regulate the internet and punish businesses under a law written at a time when television was still bleeding-edge technology.
It was billed as a pro-consumer move, but the reality was far different. Under the guise of net neutrality, popular unlimited streaming services came under increased scrutiny. When T-Mobile introduced a “Binge On” plan with unlimited video streaming from sites like Netflix and Hulu, activists lobbied the FCC to end it. Title II also made it possible for state and local governments to tax the internet as they would a public utility.
Supporters say the rules were necessary to prevent ISPs from blocking websites, slowing down disfavored content, or charging special fees for increased internet access. Curiously, none of these nefarious activities were commonplace prior to the 2015 order. When was the last time you were charged extra to visit Facebook or YouTube?
Chairman Pai was right when he said the rules were “a solution that won’t work to a problem that doesn’t exist.”
The internet is not a public utility, and as Pai noted, regulating it as such is likely to kill its defining innovation. “Do you trust the federal government to make the internet ecosystem more vibrant than it is today?” he asked. “Can you think of any regulated utility like the electric company or water company that is as innovative as the internet?”
Unfortunately, we have already seen the destructive effects of net neutrality rules that were supposed to fix the internet.
Just in the two years after rules went into effect, investment in broadband infrastructure sharply declined. Domestic broadband investment by the 12 largest ISPs dropped $3.6 billion in 2016 relative to 2014 – the first time broadband investment had declined outside a recession.
The increased regulations are especially burdensome on smaller ISPs, that are less able to absorb the added compliance costs than their larger competitors. Smaller ISPs were forced to cut back on network investments and pay tens of thousands in compliance fees.
We should all welcome Chairman Pai’s “Restoring Internet Freedom” order returning the internet to the less onerous Title I classification, as it had been since the Telecommunications Act of 1996. While people continue to claim this will lead to digital dystopia, it was under the lighter touch of Title I regulations that the internet revolutionized the lives of billions around the world.
Since the late 90s the internet has seen the rise of Google, Facebook, Amazon, Wikipedia and countless other services that it now seems impossible to live without. These innovations made the internet, in the words of Chairman Pai, “the greatest free-market innovation in history.”
These revolutionizing innovations don’t happen automatically. They are only possible when entrepreneurs are free to experiment, expand and compete with one another free of government interference. The imposition of Title II regulations and heightened government control was a dangerous step toward a less innovative, less exciting internet.
Contrary to CNN’s hysterical headline, Chairman Pai’s new order will not end the internet as we know it. Rather, it will restore the free and open internet we have enjoyed for years.
David Barnes is the director of policy for Generation Opportunity.