No One Needs Another Net-Neutrality Fight

Heavy-handed regulation isn’t needed to keep internet companies in line. Congress should pass a law and move on.

The Federal Communications Commission announced on Sept. 26 that it plans to reclassify internet service providers as “common carriers” under Title II of the 1934 Communications Act. (Unsplash)

James Joyce once defined sentimentality as “unearned emotion.” The same phrase might describe America's episodic fights over net neutrality. With a new Democratic majority in place, the Federal Communications Commission announced on Sept. 26 that it plans to reclassify internet service providers as “common carriers” under Title II of the 1934 Communications Act. The stated rationale, as with a similar effort almost a decade ago, is to impose so-called net-neutrality rules, which would in theory prevent ISPs from blocking rival apps and services on their networks or offering “fast lanes” for paying content providers.

That goal is fine as far as it goes; such conduct might indeed harm competition. But preventing it doesn't require a century-old telecoms rulebook that imposes reams of irrelevant red tape and confers outsized power on regulators, including the ability to set rates. A second run at this failed experiment would waste as much time and effort as the first.

Barack Obama's administration originally foisted Title II on ISPs in 2015. Its initial proposal caused an exodus from broadband stocks and reduced telecom investment by as much as $40 billion annually over five years. In the two years the new rules were in place, broadband investment by ISPs dipped substantially, according to research cited by the FCC, the first-ever decline outside a recession. Small providers serving rural and low-income communities were hardest hit.

In 2017, a new Republican-appointed chairman, Ajit Pai, proposed rescinding the Title II designation. Activists went berserk. Politicians warned of the “end of the internet as we know it.” One outlet said the decision would “Destroy Everything That Makes The Internet Great.” Although Pai and his family faced weeks of bizarre harassment and unhinged threats, he went ahead anyway.

And then ... nothing happened. The internet as we know it did not end. To the contrary, investment soared, competition intensified, subscriber costs declined and average fixed broadband speeds increased by some 300%.

As for net neutrality? The fact is, the principle is so obvious as to hardly need enforcing. The conduct that Democratic commissioners warn would impede competition is already prohibited under antitrust law. More to the point, ISPs generally don't want to violate these principles because doing so would have high risks and limited benefit; consumers want no part of it. In its years of pondering this issue, the FCC has identified only four instances of a company even potentially contravening such norms — all of which were resolved years ago. As Pai has put it: This entire effort “is a solution that won't work to a problem that doesn't exist.”

One final complication deserves mention. A recent study by two Obama-era solicitors general analyzed recent Supreme Court rulings concerning regulatory agencies — in particular, the “major questions” doctrine that limits their power — and drew an obvious conclusion: The current court is almost certain to invalidate another Title II reclassification. The likely result of this misguided effort, then, would be a “massive waste of resources for the government, industry, and the public.”

So what should be done instead?

No one benefits from a policy that lurches into reverse every time a new party takes power. (To be more precise: Only lawyers benefit.) Legislation to enshrine core net-neutrality principles is overdue. Congress should ban blocking or throttling apps and services, while allowing ISPs to offer paid prioritization (ie, fast lanes) in cases where it would have clear consumer benefits. The FCC, for its part, could stop wasting time and money on this issue and focus on real challenges, such as rural broadband.

As for the zealots who insisted the end of the world was nigh? Perhaps they might reflect on what they got wrong — and why meddlesome efforts of this kind are so rarely the answer.

The Bloomberg Editorial Board publishes the views of the editors across a range of national and global affairs.