Time to end net neutrality regulation once and for all

By James Gattuso | The Daily Signal

Scientists tell us there’s no such thing as a perpetual motion machine, but they haven’t seen the interminable debate over network neutrality rules, which has raged now for close to two decades.

Late last week, the Federal Communications Commission — perhaps a bit hopefully — announced that the final repeal of the rules imposed previously by the FCC would take effect on June 11.

But that news was overshadowed by reports from Capitol Hill that opponents of repeal had enough support to force a Senate vote to block the rescission.

Supporters of net neutrality regulation shouldn’t get unduly excited about this roll call, which is technically a “resolution of disapproval” under the 1996 Congressional Review Act.

The law provides fast-track procedures under which Congress can expeditiously review regulations coming out of the executive branch. That was intended to allow Congress to reclaim its constitutionally mandated responsibility to make the laws.

Until last year, the Congressional Review Act rarely was used, seeing action successfully only once before, when it was employed at the start of the administration of President George W. Bush to block a costly Labor Department rule on ergonomics. It didn’t see action again until last year, when it was used to block 14 rules written by the outgoing regulators under President Barack Obama.

Some say the current effort to use the Congressional Review Act to block FCC deregulation is a misuse of the law. But while the impetus for the law was clearly the need to reduce regulatory burdens, it was clear to the drafters that it could be used to block any kind of rule change adopted by regulators.

In fact, in 2003, the Senate passed a resolution of disapproval under the Congressional Review Act in an unsuccessful attempt to block FCC efforts to ease media ownership limits.

However, while there’s nothing improper in using the Congressional Review Act to review the repeal of network neutrality rules, passage of the resolution would be terrible news for internet users and the internet itself.

Despite claims by die-hard supporters of the Obama-era rules, net neutrality is not necessary for the health of the internet economy. In fact, it is positively toxic.

At the core of net neutrality regulation is a prohibition on broadband service providers (such as Verizon and Comcast) charging different rates, or offering different service levels, to content providers, such as Netflix and YouTube. For instance, the rules specifically ban “paid prioritization,” which means charging more for better services, or less for more limited service.

But such service prioritization is not usually a bad thing. In fact, it exists in almost every product market in America. Try buying an airline ticket, gas for your car, or even new clothes, and you will find this kind of differentiation going on. And they almost always operate to the benefit of consumers.

Banning such arrangements would not limit consumer prices, or improve broadband service by one micron. Instead, a ban would likely cause the price paid by the average internet user to rise.

That’s because the rules would prohibit internet service providers from paying their full share of costs, leaving the consumer to pay more of the cost of building and maintaining the web. Or no one at all. Either way, it’s bad news for the internet as we know it—and for the internet we hope innovation and investment could make it become.

Nevertheless, defenders of regulation assert that without FCC neutrality mandates, the big corporations would be able to do whatever they want, driving the little guys out of business. But the FCC’s neutrality rules make no distinction between “big” and “little” companies.

Some of the largest corporations in economic history — among them Google, Amazon, and Facebook — are longtime supporters of the restrictions. Conversely, smallish challengers, such as T-Mobile, find themselves subject to the full force of the rules. That makes no sense.

Moreover, the idea that the big companies will be unrestrained once the rules are finally gone is simply wrong. These rules were only put into place in 2015. The explosion of creativity, innovation, access, and choice on the web began and existed long before that.

In fact, the internet as we know it was not created as a result of FCC regulation, but in its absence.

At any rate, with or without neutrality rules, there have been virtually no cases of abuse by the internet service providers.

The marketplace is working as it should. And in the unlikely event that problems should arise in the future, antitrust regulators will be able to address them—as they do in almost every other industry.

Bizarrely, under net neutrality, broadband providers were exempt from the normal competition laws. With its repeal, these long-standing rules will go back into force.

Net neutrality rules are not needed and are positively harmful to the internet. The good news is that the pro-regulation forces on Capitol Hill are unlikely to succeed in reimposing this noxious brew on the web.

While supporters of the resolution might well garner the 51 votes required for Senate passage of the resolution of disapproval, they are far behind in the House, and have even less prospect of overcoming a nearly certain presidential veto.

But this does not mean that the perpetual motion machine of network neutrality is about to stop. Efforts to restore broadband regulation will continue. Not only is repeal under challenge in the courts, but dozens of states also are imposing their own neutrality rules. Efforts to legislate a limited neutrality law also are moving forward in Congress.

But the best solution to this never-ending story is the easiest. Just unplug the perpetual motion machine, and let the regulations die.

That would be a rare victory for engineers over lawyers, and for common sense over regulation.

Image courtesy of Wikimedia Commons/CredoAction