Perhaps President Obama envisions that the Internet is operated by Ernestine, the condescending telephone operator played by Lily Tomlin on Laugh-In. Otherwise, it is difficult to justify why he would want to hobble the 21st century broadband industry with regulations designed in the early 20th century.
Even FCC Chairman Tom Wheeler earlier this year wrote, the FCC is “not going to take over the Internet,” or “dictate the architecture of the Internet.” And yet, the FCC is now under pressure to follow President Obama’s statement on November 10 to regulate the Internet under obsolete 1930s laws.
These 20th century telephone regulations were intended to regulate traditional telephone services, not today’s advanced Internet services. And, they did a poor job of that.
Until the 1980s, telecommunication regulations codified inefficiencies, such as granting each “Baby-Bell” a regional monopoly. These regional monopolists stifled competition and thwarted innovation. Regulatory reform during the 1980s eliminated the regional monopolies, incented economic efficiency, and enabled the telecommunications revolution that spurred the tremendous advances that still drive our economy today.
This revolution completely changed the dynamics of the Internet. Thanks to the easing of these early 20th century regulations, commercial Internet services started to emerge beginning in the late 1980s and early 1990s.
Twenty-five years later, today’s Internet market and service offerings scarcely resemble the Internet of the early 1990s. Back then, communication service companies served distinct markets — cable companies provided consumers with television content and telephone companies provided consumers with landline based phone services. And, mobile technology was unheard of for anyone but the wealthiest few.
Since 1996, private sector firms have invested $1.3 trillion into the U.S. wired and wireless Internet infrastructure — $75 billion in 2013 alone. The high-speed Internet industry contributes $146.2 billion to our nation’s economy. Perhaps even more importantly, Internet access has increased economic productivity.
Yet Internet regulation has lagged, leading some — like President Obama — to argue for inappropriate regulatory changes. The most drastic proposal: regulate Internet providers like the Ma Bells of the 1930s by subjecting them to Title II of the Communications Act.
Those calling for such a shift should be careful for what they wish.
Reclassification of the Internet under Title II is not effective regulatory reform. This reclassification is supposed to address customer access problems, and ensure that everyone is treated fairly. But, there is simply no evidence that Internet providers are arbitrarily restricting customer’s access to the Internet in order to increase their revenues.
In fact, Americans have been getting faster and more dependable Internet services at competitive prices increasingly every year. Akamai found that Internet speeds have increased by 39 percent in between the second quarter of 2013 and the second quarter of 2014 while the OECD found that the U.S. ranks first out of all OECD countries in Internet affordability.
Instead of effectively empowering consumers and fostering an environment of innovation, subjecting the Internet to Title II regulations would severely restrict how providers can deliver high speed Internet services to their customers.
Title II is simply the wrong foundation from which to regulate the innovative Internet industry.
Beneficial reforms must instead recognize the dynamic nature of the Internet.
The types of services that the Internet is able to offer are continually growing. Additionally, the types of companies that are able to offer different services continually changes: former telephone companies now directly compete with former cable companies, while a search engine behemoth can offer fiber services in certain markets.
In recognition of these realties, the silo basis of the current regulatory structure within the Communications Act is simply inappropriate for the dynamic 21st century Internet as we know it today. The Internet requires a regulatory system that does not discriminate by type of company and recognizes that services over the next decade may no longer resemble the services offered today.
Regulatory reform during the 1980s eliminated the regional monopolies, incentivized economic efficiency, and enabled the information revolution that spurred the tremendous advances of the past quarter century.
Effective regulatory reform for the Internet can replicate these gains. But, only if the principles of sound regulation are not compromised.
This piece originally ran at Forbes.com and is part The American Spectator‘s developing Free Market Accountability Project, which will monitor growing threats to America’s economic freedom.
