The Federal Communications Commission is seriously contemplating whether to put one of the strongest sectors of the U.S. economy under laws that were originally modeled after railroad regulation from early in the last century.
On February 26, the FCC is set to vote on whether to reclassify Internet service to fall under Title II of the Communications Act of 1934. It’s true that the act was amended in 1996—but that was still clearly prior to the emergence of the Internet you see before you.
Title II, which was inspired by railway regulation, classifies services deemed to be “common carrier.” In the case of railroads that meant the tracks must be open to all, and train operators were prevented from discriminating against some customers in favor of others. Similarly, proponents of reclassification of the Internet want the FCC to prevent service providers from discriminating against any traffic on their wires. That is, they want to prevent phone, cable, and wireless companies from slowing or preventing traffic from reaching its destination (which no companies are actually doing).
Yet Title II carries with it myriad other regulations that would not apply to Internet companies under the current regulatory regime. For instance, the FCC could, if it chooses, regulate the rates that ISPs could legally charge customers for their cable service. It would also open up an array of taxes and fees that could be levied against your cable and Internet bill.
In a recent article attacking former FCC Commissioner Robert McDowell, Title II advocacy organization Free Press states that the coming vote “has nothing to do with lunging to seize unlimited power over the Web,’ as McDowell sputters. It’s about returning to the law…” Advocates of reclassification like to argue that so-called net neutrality has always been the law of the land. In a broad sense, preventing the disruption of traffic on a network has, in fact, always been the general rule under which the Internet has operated. But that principle is a far cry from net neutrality as currently favored by “media reformers” on the left, and it certainly bears no resemblance to the onerous regulations of Title II.
Title II rules could force companies that have invested large amount of money into building massive networks to lease their lines to competitors at below-cost rates—effectively forcing them to subsidize the competition, an example of government takings on a mass scale.
In fact, it was over that exact aspect of Title II that a company called Brand X Internet brought suit against cable companies that were investing in the nascent field of home broadband. Cable companies had never been regulated under Title II, which had only previously applied to “telecommunications services.” That’s “phones” to you and me.
When Brand X sued the cable companies, the Supreme Court found, rightly, that the FCC was within its power to regulate broadband as an “information service” instead, since no phone was involved. After the Supreme Court decision, the FCC, again rightly, chose to reclassify broadband services provided by telephone (and eventually wireless) as an information service under the less onerous rules.
But left-of-center groups (such as Free Press) bent on heavy government regulation of the private companies that provide Internet service have pressed the FCC to reclassify it yet again. The president, interfering with the operation of an autonomous agency, called on the FCC to do the same.
So now the commission is set to vote, and many observers expect another decision on party lines. The Commission swears it can reclassify Internet service and then subsequently waive the onerous regulations that providers find so objectionable. Yet Free Press and its ilk argue that “Hired guns shilling for cable companies and wireless carriers insist that Title II is outdated and shouldn’t apply to Internet access. But what’s old-fashioned about basic nondiscrimination rules?”
Well, Free Press has argued that the FCC should not waive Section 254 of the Communications Act. That section specifically provides for taxes and fees under the Universal Service Fund—the nebulous charge that shows up on your phone bill and gets dumped into a wasteful government program that fails to connect people. Since 1998, the Multicultural Media, Telecom and Internet Council has noted:
there have been $110 billion in USF expenditures, of which $64 billion went to telephone carrier subsidies to extend services out to one-half of one percent of U.S. households. In federal carrier subsidies alone, about 600,000 homes received service at a cost of $106,000 per home. In fact, some carriers receive more than $10,000 per line per year to support voice services.
Just last week, Jessica Gonzalez, a Free Press ally, made clear the real objectives of the media reform crowd when she told Congress that the FCC “can take advantage of the authority contained in Title II to meet and often exceed the apparent objectives…ensure that all charges, practices, classifications, and regulations shall be just and reasonable…explore novel ways to promote a number of other important policy goals favored by members of this subcommittee…”
In other words, the guise of net neutrality under which the political left is pursuing Title II reclassification is about far more than “simple discrimination”—despite Free Press’s assertion. It is, in the words of former FCC Commissioner Robert McDowell, “lunging to seize unlimited power over the web.”
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