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Don Quixote Lives At The FCC
Federal Communications Commission Chairman Tom Wheeler delivers opening remarks at the start of a Open Internet Roundtable discussion, September 16, 2014 in Washington, DC. (Mark Wilson/Getty Images)

Don Quixote Lives At The FCC

Harold Furchtgott-Roth

The Federal Communications Commission recently closed its public comment period on its network neutrality proceeding with more than 3.7 million comments. Far from being triumphant, the FCC is to be pitied. Let us count the ways.

The FCC launched the network neutrality proceeding earlier this year, ironically naming it “Open Internet.” Government labels are sometimes poor indicators of the likely effect of the underlying proceeding. Today, the FCC contemplates adding new regulations to limit what Internet networks and their owners may do. Never mind that the result will be a more closed, less vibrant Internet. Pity the FCC for having a poorly labeled proceeding.

The FCC has received more than 3.7 million comments. Assuming that it takes 10 minutes to review, summarize, categorize, each comment and that it each comment is reviewed by two staff members, it would take more than 600 FCC staff a full year to review every comment. The FCC has fewer than 2,000 staff members. Pity the overworked staff of the FCC.

The FCC has twice before tried to write and enforce network neutrality rules. Twice before the FCC has been challenged in court. Twice before the courts, ordinarily indulgent of the FCC, have told the FCC it has no such authority. Testing the patience of permissive courts by repeating hallucinations of imagined powers does little to enhance the institutional integrity of the FCC. Pity the FCC for a predictable loss yet again in the courts.

Few if any of the millions of comments point to actual market abuses on the Internet. Instead, the supposed Internet problems are hypothetical, what might happen in the future, no matter how dim and distant the future and its problems are. Nor is there any evidence that the federal government lacks today the authority to address any such hypothetical problems, such as the blocking of web sites. Pity the FCC for having network neutrality solutions in search of an actual problem.

To regulate the Internet, the FCC looks to rules that it has applied to telecommunications companies for much of a century. Practically every aspect of a telecommunications network and of telecommunications service is regulated by the FCC. One cannot construct a telecommunications network or offer a telecommunications service without falling under FCC regulation.

The Internet is different. It consists of both regulated and unregulated networks, some private and some public, some inside the United States and many more outside.

For the past 15 years, the FCC has consistently held that Internet services including broadband services are not telecommunications services and not subject to FCC regulation. Countless businesses have invested countless billions of dollars on an understanding that the Internet and broadband are not regulated at all as telecommunications services. Now the FCC wants to rewrite history and apply some if not all telecommunications regulations to the Internet and Internet services. The challenges of rewriting 15 years of precedents, of explaining the change to courts, and of suffering the dislocation of the Internet industry, are all reasons to pity the FCC.

Under the current system of little or no Internet regulation, American businesses dominate Internet services in global markets. Indeed, Internet services are one of the few markets where American firms do far better than businesses from other countries. Pity the FCC for choosing to tamper with the goose that laid the golden egg.

Writing 20 years ago, Professor Eli Noam of Columbia University presciently explained the economics of why unregulated firms, such as the Internet, can always compete effectively with heavily regulated firms, such as those with traditional FCC regulation. Consistent with Professor Noam’s observations, over the past two decades traditional common carriage for telecommunications has receded and the unregulated Internet has expanded. In retrospect, the solution is not to bring old-style telephone regulations to the Internet but rather to expand new-style Internet deregulation to telephone companies. Pity the FCC for misreading history and attempting to bring telephone regulation to an industry where it cannot work.

Don Quixote lives at the FCC. To even imagine a windmill might be a great accomplishment for an agency that has no responsibilities and no capability of pursuing its imagined adversary. But the FCC has many responsibilities including getting new spectrum in commercial use, facilitating a public safety network, and enforcing its many rules. Its actual responsibilities suffer as the FCC tilts at network neutrality windmills. That is perhaps the greatest pity of the FCC.

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