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Waxman’s Net Neutrality Proposal Would Harm Businesses and Consumers
U.S. Representative Henry Waxman, March 21, 2014. (Jason Merritt/Getty Images for UCLA)

Waxman’s Net Neutrality Proposal Would Harm Businesses and Consumers

Harold Furchtgott-Roth

Rep. Henry Waxman (D-Calif.), ranking member of the House Energy and Commerce Committee, recently wrote the Federal Communications Commission (FCC) to describe his “hybrid” plan to regulate access to the Internet. Waxman’s proposal is a bad idea and would harm American consumers and businesses.

The FCC regulates telecommunications services in America. It does not regulate the Internet, or at least not yet. That may change as a result of its current proceeding that it calls “Open Internet” and is more popularly known as “network neutrality.” The FCC has received many comments on network neutrality, some supporting new FCC regulations on broadband providers on the grounds that those providers are up to no good and have “incentives” in the future to harm customers and “edge” providers.

The “edge” providers, an FCC term, are entities that provide content and services over the Internet. They include Amazon, Facebook, Google, Twitter, and countless less familiar sites. In an America without FCC network neutrality rules before 2010, these edge providers have come to dominate global online markets. American firms continued to dominate those markets during a period when network neutrality rules were in place (2010-January 2014), and continue to dominate those markets after the D.C. Circuit Court tossed out the FCC rules as unlawful in January 2014.

If the purpose of network neutrality rules is to protect the economic welfare of online edge companies, it is impossible to find empirical evidence that supports the proposition that edge companies have been harmed in the past by the absence of such rules. The debate at the FCC mysteriously focuses instead on the hypothetical harms to these companies in the future. One sees the focus both in the 2010 FCC order whose rules the courts threw out, as well as the current 2014 proceeding.

Several troubles emerge in the FCC proceeding. First, is looking after the welfare of edge providers, among the most successful of American companies, a responsibility of the federal government, much less the FCC? These companies and their welfare are not in the Communications Act that governs the FCC. Congress could, but has not chosen to, regulate the Internet. The FCC should not do so on its own.

Second, even if looking after the welfare of edge companies were lawful for the FCC, should the FCC craft rules based on the mere suspicion of future harm without evidence of actual past harm, much less evidence of future harm? Regulation should not be driven by speculation.

Third, why should the FCC create duplicate protections against imagined market abuses that other federal and state agencies already have unambiguous authority to prevent? The Federal Trade Commission and the Department of Justice can and protect American consumers. The FCC should not engage in bureaucratic imperialism.

Fourth, how can the FCC ignore the revealed falsehood of past ruminations of hypothetical harms in the world without network neutrality rules? The FCC’s 2010 Order presented a parade of horribles of life without network neutrality rules, but the reality of 2014 without network neutrality rules is the continued strength of the edge companies. The sky did not fall down. Network neutrality rules simply are not necessary.

While the FCC fiddles with crafting regulations premised on hypothetical harms to the open Internet, actual, documented problems beset the Internet. To name just a few: copyright piracy is rampant; commercial spectrum is artificially restricted; oppressive regimes around the world seek to gain control over Internet governance; consumers are haunted by the threat of identity theft and loss of privacy; hackers seek to bring down portions of the Internet or worse; and federal tax policy drives American businesses, including edge providers, offshore.

Waxman has now sent a proposal that would lead to years of detailed regulatory and “forbearance” proceedings at the FCC and certain court challenges. That’s good news for Washington lawyers but bad news for American consumers and businesses, including edge providers.

Rather than advising the FCC to create harmful rules that address imagined problems, Waxman would do well to have Congress focus on laws to address the actual problems facing the Internet and the American economy.

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