FCC Chairman Ajit Pai is looking to the early days of the Internet for inspiration as he seeks to reduce the role of regulation in the networks that help millions of Americans find jobs, do business and seek entertainment.
At an industry conference Tuesday in Barcelona, the nation's top telecom regulator said he plans to use key policy decisions made in the 1990s and early 2000s as a guide for his own agenda.
Those early decisions include, he said, a bipartisan consensus to not require Internet providers to obey “outdated rules crafted in the 1930s for a telephone monopoly.” He also cited a Bush-era commitment to give Internet providers sole control over broadband networks that they built, rather than adopt a European-style system permitting other companies to use those same cables to sell competing Internet service.
Such “light-touch” regulation encouraged Internet providers to continually upgrade their technology, according to Pai, and has driven society's progression from painfully slow dial-up to massive fiber-optic networks and ever faster mobile data. Today, broadband companies are poised to introduce new connection technologies with the debut of 5G data and a constellation of smart appliances that can communicate with one another over the Internet.
“A generation ago, a cellphone was a big, clunky piece of equipment that enabled scratchy voice calls, if you were lucky,” Pai said. “Today, there are nearly 250 million smartphones in the United States alone that consumers use for everything from uploading live-stream videos to playing games.”
By crediting that explosion in innovation to an era of hands-off regulation, Pai is setting the tone for his own tenure, analysts say.
“It indicates the FCC will retain its authority to act when there is a market failure, public safety or consumer protection issue,” said Fred Campbell, director of the think tank Tech Knowledge, “but won’t use preemptive regulation to address hypothetical concerns.”
Preemption of possible anticompetitive or anti-consumer behavior tends to lock in existing business models, Campbell said, whereas regulation that intervenes only after consumers have been harmed tends to encourage experimentation in the marketplace.
But some consumer advocates say that Pai's historical references are misleading. Although the World Wide Web's own early history was marked by a free-for-all in which online businesses competed on mostly equal footing, it is not the case that the government played no role, said Gene Kimmelman, president of the advocacy group Public Knowledge.
Policymakers at the time “were setting up an entire regulatory framework for opening [a] telephone monopoly to a broader competitive environment,” said Kimmelman, referring to a time when telephone lines — and thus Internet connections — were controlled by just a few large players. “And it required substantial government intervention.”
The debate comes down to a classic ideological divide over the potentially harmful effects of unchecked corporate power, vs. its benefits. Without advancements in connection technology driven by a permissive regulatory environment, Pai has argued, consumers would not have access to many of the devices, applications and services they now take for granted.
At the same time, other analysts say, the allure of technology blinds policymakers to important differences between the Clinton-era Internet and today's Internet, raising questions about what kinds of regulations are appropriate for the 21st century. Nostalgia among policymakers for the most exciting years of the dot-com boom risks ignoring the growing concentration of power in the hands of titans such as AT&T, Google and Uber, according to the technologist and entrepreneur Anil Dash.
In a recent blog post, Dash argued that the Internet has fundamentally changed. It began as a truly free arena where bases of power were decentralized, and consumers benefited from an abundance of information. But over time, he said, those systems gave way to controlled, walled gardens (think of Apple's app store) and finally to nontransparent markets such as Uber, in which prices are set by an algorithm the public is not allowed to see and is at times distorted by the information the app does allow users to see.
“These new False Markets only resemble true markets just enough to pull the wool over the eyes of regulators and media, whose enthusiasm for high tech solutions is boundless, and whose understanding of markets on the Internet is still stuck in the early eBay era of 20 years ago,” Dash wrote.