Net neutrality rules have been sold for a decade as a way to keep the Internet “open and free” by keeping Internet service providers (ISPs), such as phone and cable companies, from blocking or degrading Web sites. Its advocates have argued that ISPs have an economic incentive to act anti-competitively toward consumers and competitors. In a common hypothetical they cite, ISPs would slow — or buffer — traffic for Netflix unless it unfairly pays for more access points, or “off ramps,” and better quality of service.
In truth, however, market failures like these have never happened, and nothing is broken that needs fixing. If consumers were being harmed by ISPs, ample antitrust, competition and consumer protection laws already exist to fix the problem. And major broadband providers have pledged, in their terms of service, to keep the Net open and freedom-enhancing. Why? Because it is good business to do so.
Additionally, Netflix produces upwards of 34 percent of the Net’s traffic at peak times. It can clog any pipe it touches. That torrent of traffic imposes delivery costs that Netflix would prefer to pass on to others. But the market is sorting out these growing pains as the open Net grows, just as it has successfully from the beginning. (My views on this subject long predate my affiliation with the Hudson Institute, but in the interests of full disclosure: Hudson receives financial support from media, technology and telecom companies, as well as foundations, including those on both sides of the net neutrality debate.)
The Net has been open since it was privatized by the Clinton administration. It proliferated globally as it migrated farther away from government control — bringing freedom and prosperity to billions. It grew from a mere 88,000 users in the late 1980s, to more than 3 billion today. Cisco estimates that the exploding “Internet of Everything” (that is, machines talking to one another online, such as your car and your tablet) will generate more than $14 trillion in global economic growth by 2022. In short, the Internet is the greatest deregulatory success story of all time — a simple fact that vexes those seeking new and unnecessary rules.
In refreshingly honest congressional testimony, Wu has crystalized the net neutrality movement’s goal: “FCC oversight of the Internet.” His simple statement acts as a dog whistle to regulators, telling them to sweep everything about the Internet under the government-controlled net neutrality umbrella— technical operations, business decisions, content and speech. State manipulation of the Net would shape “not merely economic policy, not merely competition policy, but also media policy, social policy” and “oversight of the political process,” according to Wu’s testimony. Current regulations simply do not “capture” the Net the way more government powers would through powerful new rules, he argued.
Without contesting the adequacy of existing laws to protect consumers and preserve the free flow of information over the Net, Wu asserted that only “the FCC is equipped to deal with issues like regionalism, like localism, like diversity, which … aren’t captured” by other agencies. These words were likely not selected randomly: They have legal significance at the FCC in regulating speech and go far beyond net neutrality’s original sales pitch.
Wu’s vision of more government “capture” strongly resembles old broadcast regulations spurred by a “scarcity” of outlets in the mid-20th century — the legal rationale for government regulation of speech over the airwaves, which would never be tolerated by, say, newspapers. Even in today’s competitive and digitized media markets, broadcasters must adhere to strict rules dictating speech, or risk losing their licenses. This Supreme Court-blessed government speech control operates under aliases such as “regionalism” and “localism” as invoked by Wu. These rules compel broadcasters to tailor their content to serve properly (in the eyes of regulators) their “communities of license.” That could include mandates ranging from sufficient local news, sports and weather, to a minimum amount of programming for children.
Broadcast regulations have also controlled political speech. The most infamous FCC effort to exert “oversight over the political process,” in Wu’s words, was known as the “Fairness Doctrine.” For decades, it allowed the government to censor political speech by justifying its purpose as “balancing” competing points of view in the name of “diversity,” serving the “public interest” and, most cynically, protecting freedom of expression. That meant the state muted some political voices while amplifying others. Although the Reagan-era FCC correctly scrapped the Fairness Doctrine, vestiges of it remain, such as the confusingly similar “equal time rule,” which, for example, curtailed the airing of old Reagan movies when he ran for office. FCC “oversight of the political process” through more Internet regulations sounds eerily like political speech controls. Will new FCC rules lay down a slippery slope toward those kinds of controls?
While some tech companies have been inspired by Wu as they try to “regulate their rivals,” phone and cable companies, they may be forging their own regulatory chains, link by link. During my seven years as a FCC commissioner, I lived through several iterations of the net neutrality debate. Its proponents have broadened the term’s definition each time to serve their own growing purposes, both here and abroad. Wu’s vision, which goes far beyond the Netflix scenario, shows how their ostensible goal could continue to morph into a regulatory regime for the entire Internet ecosystem, affecting far more than ISPs. Inviting regulators into your neighborhood is likely to embolden them to control not only your neighbor but you, too. Wu’s supporters should be careful what they wish for.