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Harold Furchtgott-Roth

Critics at Digital Policy Institute Say Net Neutrality Is a Solution In Search of a Problem

in Net Neutrality by

WASHINGTON, July 22, 2014 – As the Federal Communications Commission received more than a million comments on the agency’s push for net neutrality regulations governing the conduct of broadband providers, critics argued on July 15 that net neutrality is a counter-intuitive solution in search of a problem.

Moreover, these critics said, “common carriage” regulation under the Communications Act would actually prohibit broadband providers from engaging in paid discrimination against content providers like proponents claim.

An event hosted by the Digital Policy Institute included Babette Boliek, associate professor of law at Pepperdine University, former FCC Commissioner Harold Furchtgott-Roth, Hal Singer, principal at Economists Incorporated, and Brent Skorup, research fellow at the Mercatus Institute at George Mason University.

Although net neutrality proponents fear internet service providers might block or degrade services they don’t like, Skorup said that such behavior would be bad for business. ISPs concern themselves first and foremost with bringing consumers fast broadband connections. Degrading their platform would be to “shoot themselves in the foot.”

Boliek said she’d like no regulation at all from the Federal Communications Commission. Managing any concerns that ISPs would block or degrade a service like Netflix, “is exactly what antitrust and consumer protection laws would protect you from.” This approach waits to solve a problem until it actually arises.

Hastily slapping net neutrality rules on the internet would raise prices, stifle innovation, reduce quality of internet services in the United States, Furchtgott-Roth said.

There is precedence for less regulated industries outperforming heavily regulated ones, Boliek added.

“It is no surprise that the technology that has had this lighter regulatory touch has enjoyed greater investment, greater information, greater growth, and greater consumer satisfaction,” Boliek said. “This happened  when landlines were still controlled under Title I. Cable, on the other hand, did not have this severe regulation that is Title II. And we know the story of cable and broadband. It has taken off at a greater speed, rate and popularity.”

Mobile is part of the story, too, she said. Initially treated like landlines telephones under Title II, mobile phones were “abysmal,” Boliek said.  “Cell phones did not take off until after those regulations had been lifted.”

The experts at the panel agreed that if regulation is to happen, it’s better to lean toward a “light-handed approach.”

But proponents take the opposite view. Michael Weinberg, vice president at Public Knowledge, said on July 15 that Title II was “the only way to protect a single, open internet.” Democratic senators Ed Markey of Massachusetts, Al Franken of Minnesota, Chuck Schumer of New York, and Ron Wyden of Oregon reinforced their desire for common carriage regulation in a joint letter to FCC Chairman Tom Wheeler. They argued that Section 706 of the Telecom Act of 1996 – the provision upon which Wheeler has thus far relied in his efforts to impose net neutrality – was inadequate to meet the requirement that businesses serve everyone.

“Sanctioning paid prioritization would allow discrimination and irrevocably change the internet as we know it,” the senators wrote. “Small businesses, content creators and internet users must not be held hostage by an increasingly consolidated broadband industry. Start-ups should not find themselves unable to get a foot in the door, deterred from making the kind of investments that make the internet the engine for creativity and economic growth we know today. Consumers should not be faced with fewer choices at ever higher prices while ISPs monetize their data and dictate who succeeds and who fails online.”

At the Digital Policy Institute event, economist Singer said that Title II was nothing but harmful.

“Using Title II to solve this problem is the equivalent of using a fire hose in your kitchen to eliminate the risk of a fire,” Singer said. “Certainly, it does the job but the ancillary harm it can cause swamps the benefits, especially if there’s a less invasive remedy that will do the trick.”

While proponents argue that forbearance, or the ability for the FCC to excuse compliance with portions of the regulations, eases concerns about Title II reclassification, Singer said it’s “pretty far-fetched” to assume that every single future commission will “forbear” the same way every time.

Singer did, however, take the more moderate approach that abuses should be judged on a case-by-case basis.

“Title II doesn’t strike the right balance, which is weighing the incentives of the ISPs to invest at the core against the incentives of the content providers to invest at the edges.”

More importantly, Title II “does not do what proponents purport it does” – namely, prevent discrimination, Furchtgott-Roth said. Even under Title II rules, common carriers can still discriminate, albeit in a more diminished capacity.

“It’s hard to believe that Congress intended the old monopoly telephone price regulation to apply to the broadband networks that we have today, which very fast moving [and] dynamic,” he said.

Singer and Furchtgott-Roth questioned whether Wheeler would have the three votes necessary to pass net neutrality rules under either Section 706 or Title II.

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