by Jon Guze
Senior Fellow, Legal Studies, John Locke Foundation
The Wall Street Journal reports that:
A federal appeals court has twice invalidated attempts by Washington bureaucrats to regulate the Internet. The Federal Communications Commission deserves a third-time strikeout in December when the U.S. Circuit Court of Appeals for the District of Columbia considers the agency’s latest power grab. …
Followers of the net-neutrality drama will recall … President Obama’s surprise decision last year to demand the most extreme form of utility regulation for the Internet. The White House even shocked the Democratic FCC chairman, Tom Wheeler, who complained to his staff about being bullied.
The politicizing of an agency whose independence is established by law is a good argument to invalidate Obamanet. Internet service providers argue in their brief to the court that the new regulations are the “output of an agency determined (or pressured) to reach a particular result and visibly struggling to devise a post hoc justification for contradicting Congress’s pronouncements, the agency’s own longstanding policy, and real-world facts.” …
Legal briefs filed by broadband providers, wireless companies and free-market advocates identify numerous other legal problems, any of which should invalidate Obamanet:
• Reclassifying the Internet as a regulated utility, giving the FCC the power to decide what is “fair” and “reasonable,” violates the express terms of the Telecommunications Act.
• The agency’s new “Internet conduct standard,” which creates open-ended regulation, exceeds the agency’s authority.
• Mr. Obama’s last-minute insistence on utility regulation violated the notice period required by the Administrative Procedures Act.
• The agency’s claimed discretion, which could apply the broadcast era’s Fairness Doctrine to broadband, violates the First Amendment’s guarantee of free speech.
• Blanket bans on “fast lanes” exceed the broadest regulatory discretion under utility laws.
Meanwhile, briefs filed by entrepreneurs and economists explain how utility regulation suppresses innovation. Bipartisan economists at the Georgetown Center for Business and Public Policy credit light-touch regulation with enabling consumers “to toggle seamlessly between voice, data and video services using both fixed and mobile broadband infrastructure.” They add: “Such innovation does not happen in a vacuum—it is a product of the institutional environment created by policymakers.”
Law-and-economics analysts Gus Hurwitz and Geoffrey Manne note that micromanaging the Internet is even more intrusive than the 1930s-era law that oversaw the Ma Bell monopoly. Utility law “was designed to regulate hundreds of telephone exchanges, not the thousands of entities that interconnect with them or the millions of edge companies whose technical and business plans are now potentially subject to FCC review.”
A group of self-described “tech elders,” including futurists John Perry Barlow and George Gilder and investors Mark Cuban and Tim Draper, have convened conference calls warning that the Internet would never have been built if their generation had been subject to utility regulation. Jeff Pulver, a pioneer in Internet voice calls, said: “Having to go to the FCC for permission to be disruptive will take away the incentive for many people.” Another entrepreneur, Daniel Berninger, said, “Silicon Valley could ignore the FCC when the information services category was there, and now they can’t.” …
A new pamphlet, “Against the Obamanet,” by Brian Anderson of the Manhattan Institute, sums up the problem: “Pervasive uncertainty will inevitably dampen competition, investment, and innovation.” It’s up to federal judges to rescue Silicon Valley from the destructive hand of Washington politics and regulation.