The new net neutrality proposal set for a vote by Federal Communications Commission (FCC) next week is setting the stage for vigorous opposition by congressional Republicans, though compromise is possible. The FCC plan, which would regulate Internet companies as public utilities, was orchestrated by President Obama behind the scenesand trumps a more moderate approach in development by FCC Chairman Tom Wheeler. The harder line from Obama is reminiscent of his heavier hand on immigration, Cuba and other matters since losing the Senate to Republicans in November.
Web startups have said they need the Internet treated as a utility to prevent excessive fees that only larger firms can bear. However, startups have not illustrated this in practice. Internet providers currently can charge more for certain types of content, and this differentiating power is an important feature in better serving consumers. Pro net-neutrality activists are seeking to give government more power when consumers should have greater power and choice. Customers want faster Internet, and provider companies have incentives to make the Internet faster. By inserting government into the process, this weakens competitive incentives not only for the Web but for other tech innovations, also.
“I always wonder whether there’s some point at which there’s a regulatory arbitrage.”
Peter Thiel, the libertarian Internet mogul who co-founded PayPal and was the first outside investor in Facebook, has spoken out against net neutrality,
“You have to worry about monopolies that become static,” Thiel told Opportunity Lives during a Q&A at the recent Buttonwood Gathering sponsored by The Economist. Yet Thiel said he didn’t see the Internet in its current state behaving statically like the postal service. Thiel has been a vocal opponent of general over-regulation and its negative impacts on innovation.
“The state is not being run by scientists and engineers, it’s run by lawyers,” he said. “You’re not allowed to use substance, it’s all process…If Einstein sent a letter today it would get lost in the mailroom … I always wonder whether there’s some point at which there’s a regulatory arbitrage.”
Congressional Republicans argue that market forces protect online innovation without government involvement. House Energy and Commerce Committee Chairman Fred Upton (R-MI) has called network neutrality rules a “solution in search of a problem.” GOP leaders have created alternative legislation to create network neutrality rules withoutimposing the controversial public-utility step.
Such legislation (as with the case of congressionally-adopted immigration reform instead of executive fiat) is more likely to remain intact following the Barack Obama presidency than the FCC rules in their current form. Should Republicans regain the White House in 2016, it’s highly likely the new president would appoint a more liberty-minded FCC chairman to possibly dismantle many of Wheeler’s regulations.
Wheeler’s WIRED opinion piece, calling to “ban paid prioritization, and the blocking and throttling of lawful content and services” and “no rate regulation, no tariffs, no last-mile unbundling,” worried many conservatives who fear that this would eventually occur.
Progressives serious about compromise and societal progress must consider this Republican alternative as a more expansive and bi-partisan solution toward encouraging digital innovation. American ingenuity needs protection, and the current FCC proposal unfortunately would do just the opposite.