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The FCC votes to regulate a booming Internet; AEI welcomes Rep. Greg Walden to discuss the next chapter

Seventy-three private firms, according to The Wall Street Journal, are now members of “the billion-dollar startup club.” Fifty of these start-ups are American, and a number of them have recently achieved valuations of $10, $20, even $40 billion.

The total value of the 50 US club members is $223.9 billion and does not include the 10 club members that went public or were acquired in 2014. Many US public technology firms are, likewise,...

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Title II: A new way to collect fees on broadband

The FCC is scheduled to vote tomorrow to classify broadband under Title II of the Communications Act. Two factsheets about the proposed rules hint to what new charges consumers might pay in increased fees if the vote goes as expected. Chairman Wheeler’s factsheet asserts that the proposed rules “[bolster] universal service fund support for broadband service in the future through partial application of Section 254,” which refers to the section of the 1996 Telecommunications Act that governs the universal service fund (USF). Commissioner Pai’s factsheet notes that Title II “explicitly opens the door to billions of dollars in new taxes on broadband.” Assuming it is passed, the Permanent Internet Tax Freedom Act (ITFA) will prohibit some kinds of state and local taxation, such as sales tax, on Internet access, while allowing other fees and charges.

Applying Title II without embarrassment

Is there a way for the FCC to apply Title II regulations to the Internet without embarrassing itself? Yes, but it would require a change in direction. “Title II” is the section of the Communications Act that was intended to regulate monopoly telephone companies as public utilities. Its roots go far back in history, but an effective starting place for understanding Title II is an 1876 Supreme Court case, Munn v. Illinois. The case involved grain elevators that the court found were situated uniquely between a river harbor and railroad tracks, giving the elevators monopoly control over grain movements from farmers in certain Midwestern states to markets on the East coast. The elevators extracted economic rent to such an extent that they seriously hindered the agricultural economies in the affected areas.
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Telecommunications law primer: The Federal Universal Service Fund

A common lament of telephone consumers is that they don’t always pay what they expect to pay for their phone plans. They purchase these plans at a fixed price, but when the bill comes, the total is inflated by a laundry list of regulatory fees. In today’s blog post, part of an ongoing series of telecommunications law primers, we will explore the law underlying the most prominent of these charges: those related to the...