For the past two years we have had a natural experiment in the central planning of broadband. In my new AEI research paper (0) with Bronwyn Howell, we describe how Title II has harmed consumers and innovators.
Imposing Title II on the internet has harmed consumers by suppressing their ability to optimize their preferences to realize an optimal user experience online. Our research details how the 2015 Federal Communications Commission (FCC), Title II advocates, and Open Internet policy unfairly and deceptively imposed regulators’ preferences upon consumers, removed broadband from the discipline of the free market, and abrogated the will of the people by violating Congress’ intention that the internet should be free and unfettered (1) from federal and state regulation.
The 2015 FCC and Title II advocates have deceived consumers by promoting a narrative that speed is the most important metric (2) of broadband quality and by implementing regulation and standards around this metric. Indeed, speed may be the least important metric, depending on the consumer and application in question. Rather than perform the requisite market analysis, the 2015 FCC abused (3) the definition of broadband speed to create the appearance of an uncompetitive market to justify its decision to impose common carrier obligation on a market that had no natural monopoly. Open Internet regulation prohibits consumers from contracting with broadband access and edge providers to optimize the many factors that could improve user experience. A free market for broadband would enable consumers to optimize their preferences for the internet just as they do for technology services such as Uber.
Innovators have not fared well under the Open Internet Order either. A harbinger of the regime is the banning of HelloDigital, a technology that seeks to voice enable the ubiquitous process of posting comments on the web. The Open Internet rules, which prohibit paid prioritization, have made HelloDigital illegal and blocked its users’ ability to speak on the platform. Daniel Berninger, one of the coinventors of Voice over Internet Protocol (VOIP) and an early entrepreneur of the technology, is no stranger to the FCC blocking innovation. He and colleagues worked for a decade to secure the Pulver Order, which prohibits the FCC from treating VOIP like the rotary phone of 1891. Berninger has sued the FCC (4), and his Supreme Court case includes both a claim on the First Amendment and the Chevron Doctrine.
In imposing common carrier status on the internet, Title II advocates have revealed a plan to turn the internet into a government monopoly. While classic regulation sees a linear process to transition the national telephone company into a competitive market under the guidance of antitrust rules and the subsequent sunset of sector-specific regulation, the goal of Title II advocates is to empower the FCC to regulate a national broadband monopoly in perpetuity, specifically municipally owned networks offering the uniform technology of fiber to the premises.
We can learn a lot from other countries that have implemented national broadband networks. When the National Broadband Network (NBN) was launched in Australia, the government compensated private providers for their losses. In the US, advocates are clever enough to deprive private shareholders of their property without compensating them. Indeed, nearly a quarter of the original budget for the NBN constituted compensation paid (5) to copper incumbent Telstra and cable network operator Optus for revenues foregone from the premature decommissioning of fixed-line infrastructure made obsolete (6) by the nationwide fiber network.
While some may like the idea of nationalized or centrally planned broadband (7), it is fraught with technological risk. Just like any investment portfolio, diversification in technologies is the key to managing risk. To be sure, finding a winning technology is great, but a nation should want competition and experimentation in different kinds of broadband networks, not just for the efficiency of delivering broadband to people with different needs and in different places, but for continuous improvement in broadband through technological competition.
Title II is the opposite of the free market for broadband. Therefore, it is welcome news that the Republican-led FCC launched a plan to restore internet freedom (8) this spring, with the first round of comments (9) closing today. At a minimum, the unfounded and possibly illegal Title II imposition should be overturned and the Open Internet Order vacated. The outpouring of comments (10) is best directed to Congress, where the people, not five unelected commissioners, should decide whether the internet is to be regulated.