PublishedMarch 9, 2011

House Communications Subcommittee Expected To Register Disapproval of FCC’s Rules To Ensure Customers’ Open Internet Access

Months after the FCC’s December vote to approve the Open Internet Order we’re still talking about net neutrality. Nonstop.

The House Committee on Energy & Commerce Subcommittee on Communications and Technology holds a hearing today on a resolution to express disapproval of the net neutrality rule and, at the hearing’s conclusion, immediately markup and vote on that resolution.

The Internet content marketplace is innovative and vibrant and stands in stark contrast to the closed off markets of yesterday’s technologies. And it drives the cable and telephone companies crazy. So much so that they beg Congress to protect them from ever having to innovate or compete with online content or applications from innovative firms like Netflix, Skype, and YouTube.

The resolution of disapproval will pass the House, but that’s it. It surely won’t be passed by the Senate or signed by the President. The hearing is little more than a distraction from the real work at hand this year for the Congress on technology issues: spectrum auction authority and privacy.

Of course there is still plenty of room for mischief. Actions by the Subcommittee could cripple the effectiveness of the FCC moving forward and create a more uncertain regulatory environment for firms in the online marketplace, discouraging investment, innovation, and job creation.

One has to question the Subcommittee’s rationale for undermining an independent agency. As an independent agency the FCC is structured to be outside the usual Washington partisan wrangling. The fact that the vast majority of FCC decisions are unanimous, with the agreement of both Democratic and Republican commissioners suggests it is largely immune from partisan rancor. Congress’ efforts to politicize the FCC may have the damning effect of delegitimizing and creating ideologically based hurdles in an agency that historically has been a model for responsible and data oriented policy solutions. Creating a toxic and partisan environment in an agency responsible for such dynamic sectors of our economy is exactly the wrong action.

Additionally, remember all the talk over the last two years about how the anemic economic recovery was due to regulatory uncertainty? Welcome to regulatory uncertainty 2.0 – courtesy of the House GOP. After more than a year of negotiations on net neutrality rules, last December the FCC finally came to an agreement with Internet content providers, wireless carriers, and broadband Internet access providers on some simple rules of the road. Those rules created regulatory certainty that the House now seems intent on upending, which will undoubtedly lead to reduced investment, innovation, and job creation in the Internet content and applications sectors. Why would inventors and investors waste their time when they know Internet access providers will block the most lucrative parts of the online marketplace from reaching consumers?

Finally there has been much consternation that the FCC rule is prophylactic in addressing harms that haven’t yet materialized. This might be a reasonable argument for opponents of the net neutrality rules if only it weren’t so intellectually dishonest. Opponents of “prophylactic” rulemaking argue, without irony, that the rule could potentially harm investment in broadband networks by the large incumbent cable and telephone providers that serve most Americans. They argue that the new rule could potentially, sometime, in the future, maybe harm their desire to build out their incredibly lucrative broadband networks for which millions of Americans pay, on average, about $50 per month to access. So, in effect they’re asking for prophylactic Congressional action in a scenario wherein they haven’t yet experienced harm. Congress should respond by telling those firms to come back when they can show actual damages that aren’t outweighed by the benefits to consumers and the rest of the economy.

Wednesday’s Congressional hearing on the net neutrality rules is a futile exercise. Congress will not ultimately rescind the rules – but its impact may not prove to be painless for Internet driven economic growth.

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