OPINION

FCC’s Genachowski Not Neutral on New Net Rules

Federal Communications Commission (FCC) Chairman Julius Genachowski stirred up the Net neutrality pot last week with his speech at the Brookings Institution where he pledged to create new rules for governing the Internet. While the chairman’s comments were delivered eloquently, they were problematic for a number of reasons.

The FCC boss implied that because the Internet is such a big part of the lives of Americans, its management cannot be left to the marketplace. He noted that “millions of us depend upon it every day: at home, at work, in school” and argued that “the FCC must be a smart cop on the beat preserving a free and open Internet.”

This is an odd conclusion, since one of the greatest drivers of the Internet’s success has been its freedom from the eyes of government and the regulatory burden that such oversight brings. Some writers, such as GigaOM‘s Stacey Higginbotham, have argued that “a lack of regulation can also slow innovation.” She laments “the eight-month time frame for the FCC investigation into Comcast’s decision to block P2P files.” This is also a strange argument.

Different Lesson

The FCC did act to address Comcast’s failure even without clear rules on the books, and government bodies can still take months to respond even when rules allowing them to do so exist. Perhaps more importantly, new regulations often increase costs and slow innovation. Those who think that the FCC’s rules on Net neutrality won’t be burdensome haven’t spent much time following how the FCC works or its history in attempting to be a “competition cop.”

It is ironic that the FCC chairman said that “history’s lesson is clear: Ensuring a robust and open Internet is the best thing we can do to promote investment and innovation.” He’s right that history is clear, but he’s wrong about the appropriate lesson. The reality is that politically generated rules in the name of freedom or competition often result in the exact opposite.

Consider, for instance, the 1996 Telecom Act, which authorized the FCC to “create competition” by forcing phone companies to share their telecom infrastructure with rivals at low, government-set prices.

Such a program certainly opened up the network to rivals — but in the long run it failed, because it reduced incentives for the owners of the networks to continue upgrading their property.

Indeed, one of the biggest problems with the discussion about Net neutrality is that advocates seem to forget that the Internet’s infrastructure is not publicly owned like most of our highways. Instead, most of the system is private, and investors expect a return for the risks involved in creating new products and services.

Changing the Game

Another big problem with the chairman’s speech was his suggestion that the government needs to set rules in order to ensure confidence in the marketplace.

“Saying nothing — and doing nothing — would impose its own form of unacceptable cost. It would deprive innovators and investors of confidence that the free and open Internet we depend upon today will still be here tomorrow,” Chairman Genachowski said.

Since when do ever-changing government rules, particularly in this space, create investor confidence? There are so many examples of the government altering the rules in the middle of the game that it’s hard to know where to start. The most recent example involves AT&T’s purchase of spectrum last year.

The block of spectrum that AT&T bought was “sold with the promise that the spectrum would not be subject to the open rules,” said Chris Guttman-McCabe, VP of regulatory affairs for CTIA. “Now the Commission is considering changing the rules after the auction — impacting companies’ confidence in the auction process — just as carriers are facing a brewing spectrum crisis.”

The block of spectrum that Verizon bought was subject to open access rules, and as a result was much cheaper. Changing the rules of the game now would be unfair, and it would create investor uncertainty in the future. What unexpected changes would be next? Price and usage controls set by the government? Given the FCC’s history, that is not an unthinkable outcome.

Wrong Sort of Protection

Yes, there have been a small number of problems with some Internet providers in the past, but it is hardly realistic to expect something as vast as the Net to be free of all problems.

The reality is that once these provider problems surfaced, the situation was fixed — without the imposition of a new regulatory regime deceptively packaged as “neutrality.” The Internet doesn’t need Washington’s help to “save” Americans from the companies that are trying to meet their needs.

On the other hand, Americans do need protection from pro-regulatory officials such as Chairman Genachowski. A much greater worry is that government involvement will move the Internet from being market-driven to politically driven. If that were to happen, consumers would see a shift from services based on demand to services based on what a few bureaucrats in D.C. think is good for the country.


Sonia Arrison, a TechNewsWorld columnist, is senior fellow in technology studies at the California-based Pacific Research Institute. Follow her on Twitter@soniaarrison

8 Comments

  • The classic definition of insanity is doing the same thing over and over but expecting a different result. Let’s remember a few of the FCCs sterling moments in history:

    -Implementing rules to increase local wireline competition

    -Making rules to increase cable television competition

    -Holding bandwidth auctions that would lead to increased cellular competition

    -Using USF funds to expand broadband to rural areas

    -Making rules to protect calling card users

    Now, in light of these abject failures to manipulate what should be free markets, does anyone believe that the FCC should begin regulating what has been the free-est market ever, the Internet? If so, you need to make a reservation at the Funny Farm, but for the rest of us, what is getting ready to be another colossal FCC failure is anything but funny,

    • Libertarian. Not that there is a lot of difference. In fact, about the only difference that seems to exist, and this is why I can’t say for sure if its a Republicrat or a Libertararchist we have here, is that the former think that "community standards" don’t apply to communities, unless, by standards, you mean, "Jesus everyplace". The later thinks that "community standards" apply everyplace, including big business, where the word *community* means, "The mini-kingdom/nation state, which is {insert name of company}". They can’t seem to grasp that the thought processes of communities do not, in general, function in terms of, "Members of a greater whole." Local standards apply "locally", this is true with respect to how communities manage money, which laws, unless something like the fed tells them otherwise, they impose, what things they allow or don’t allow, etc. If they did function as a whole, with the greater good in mind, then, to use an extreme example, either Intel would have the same dress code as strip clubs, or strip clubs wouldn’t exist, because everyone would dress like lawyers. **Local standards**, unless otherwise forced to be different, by a governing body, differ from company to company, with respect to everything from what/if they pay you, to how, when, how often, your dress code, your behavior, etc. And, this **includes** the companies vision of how to interact with **other companies**.

      In short, when government gets involved you get one of two things – obsessive nitpicking/nannying, directed at trying to force a direction, or you get regulations intended to "guide". The FCC’s actions, under nearly every president/congress/political push and shove, has been to be an incessant nitpicker, whose job isn’t to suggest, or guide, or prevent serious mistakes, but instead to micro manage everything from how you get something, to what it is, and whether or not it contains what some idiots call "bad language". And, the truly stupid thing about it all is, to use the "equipment malfunction" example, it follows the loudest and most obnoxious segment in defining "standards", when the overall "community" of the US has an entirely different one. I seem to remember that like 9/10 people said, "Who cares?", but not the FCC, they had to implement an entirely new set of draconian idiocies to nanny everyone into not showing nipples on TV, so that the minority who *where* offended didn’t freak.

      Sadly, such appeasement doesn’t work, witness the recent Glen Beck rant, lying about god being removed from money (I wish…), not being allowed to pray in school (since when is not letting a teacher lead it not allowing it at all?), not being allowed to sing Christmas Carols (what, its time for the War on Christmas already? I haven’t gotten my Grinch costume back from the cleaners from last time…), etc. Their entire existence is about ranting about all the stuff they wish everyone did 24/7, and they have been told they can’t **force** other people, especially other people’s children, to do. If we had a government sanctioned church, teacher led prayer in school, and our money had bloody crucifixes on it, they would be whining about the world ending because the local hotel forget to put the extra "bathroom" edition of the Bible next to the toilet, but remembered the ones for bedside, the all Jesus all the time TV station, and the Psalms wall paper.

      We don’t need to cater to these people’s hang ups, they would have them even if 100% of the world was Christian, and the worst offense they could come up with is that you forgot to do laundry, and showed up wearing your non-Sunday clothes. But, **these** are the people the FCC listens to when deciding that new laws need to exist to prevent "equipment malfunctions"… WTF?!?

      Lets lose the damn nanny and decide if the FCC even makes sense any more, and what, if it does, it should actually be doing.

      • Another boorish corporate crone pig who would be much better served in the robber baron years.

        Unfortunately for you ‘gretske" we are in the 21st century at a time where people are really seeing through the false logic you try to use here.

        • What a load of rambling tomfoolery Kaghi. Do you really believe that our government is not capable of regulating moderately responsibly? (especialy the things that gravely REQUIRE regulation)

          That is rhetorical, I AM not interested in trying to debate you just show others that you can NOT be believed.

          • You have proven my point about insanity with your kind and thoughtful response. It is exactly your type of deep thinking and immutable loyalty to an obscure dogma that enables the government take over of all we hold dear.

            Oh, by the way, please be advised that I AM not a withered old woman. ("crone") Just so you know.

          • I apologize for spelling crony wrong.

            I’ve already exposed you (gretske) as not to be believed in what you have said about net neutrality. But for those people who may be reachable:

            The simple fact at the basis of the whole net neutrality thing is this: currently many internet providers police your traffic and try to squeeze more money from you depending on what you are sending over the pipe (pipe=internet access). It is so easy to see that we simply need to "govern" the greedy companies who would like to continue squeezing us so that we simply pay for the pipe and use it at will (that’s-use it freely).

            Anti net neutrality people are obviously either so "anti anything government" that they can never make up their minds to have any good government or they are simply people who are in the industry of squeezing money from you where they have no business squeezing. The anti net neutrality people will go on and on about how any governing is always horrible and they’ll confidently state how they are absolute experts in the matter and that you simply don’t understand as well as they do besides all innovation and growth and jobs etc etc etc will be stifled if you try to have your internet freedom by getting your government to do what it should- your government should make sure you are not squeezed by greedy corporations-don’t let them fool you anymore!!!

            There may be other variants but it’s simple to see my logic here and I challenge anyone to refute it. So you’re an old hag, corporate crony or not I grow weary of sifting through the same lame reasoning used by the anti net neutrality bums.

            Just do yourself a favor and have a real argument not just the same lame silly stuff I’ve seen here. You just look foolish.

  • You know what FCC involvement in TV got us? A law that said that they could impose right wing ideals on the entire spectrum, to the extent that, while this has loosened up, we still see the same BS rules now on most TV as where in place when they originally handed them the power. You want to get away from the rules.. make people pay through the nose for a few stations that don’t have to follow them, and you specifically have to subscribe to. And that.. wasn’t possible when TV first came out, and didn’t happen until much later. Since then we have also had the draconian DMCA, and numerous other "protections" put in place, to guard what exactly? Against fans posting more than 30 seconds of audio from a song, or using artwork on their web pages? We want more of this?

    No, the problem is, regulation gets applied when it shouldn’t, and fails to be applied where it should. And the right is no better than the left, or libertarians, or anyone else. What gets regulated is always what ever scares the morons and paranoid, and what doesn’t is what ever lines the pockets of the people making the most money, not what benefits society. The FCC has been operating beyond its original mandate for decades, and half of the shit they do is not justified, either by their arguments, the nature of the regulation, *or* their success/failure in those areas. But, no one wants to bloody fix it. One side wants them to back off from everything, the other wants them to control more, and neither is willing to admit that the "effective" solution would be to very clearly change the FCC rules, so that they better police "technological" aspects of the system, **where needed**, and stop fracking policing morality, where its **almost never** needed.

    The key word here being "needed", and that one causes some serious damn problems. We need them involved here why exactly? If it was to mandate correcting the system so it worked like originally, and had faster response to failure, that *might* be OK, only.. it would likely double the cost of even having internet access at all. If its to nitpick over every new innovation and technology, like some nanny, who doesn’t want you to play with that, because you might break it, or not do this or that, because you didn’t ask first, well then.. screw them. We don’t need that kind of watch dog, and it **would** bury a lot of good ideas.

  • Sonia’s logic is the same lame "less regulation is always better, since government is bad at regulation". Sonia’s arguments are all weak here and I can’t help but wonder how much interest (payola etc) she has in the companies who we’re talking about regulating here.

    It’s no secret that ISP’s go out of their way to control your internet content rather than just sell you the pipe. They do this for shear profit, not to innovate or help their customers. We need regulation for this since most people have been hoodwinked by this practice. It’s a clear cut time to regulate for the common good.

    To lay down all the tired logic for no regulation at this one really gets my panties in a bunch. I see Sonia as some sort of greed prostitute bought by the ISP’s as she’s spouting out what is clearly false simply to try to deceive you.

    Don’t buy it (her bull). We clearly need to get our government to do what it is supposed to do: govern, and, regulate the providers to give us real free internet.

    Sonia must be a republican and think our healthcare and wall street need less regulation too…

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