Tuesday, February 23, 2010

Chairman Genachowski Needs a Sister Souljah Moment

As I pointed out in piece published last week on CBS.com called "Reject the Internet 'Public Option," groups like Public Knowledge and Free Press have mounted a vigorous campaign to have the FCC classify broadband Internet access services as "telecommunications" rather than "information" services. The import of such a decision would be that Internet access services provided by cable, wireline, wireless, and satellite firms would be regulated under Title II of the Communications Act as common carriage under the same public utility-type regime that applied to Ma Bell in the last century.

In my CBS piece I stated: "I don't think most consumers wish to retrogress to public utility-type regulation for broadband providers. They know, instinctively, that the same kind of regulation imposed on railroads in the 19th century and on Ma Bell last century is not suitable for 21st century high-speed Internet networks." I suggested the most strident net neutrality proponents are "seriously overreaching."

In his keynote address at the Free State Foundation's Annual Winter Telecom Policy Conference, FCC Commissioner Robert McDowell explained in a clear and detailed fashion why the notion of classifying Internet providers as common carriers under Title II has no merit. Why, in fact, common carrier classification would be counterproductive. In his address, which bears reading, and re-reading, Commissioner McDowell demonstrated the extent to which Title II regulation would require government micromanagement of the Internet service providers' businesses.

And now a group of wireline, cable, and wireless industry leaders have sent a 14-page letter to FCC Chairman Julius Genachowski vigorously opposing the proposal to regulate Internet providers under Title II. The industry leaders say to Chairman Genachowski that, "[i]t is difficult to imagine a proposal more at odds with the Commission’s historical commitment to keeping the Internet unregulated, to our national prospects for economic recovery, and to your own commitment to 'common sense' solutions and to 'private enterprise, the indispensable engine of economic growth.'"

I agree it is difficult to imagine a proposal more at odds with the FCC's historical commitment to keeping the Internet unregulated and with hopes for economic recovery and job creation. After all, the Internet access providers have invested over $200 billion of their own (read: non-government bailout) capital in just the last several years in continuing to build out high speed broadband networks. The FCC's broadband plan staff estimates it could cost up to another $350 billion to build out a high-speed network to every American. With the Internet providers apparently prepared to keep investing billions of dollars their own capital, given a reasonable regulatory environment, it's easy to understand the positive impact of their efforts on economic recovery and job creation.

What no one really knows at this point in his tenure is the extent to which Chairman Genachowski, when he says he is committed to private enterprise as the indispensable engine of economic growth, is prepared to act consistently with his words. Reversing the FCC's policy of not regulating Internet access providers as common carriers – after a long period of non-regulation during which broadband Internet availability and adoption have progressed nicely – would not be consistent with a commitment to such a private enterprise approach and would not be seen as such.

It is perfectly clear that the Title II'ers are not committed to a regime in which private sector firms respond to the demands of marketplace competition. Instead, they are committed to a regime in which Internet providers respond to the demands of government regulatory micromanagers. Indeed, as I pointed out several months ago here and as the industry letter reiterates, Robert McChesney, a founder and board member of the Free Press organization, which is the staunchest net neutrality proponent, said the following in an interview with "The Bullet," a publication of the Socialist Project: "What we want to have in the U.S. and in every society is an Internet that is not private property, but a public utility. We want an Internet where you don't have to have a password and that you don't pay a penny to use. It is your right to use the Internet."

As we say in the law: Res Ipsa Loquitur – "the thing speaks for itself."

Professor McChesney, Free Press, and Public Knowledge are certainly entitled to their views, however radical they may seem to me or others. In fairness, in some technical legal sense, a public utility's property may still be considered private property subject to the strictures of the Constitution's Takings Clause. But, the import of Professor McChesney's and his cohorts' vision for the Internet is clear: At a minimum, Internet networks would be highly regulated by the government, including the rates, terms and conditions of service. This is the essence of the authority conveyed to the FCC by Title II.

Chairman Genachowski's launch of the Commission's net neutrality proceeding – right in the midst of the development of the national broadband plan – was in my view ill-advised and unnecessary. There is no reason at this point, however, to conclude that he agrees with the Title II'ers notion that Internet providers should be subject to common carrier regulation, much less that he subscribes to Robert McChesney's radical idea that Internet networks should not be private property.

Mr. Genachowski is undoubtedly a smart and capable person. He came to his job armed with a lot of knowledge about the communications, information services, and high tech marketplace, and also about communications policymaking. As chairman, he thus far has worked hard and deserves credit for taking actions to foster a sense of collegiality among the commissioners. My sense – perhaps it will turn out to be a misplaced hope – is that he must recognize that his entire policymaking agenda will be put at risk unless he puts an early stop to this talk about Title II Internet regulation or, indeed, any form of heavy-handed regulation..

In my view, what Mr. Genachowski needs right now is something roughly akin to a Sister Souljah moment, a forceful repudiation of the more extreme ideas urged by those who are seen by some as his natural allies and the allies of the president who installed him at the FCC. He ought to avail himself of such a Sister Souljah-like moment to make clear he understands that, in today's dynamic digital environment, debate about the need, or not, for regulatory intervention regarding the Internet should be circumscribed within certain essentially moderate parameters which necessarily exclude Title II common carrier regulation.