Presidential candidate Jeb Bush has an op-ed in the Wall
Street Journal entitled, “How
I’ll Slash the Regulation Tax.” There is much in his piece with which I
agree, including his conclusion: “Once we remove the burden of overregulation,
America will once again reclaim its
reputation for inventiveness, energy, and boundless opportunity.”
The use of “reclaim” was deliberate. Mr. Bush began his
commentary by pointing out that, according to the World Bank, “the U.S. ranks
46th in the world in terms of ease of starting a business.”
In the course of his piece, Mr. Bush identifies a number of
Obama Administration initiatives that he contends have “mired America’s free
market in a flood of creativity-crushing and job-killing rules.” He concludes his
list with this: “And in perhaps the most shocking display of regulatory
overreach, it is regulating the Internet as a public utility, using a statute
written in the 1930s.”
Well, Title II of the Communications Act of 1934, under
which the Federal Communications Commission has now decided to regulate
Internet providers as public utilities, is derived in all essential respects
from the Interstate Commerce Act of 1887, which itself was enacted to regulate long-since
deregulated railroads. So, in truth, Mr. Bush could have said, “using a statute
written in the 1880s.”
But who’s counting? The fundamental point is that the public
utility-like provisions of both the Interstate Commerce Act and the Communications
Act, which the FCC now has applied to today’s broadband Internet providers,
were included in those statues to prevent abuses by monopolistic carriers. This
point is indisputable. And it is also indisputable – despite the FCC’s feeble attempt
to suggest “gatekeeper” market power in the effort required by consumers to
switch among providers – that broadband Internet services are offered in a
largely competitive environment.
Most Americans can choose among several different broadband
providers to access the Internet, including among four wireless providers that
are carrying an increasing amount of broadband traffic. The fact that there are
still pockets where this is not the case does not justify subjecting all Internet providers, in all areas of the country, to a public
utility regulatory regime.
The extent to which Chairman Wheeler and his two Democrat
colleagues are willing, perhaps even eager, to look backwards in time – as though
looking through a rear view mirror – to justify their stringent approach to
regulating Internet providers should be clear to all. At the very outset of its
Court of Appeals brief, the FCC begins its defense of its Internet regulation
order by stating: “The roots of the [Open Internet] debate can be traced back
to 1980 and Computer II, … in which
the Commission separate data-processing activities from the telecommunications
services regulated under Title II in order to enable new information services
to flourish free from the ‘bottleneck’
power of telephone companies.” [FCC
Brief, at 10.] The agency’s brief declares the purpose of the Computer II regime, with its strict
definitional separation of “telecommunications” and “information services” was
“to establish a regulatory framework supporting development of the nascent information economy free from
interference by the traditional providers of telecommunications services.” [FCC
Brief, at 11.] Even a casual glance at the brief reveals the extent to which
the Commission harkens back to 1980 in an effort to find support for its
current order imposing Title II regulation on today’s Internet service providers.
But this backwards-looking approach is highly problematic.
As you can see from the above (and you can read the FCC’s lengthy Computer II order and reconsideration
orders for much more of the same), the Commission’s action in 1980 was clearly premised
on the assumption that the “telephone companies” possessed “bottleneck” power
and that information services were “nascent.” This may have been true then, but
it is simply not true 35 years later. Today’s broadband Internet providers
(there no longer are “telephone companies” in the sense the Commission used the
term in 1980) operate in a competitive environment, and information economy
providers like Google, Facebook, Twitter, eBay, and so forth are anything but
nascent.
Above all, understood through the lens in which regulations
ought to be properly assessed, whatever the case in 1980, in 2015 no
demonstrable evidence exists of market failure or consumer harm justifying the
Commission’s imposition of public utility regulation on Internet providers.
I am no expert regarding many of the Obama Administration’s
regulations in other areas. But it doesn’t surprise me at all that Jeb Bush
calls the FCC’s action perhaps the Obama Administration’s “most shocking display
of regulatory overreach.”
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