Wednesday, March 21, 2018

Thinking Things Through – Maintain a Stable Legal Framework

A few weeks ago, I started what I said would be a series of a few brief posts aimed at “thinking through” the fundamental principles at stake in the long-running controversy over “net neutrality.”

In the first, “Thinking Things Through – Maintain That Line,” I explained why it is important to maintain the line that prevents Digital Age Internet services from being regulated in a public utility-like fashion like Analog Age telephone services were regulated throughout most of the twentieth century.

In the second, “Thinking Things Through – Maintain That National Policy Line,” I explained why it is important that digital broadband services not be subject to state regulation that is inconsistent with the decades-old national policy favoring light touch regulation of information services.

Here I want to assert – what common sense tells us is true –  that, in order for businesses to grow and prosper, and to invest and innovate for the benefit of consumers, they must operate in a stable legal framework under clear, predictable rules. In other words, without a stable legal framework that establishes “the rules of the road,” markets cannot operate effectively and efficiently, if at all.

The marketplace for Internet access services is not immune from the operation of this fundamental principle which is the underpinning of our free enterprise system.

Here is what James Madison (or possibly Alexander Hamilton, the scholars aren’t sure) said 230 years ago in Federalist No. 62 about a stable legal framework: “It will be of little avail to the people if the laws…undergo such incessant changes such that no man, who knows what the law is today, can guess what it will be tomorrow.” Or, as he continued: “What prudent merchant will hazard his fortunes in any new branch of commerce when he knows not but that his plans may be rendered unlawful before they can be executed?"

What prudent merchant indeed?

More contemporaneously, in one of his first speeches in 2012 after becoming a commissioner, now FCC Chairman Ajit Pai put the Federalist’s point this way: “[W]hen businesses are uncertain, they, like you or I, are hesitant to invest. It’s therefore no surprise that billions of dollars of capital are staying on the sidelines in the communications industry.”

By now you have probably surmised that I hold that it is necessary to establish and maintain a stable legal framework governing the actions of Internet service providers in order to maximize the investment and innovation which fosters Internet advances. This is why, as I asserted in this recent piece, “Chevron and Net Neutrality at the FCC,” that Congress should now put an end to the net neutrality regulatory “bouncing ball” by adopting a stable legal framework with clear rules of the road.

Make no mistake. The FCC’s Restoring Internet Freedom Order’s repeal of the Title II public utility-like regulatory framework, adopted by the agency in 2015, is crucial to the future of the Internet for the reasons set forth in the first two pieces in this series. So, I am by no means suggesting that any existing legal regime that might turn out to be stable is acceptable. And I am not suggesting that just any law adopted by Congress to resolve the ongoing uncertainty surrounding Internet service providers’ practices would be acceptable.

What I am saying is this: To secure continued investment and innovation for the Internet ecosystem through the maintenance of a stable legal framework, Congress should enact a law governing Internet service providers’ “net neutrality” practices – a free market-oriented law with a light-touch regulatory default.