For the National Association of Regulatory Utility Commissioners (NARUC) it is not enough to advocate for regulation of broadband Internet providers under the rubric of "net neutrality." Believe it or not, the organization representing state public utility commissioners is now on record advocating "content neutrality."
If this sounds a bit 1984-ish, it is only because it is. For those advocates and regulators who seek more regulation for every ill they can imagine – regardless of the real world marketplace environment – it is a short leap from regulating the "neutrality" of networks to regulating the "neutrality" of content.
I understand that, consistent with their original missions to regulate monopolistic public utilities, state public utility commissions have much less communications regulatory work they ought to be doing. But as competition rather than monopoly has become the norm in communications markets in the past few decades, and as telecom providers have mostly lost their traditional "public utility" characteristics, NARUC, on behalf of its utility commission constituency, seems intent on looking far afield to remain relevant.
Hence its advocacy of "content neutrality" through adoption of the "Resolution on Fair and Non-Discriminatory Access to Content" at the just concluded NARUC meeting in Washington.
NARUC wants the FCC to go beyond regulating broadband providers' Internet access services to regulating the provision of video programming by multichannel video distributors. The resolution states that the FCC dealt with program regulation on a selective basis in the context of approving the Comcast-NBCU transaction by acting to ensure "reasonable access" to programming. NARUC points out that in the merger approval order the FCC dictated that content be made available at "fair market value" and on "non-discriminatory prices and terms." NARUC's resolution implores the FCC to now attack the issue "more broadly."
As icing on the cake, and by way of justification I suppose, NARUC asserts that video content is the leading, if not the "killer" application, in the bundling of broadband services by competitors seeking to enter mid-size, small, and rural markets. In other words, despite the fact there are hundreds of completely independent cable programming networks, and countless other producers of quality programming who regularly score hit programming on YouTube and other popular Internet sites, we are supposed to think of the video programming marketplace as something akin to an "essential facility."
No matter how much the NARUC resolution is dressed up with talk of "killer" apps and "fair market value" and "non-discrimination," the regulatory interference it seeks to justify constitutes bad public policy. And the fact that Comcast and NBCU agreed to similar access and sharing conditions, whether "voluntarily" or not, in the context of their merger proceeding, certainly does not make such regulatory intervention sound policy.
Indeed, as I explained in a piece two weeks ago commenting on the FCC's recent net neutrality and Comcast-NBCU actions:
"Continually invoking language at the heart of the analog-era regulatory paradigm – "public interest," "reasonable," "unreasonable," "fairness," and "non-discrimination" – the Commission clings tenaciously to the exercise of regulatory power. Acting under the guise of "reasonableness" and the "public interest" and so forth, it exercises this regulatory power in the name of ensuring "fair competition" or "leveling the playing field," all the while picking marketplace winners and losers – and all the while disclaiming it is doing any such thing."
Not surprisingly, in supporting more program regulation, the NARUC resolution, right on cue, invokes the FCC's "commitment" to "level playing fields." With all the leveling going on with this FCC, it's a wonder the agency's Portals headquarters is not flat. And NARUC's headquarters too, for that matter.
At the end of the recent piece, I concluded that "the Commission, at least in the form of its present three-person majority, exhibits unbounded – but unwarranted -- confidence in its ability, notwithstanding the dynamic marketplace and technological changes, to make judgments as to what is 'reasonable' and 'fair' and 'nondiscriminatory' and in the 'public interest.'
By invoking its broad discretion to decide what is "reasonable," "fair," "non-discriminatory," and in the "public interest," the FCC's regulatory interference can have the effect of stifling investment and innovation, whether with regard to broadband networks or video programming. The reality is, whether deciding that non-discrimination and fairness dictate no prioritization or differential treatment of traffic or mandatory sharing of video programming with competitors, the effect may be to chill investment and innovation. When returns on invested capital are capped and limited by regulation, innovation and investment necessarily are chilled.
As for video programming, regulated mandatory sharing could well mean there will be less new innovative programming produced, and less new distinctly differentiated programming produced, because producing such programming is riskier, the returns less certain.
So, NARUC may wish to become a "player" in the video programming arena in the name of "leveling a playing field" through more government regulation. The state regulators may have supreme confidence that the folks over at the FCC know exactly what fairness and reasonableness require in the name of such leveling.
In my opinion, however, it is much more likely that the advocacy of "content neutrality" by NARUC, and others with a like-minded pro-regulation mindset, will result in just that – more content neutrality. By this I do not mean something positive. I mean program content that is less differentiated, less innovative, and less diverse.
Yes, more leveled in a way that does not ultimately serve America's viewers and consumers.
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