Thursday, October 19, 2023

PRESS RELEASE: The FCC's Proposal to Impose Public Utility Regulation on Internet Providers Is Deeply Flawed


In response to the FCC’s adoption of a notice of proposed rulemaking to reclassify Internet service providers as common carriers, Free State Foundation President Randolph May issued the following statement:

“Despite the over-the-top scare tactics and doom-and-gloom predictions employed by Chairwoman Rosenworcel and net neutrality proponents throughout 2017 in opposing the Restoring Internet Freedom Order, the FCC’s own rulemaking notice doesn’t purport to claim there is any present evidence of consumer harm to justify imposing a costly intrusive public utility regime on Internet service providers. Instead, the proposal concededly is based on conjecture about what ‘could' or ‘might' occur at some time in the future. For this reason alone, today’s proposed agency action will go down in history as one of the most egregious overreaches in regulatory history. Rather than “net neutrality,” the proposed strict government control of Internet providers by the imposition of public utility regulation might more properly be called “net neutering." 

Chairman Rosenworcel claims that public utility regulation is justified because the Internet is now 'essential' like water and electricity, and providers of those services are most often public utilities. This claim is misguided because, unlike water and power companies, Internet service providers operate in a facilities-based competitive marketplace, and one that is steadily growing increasingly competitive. Regardless of whether Internet service should be characterized as ‘essential’ for some purpose or another, in light of the competitive conditions in which Internet providers operate, likening them to water and electric utilities is especially inapt. Food and clothing are 'essential' too, but no one suggests they should be subjected to public utility regulation. If they were, there almost certainly would be less food and clothing available because, as most economists acknowledge, public utility regimes almost always, over time, suppress investment and innovation. This is because of the regulatory costs imposed and uncertainties created regarding regulators’ decisions.

As but one example in this instance of such inevitable regulatory uncertainties that necessarily disincentivize investment and innovation, the FCC is proposing to adopt what it calls a 'general conduct standard.' But the conduct standard is inherently ambiguous and subject to abuse, based as it is on ad hoc determinations of ‘reasonableness’ and 'totality of the circumstances' evaluations.  

Rather than proposing regulatory solutions for non-existent problems, at a time when Congress has appropriated over $100 billion to promote ubiquitous broadband deployment, especially to unserved areas, and to support adoption, it would make far more sense for the FCC and the Biden Administration to devote their full attention and resources to implementing these programs in an efficient and cost-effective manner, with as little fraud and abuse as possible.

On top of the reasons why, as a matter of policy, the FCC’s proposal is so seriously flawed, as I have explained elsewhere, it is very unlikely to survive judicial review because Congress has not clearly authorized the Commission to take an action of such major economic and political significance. Indeed, Congress has rejected several attempts to amend the Communications Act to provide the FCC with such authority.

Please direct any press inquiries to Mr. May at

Recent Free State Foundation Resources Regarding Net Neutrality:

Seth L. Cooper, Net Neutrality Regulation Is Not a Public Safety Measure, October 17, 2023


Randolph J. May, Net Neutrality Redux: A Fight Over First Principles, October 16, 2023


Seth L. Cooper, FCC Ambiguous 'General Conduct' Standard Is Bad Policy and Likely Unlawful, October 13, 2023

Randolph J. May, There’s Little Question Net Neutrality Is a Major Question, September 28, 2023