Chevron Deference Never Promoted Regulatory Stability

As reported by Policyband, at a policy forum hosted yesterday by Broadband Breakfast, Senator Amy Klobuchar bemoaned the demise of the Chevron deference doctrine, claiming that the doctrine's jettisoning "could be a real mess because a lot of how we move forward with our economy is if we have consistent rules in place, right?” She went on: “You know what the rules are and then you can invest because you know what the rules are. And if people don't know what the rules are going to be or if they're going to change, it makes it a lot harder.”

Senator Klobuchar is right that stability in the law is important for businesses so they can properly plan investments and make other business decisions. This is even more true, of course, when the legal rules in question are not improperly or unnecessarily restrictive, costly, or burdensome.

But Senator Klobuchar, and others who have taken the same line, especially those familiar with communications law and policy, should know better. They surely understand that the Chevron doctrine promoted more instability in legal regimes than stability. Of course, the back-and-forth "switcheroos" in the "net neutrality" context between imposition of heavy-handed Title II public utility-like regulations and a light-touch regulatory regime for broadband Internet services is a prime example.

Each time the FCC adopted and then abandoned one or the other version of its "net neutrality" regime it relied upon Chevron deference to support the switcheroo. And each time the courts affirmed the FCC's changes based on the Chevron deference doctrine.

Very few credible observers contend that somehow this instability in the legal regime governing broadband providers has promoted investment, or otherwise has been conducive to business planning. Of course it hasn't. And the same "instability effect" has occurred across the administrative state where regulatory regimes have been subject to back-and-forth switcheroos sustained by application of Chevron deference.

The principal reason the Chevron doctrine was eliminated in Loper Bright Enterprises is because Chevron is inconsistent with the Administrative Procedure Act's requirement that courts, not agencies, must decide “all relevant questions of law” arising on review of agency actions. And the Constitution's separation of powers reinforces the APA's dictate.

In my view, the elimination of the Chevron doctrine is correct as a matter of law. And the fact that it promotes stability with respect to regulatory regimes cannot be gainsaid.

Newsom Vetoes Small Cell Bill, Fumbles His Explanation

California Governor Gavin Newsom made confusing remarks while explaining his Monday veto of SB 556, a bill for streamlining small cell deployment in California. Newsom claimed, in one breath, that SB 556 would have severely limited local government authority, but said in another it contradicted federal law – presumably the FCC’s Small Cell Order.

Newsom's remarks made little sense because SB 556 mirrors current federal policy. The FCC's Small Cell Order prevents intentional, costly delays to broadband deployment that prolong the digital divide while also preserving local authority for aesthetic and safety reviews. It bans local authorities from charging discriminatory siting fees and siting fees above objective reasonable costs, and it implements shot clocks for small cell collocation and siting on new structures.

My description of SB 556 sounds quite similar. It bans local authorities from charging discriminatory and unreasonable siting fees above a reasonable estimate of actual cost, and implements shot clocks for small cell siting. The only difference between the Small Cell Order and SB 556 is that the Order places a 60-day shot clock on small cell collocation and 90-day shot clock for siting on new structures, while SB 556 has a 45-day shot clock for both, unless there are more than 300 poles involved, at which point the shot clock extends to 60 days.

But this faster timeline in SB 556 does not conflict with federal law, as Newsom suggests. The FCC derives its authority to implement shot clocks from 47 U.S.C. § 332 (c)(7). Section 332(c)(7)(A) expressly preserves local authority for siting decisions, subject to limitations found in the next section. One of these limitations, found in Section 332(c)(7)(B)(ii), is the requirement that local governments act on wireless siting applications "within a reasonable period of time after the request is duly filed with such government or instrumentality, taking into account the nature and scope of such request."

The Small Cell Order establishes that shot clocks of 60 days for collocation and 90 days for new structure siting are presumptively reasonable for meeting the "within a reasonable period of time" requirement in Section 332(c)(7)(B)(ii). Given that the purpose of shot clocks is preventing delay, state laws with faster shot clocks are presumptively reasonable too. Indeed, nothing in the Small Cell Order prohibits states from requiring cell siting permit decisions faster than the FCC's shot clocks. How could timelier decisions by local governments regarding cell siting pose a conflict with federal policy favoring timelier decisions?

Which brings us back to Governor Newsom's confusing remarks. I've established that SB 556 comports, not conflicts, with federal law. Newsom's other stated reason for vetoing SB 556 is that it's too restrictive on local authority. We can infer, then, that Newsom also thinks the Small Cell Order is too restrictive on local authority since it is barely different from SB 556.

Maybe his remarks aren't so confusing after all. Newsom could be hoping that a future FCC might repeal the Small Cell Order, and without SB 556 in place, California localities could once again use dilatory tactics and punitive fees to prevent or slow broadband deployment. Commissioner Carr wrote in the Bay Area outlet Mercury News about how San Jose's government did just this.

Local government policies that slow or stop broadband deployment are a serious contributor to the digital divide. The Small Cell Order discusses this phenomenon. Highly populated municipalities have an incentive to charge above-cost fees for siting and right-of-way access because broadband providers make the most money from densely populated areas. Absent regulation preventing these fees, incumbent broadband providers will likely pay them because they need to access the densest swaths of customers. But such excessive fees are a deterrent to new entrants. And in all cases, the fees drain broadband providers' funds for capital investment, slowing next generation broadband rollouts in smaller metros and especially rural areas, which are tougher to serve due to lower density. Meanwhile, smaller metros and rural areas don't have the incentive to charge high fees because they need more broadband. When fees are set to cover reasonable costs and no more, providers have more money to deploy better broadband to everyone at a faster pace.

Deployment delays also cause other economic harms. Boston Consulting Group's February 2021 report estimates that 5G infrastructure buildout will directly contribute $400-500 billion to U.S. GDP and create up to 1 million jobs over the coming decade. But it also estimates nationwide losses of $25 billion in potential benefits for every 6-month stall in 5G deployment. SB 556 would have usefully complemented the Small Cell Order, helping to ensure our country enjoys the full economic benefits of 5G.

Government Newsom's veto of SB 556 is disappointing, especially given that 32 other states have passed similar measures in bipartisan efforts, Pennsylvania being the most recent. This is now the second time a California governor has vetoed sound small cell legislation: former Governor Jerry Brown also vetoed a bill supported by Free State Foundation scholars. Hopefully the third time will be the charm.

FCC Proposal Would Protect Internet Services from Local Government Regulations

Under the leadership of Chairman Ajit Pai, the Federal Communications Commission already has compiled a record of clearing away barriers to the deployment of next-generation broadband services to all Americans. At its September 28 public meeting, the Commission can build on that record by keeping broadband Internet networks free from local government regulations. 

The Commission will vote on a proposal that would expressly prohibit local governments from misusing their cable franchising authority to regulate "information services" such as broadband Internet services. Its proposal also would limit in-kind payments from new entrants and cable incumbents seeking to offer video services in local markets. There are solid statutory bases for the Commission’s worthy proposal. And its adoption would further Congressional policies favoring free market competition and innovation in advanced communications services.

Section 621(a)(1) of the Communications Act recognizes that states and their local governments may require cable operators to obtain franchises in order to provide cable TV service within their respective states or localities. However, "a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to award an additional competitive franchise." Other statutory provisions place further limits on local franchising authorities (LFAs). For instance, Section 622(b) caps the amount of franchise fees a LFA may collect from a cable operator for any 12-month period to 5% of the cable operator’s gross revenues for providing cable services during that period.

In a 2007 order, the Commission found that some local government franchising processes imposed barriers to entry that inhibited competition. The agency also found that local franchising processes could unnecessarily burden and disadvantage incumbent cable operators in competing with entrants. Accordingly, the Commission issued rules and guidelines for implementing Sections 621 and 622. 

The Commission determined that the regulatory jurisdiction of LFAs extends only to video services provided over cable networks, and not to non-cable services provided over "mixed-use" networks. Refusals to award a video franchise based on matters involving such non-cable services were deemed unreasonable and therefore impermissible. Additionally, the Commission determined that "in-kind" contributions charged by LFAs in exchange for video franchises are included within the 5% cap on franchise fees. Importantly, a second 2007 order extended those rules to incumbent cable operators. The Commission recognized that the term "cable system" in Section 602(7)(C) "does not distinguish between incumbent providers and new entrants" and that incumbents could be put at a competitive disadvantage if subject to different rules. 

In Montgomery County v. FCC(2017), the U.S. Court of Appeals for the Sixth Circuit concluded that the Commission failed adequately to explain the scope and statutory basis for its "mixed-use" network and "in-kind" contribution rules. The Sixth Circuit effectively narrowed the application of those rules and remanded the matter to the Commission. To its credit, the Commission is now proposing to shore up the previous "mixed-use" network and "in-kind" contribution rules with clearer definitions and fuller explanation of their statutory bases.

With respect to "mixed-use" networks, the Commission's proposal would in all cases prohibit LFAs from regulating information services offered by cable operators, including broadband Internet access services. Under Section 624(b), LFAs "may not ... establish requirements for video programming or other information services." Significantly, the Commission's proposal includes a persuasive analysis indicating "information services" in Section 624(b) is equivalent to Title I's definition of the term and that "Congress intended to bar LFAs from regulating information services." 

Rightly, the Commission's proposal recognizes that LFA regulation of broadband services "would frustrate the light-touch information service framework established by Congress that the Commission previously has found necessary to promote investment and innovation." The Restoring Internet Freedom Order(2017) reclassified broadband Internet access services as lightly-regulated Title I "information services." And the order expressly preempted any "economic" or "public utility-type" regulation of broadband services by state and local governments, including entry and exit restrictions, because such regulation would disrupt federal deregulatory policy goals. Consistent with this federal light-touch policy, the Commission’s proposal expressly would preempt LFAs "from requiring incumbent cable operators to obtain franchises to provide broadband Internet access service." 

Further, the Commission's proposal would clarify that in-kind contributions would count toward the 5% cap on how much LFAs can require cable operators to pay to obtain cable franchises. The 5% cap would apply regardless of whether the in-kind contributions required were cable related or non-cable related, keeping LFAs from overextending their limited authority. Also, the Commission's proposal delineates categories of expenses that are excluded from the 5% cap on contributions, such as capital cost payments for providing public, educational, and government (PEG) access. Those exclusions carefully track with statutory provisions and should satisfy any reviewing court of law.

In all, the Commission's cable LFA proposal is legally solid. And it would protect Internet services from regulatory overreach. By keeping local regulators in check consistent with the Communications Act, the Commission can help ensure a market-oriented environment favorable to the deployment of next-generation broadband services.  The ultimate beneficiaries of such an environment are the nation's consumers.

Thinking Things Through - Maintain That National Policy Line

In a piece titled, “Thinking Things Through – Maintain That Line,” published on February 27, 2018, I contended that, as a matter of fundamental principle, it is important that “[d]igital broadband services should not be regulated under the same public utility-like Title II regulatory regime established for analog narrowband telecommunications services and applied to them throughout the 20^th Century.” I contended that the “line that prevents Internet service providers from being classified and regulated as common carriers in a public utility-like fashion should not be crossed.”

Here I want to think through – contend for if you will – another fundamental principle: Digital broadband services should not be subject to state regulation that is inconsistent with the decades-old national policy favoring light touch regulation of information services.

Of course, it is well-known by now that many states, either through the adoption of new laws or the promulgation of executive orders, are attempting to impose various “net neutrality” mandates on Internet service providers (ISPs) offering services to the general public and/or through procurement contracts to state agencies. In effect, these laws and executive orders, absent preemption by the FCC, would re-impose the very public utility-like regulation that the FCC repealed in its December 2017 Restoring Internet Freedom Order (RIF Order).

If Internet service providers are required to operate under a patchwork of regulation imposed by the various states – a patchwork of public utility-like regulation incompatible with the federal deregulatory policy – then it is likely investment in new broadband facilities will be deterred and innovation chilled with respect to the development of new services.

This is exactly what the FCC concluded in the early 1980s in its seminal Computer II decisions when it first drew what it called a “bright line” between the newly emerging online services – then called “enhanced services” but now “information services” without any material change in definition – and basic telecommunications services. There the Commission established the policy of non-regulation for information services as distinct from common carrier regulation of telecommunications services. Importantly for present purposes, the Commission declared that its deregulatory policy preempted inconsistent state regulation so that the online services could grow free from state economic regulation that would stifle their growth. The FCC’s preemptive authority was upheld by the D.C. Circuit in Computer & Communications Industry Ass’n v. FCC in 1982.

Likewise, the FCC’s preemptive authority regarding state regulation incompatible with federal policy was affirmed by the Court of Appeals for the Ninth Circuit upon review of the agency’s late 1980s Computer III proceedings. The FCC had relaxed some of the requirements applicable to the Bell Companies provision of information services – moving from a strict structural separation regime to one employing nonstructural safeguards – and preempted state regulations that would have imposed more stringent mandates. Significantly, in California v. FCC (1994), the court declared: “The FCC has presented adequate record support for its conclusion that because of economic and operational factors, enhanced service providers would separate their facilities for service that are offered both interstate and intrastate, thereby essentially negating the FCC’s goal of allowing integrated provision of both enhanced and basic services.”

With this backdrop in mind, it should not be surprising – nor is it insignificant – that when Congress enacted the Telecommunications Act in 1996 it declared it to be federal policy “to preserve the vibrant and free market that presently exists for Internet and other interactive computer services” and further that information services should remain “unfettered by Federal or state regulation.’ 47 U.S.C. Section 230. In essence, Congress stated clearly that information services should continue to be subject to the deregulatory policy established in the early 1980s in Computer II and that this is a matter of national policy.

Of course, there have been many, many more pronouncements along the way to the same effect, by both the FCC and the courts. So, the FCC’s declaration in the Restoring Internet Freedom Order – like Congress’s declaration in the 1996 Telecommunications Act – should in no way be surprising. Indeed, the surprise would have been had there been no such declaration.

Here is what the FCC stated in the RIF Order:

Federal courts have uniformly held that an affirmative federal policy of deregulation is entitled to the same preemptive effective as a policy of regulation. In addition, allowing state or local regulation of Internet access service could impair the provision of such service by requiring each ISP to comply with a patchwork of separate and potentially conflicting requirements across all of the jurisdictions in which it operates.

The FCC went on to explain that it is “well-settled that Internet access service is a jurisdictionally interstate service because ‘a substantial portion of Internet traffic involves accessing interstate and foreign websites.’” And then, once again significantly: “Because both interstate and intrastate communications can travel over the same Internet connection (and indeed may do so in response to a single query from a consumer), it is impossible or impracticable for ISPs to distinguish between intrastate and interstate communications over the Internet or to apply different rules in each circumstance.” In this situation, state actions that have the effect of regulating and burdening an inherently interstate service are impermissible under the Commerce Clause.

It should be crystal clear from the foregoing that, dating back to the landmark Computer II decisions, there is a long history supporting the Commission’s declared intent to preempt inconsistent state public utility-like economic regulation that conflicts with the national policy that Internet providers should not be subject to a patchwork of conflicting state regulation, whether in the form of laws, executive orders, or other regulatory impositions.

I should reiterate once again, as I did in  “Thinking Things Through – Maintain That Line,” that the exercise of the Commission’s preemptive authority does not leave consumers or competitors unprotected or without recourse with regard to claims of alleged abusive ISPs practices. Not only will they have recourse to the Federal Trade Commission, with its consumer protection and competition authority, and the Department of Justice, with its antitrust authority, but they will have recourse as well to state laws and regulations, including consumer protection laws, of general jurisdiction. As the FCC stated in 2004 in the Vonage Preemption Order, the federal deregulatory policy regarding information services “refers primarily to economic public utility-type regulation, as opposed to generally applicable commercial consumer protection statutes, or similarly generally applicable state laws.”

So, in sum, just as one fundamental principle requires maintaining the deregulatory line that prevents today’s Internet service providers from being regulated like public utilities, another, correlative fundamental principle requires that, in order for Internet services to continue to thrive and to respond to consumer demands in a fast-changing marketplace, the FCC’s deregulatory policy must be applied on a national basis.

It should be evident that these two long-standing principles – first articulated almost four decades ago – have stood the test of time.

SPEED Act Would Promote Broadband Deployment in Underserved Areas

On October 19, 2017, Senators Roger Wicker (R-MS) and Catherine Cortez (D-NV) introduced the Streamlining Permitting to Enable Efficient Deployment of Broadband Infrastructure Act of 2017 (SPEED Act), which would expedite federal permitting processes for the deployment of next-generation broadband technologies. Specifically, the bill would exempt from environmental and historic reviews currently required by the FCC and other federal agencies for proposed broadband deployment in public rights-of-way areas. This regulatory relief would promote the expansion of broadband access in rural and underserved areas.

The introduction of this legislation was praised by FCC Commissioner Michael O’Rielly who said: "This bipartisan effort to ease and accelerate the deployment of broadband technology would put an end to some of the excessive delays industry experiences when siting facilities." Moreover, Kelly Cole, Senior Vice President of Government Affairs at CTIA, stated: “This legislation will streamline the federal regulatory review process for wireless infrastructure and pave the way for significant investment in next-generation 5G wireless. Quick passage of this legislation will improve access to jobs, education and healthcare for Americans in rural and urban communities in Mississippi and Nevada, and across the country.” (See October 20 edition of TRDaily.)

Unnecessary regulations impede efforts to expand broadband deployment and negatively impact broadband investment. We commend Senators Wicker and Cortez for their bipartisan effort to remove unnecessary federal regulations and to promote broadband deployment in underserved areas, creating access for Americans on the wrong side of the digital divide.

FCC Paves the Way for More Satellite Broadband Deployment

Yesterday, the FCC adopted a Report and Order to modernize rules facilitating deployment of next-generation satellite systems. In a June 2017 Perspectives from FSF Scholars entitled “The Problem with Municipal Broadband and Solutions for Promoting Private Investment,” Ted Bolema and I discussed how satellite broadband is an emerging technology that could be a viable solution to closing the gap of the digital divide. Satellite broadband is accessible to 99.1% of Americans at 10Mbps down and 1 Mbps up, but innovation has enabled consumers to access speeds of 25 Mbps down and 3 Mbps up. By simplifying regulatory approval processes and relaxing requirements for antenna pointing and frequency-band usage, this Report and Order will allow satellite broadband providers to experiment with consumer-friendly innovations and deliver high-speed broadband access to rural Americans.

A "Shot Clock" Would Streamline Broadband Deployment on Federal Land

On October 28, 2015, the Subcommittee on Communications and Technology within the House Committee on Energy and Commerce held a hearing titled “Breaking Down Barriers to Broadband Infrastructure Deployment.” The hearing focused on six different proposals, which are all summarized in the hearing’s background memo. These six drafts represent a positive step towards reducing regulatory barriers and incentivizing more broadband deployment.

One of the big issues that is addressed in several of the discussion drafts is the costly approval process of deploying broadband infrastructure on federal land. Scott Bergmann, VP of Regulatory Affairs at CTIA - The Wireless Association, said in his written testimony that 28 percent of land in the United States is held by the federal government, along with thousands of federal buildings across the country. But he said the approval process to install broadband infrastructure on federal property can take many years.

Chairman Walden gave an example from his district. The town of Mitchell, Oregon has waited two and a half years for permission from the Bureau of Land Management to deploy four power poles so the town can have three-phase electric power. If it takes that long for permission to build electrical infrastructure, it probably takes even longer for permission to build broadband infrastructure.

While the draft legislation would help streamline federal permitting processes, it would not implement a “shot clock” for the review process. Mr. Bergmann said that this simple change would streamline deployment tremendously and has helped broadband providers at local levels. In 2009, the FCC initiated rules which require municipalities to respond to broadband deployment applications within 90 or 150 days, depending on the type of request. In 2012 as part of the Middle Class Tax Relief and Job Creation Act, Congress required states and municipalities to allow any “modification of an existing wireless tower or base station that does not substantially change the physical dimensions of such tower or base station.”

Mr. Bergmann asked Congress to adopt legislation that would create deadlines for federal agencies to respond to requests to deploy on federal lands, buildings, or other properties. Sometimes the only way to reach rural consumers is through federal property. Without undermining national security or other important federal projects, this small change would have very large effects. Not only would this increase revenue for the federal government because providers would pay for access, but it would increase the quality of Internet access for military bases, tribal lands, and other remote areas.

Mr. Bergmann stated that “sound infrastructure policy is a necessary complement to good spectrum policy.” Of course, more spectrum is needed in order to keep up with projected mobile demand. But, in the meantime, reducing infrastructure barriers is a technology-neutral government action. Implementing a “dig once” policy (proposed in one piece of draft legislation) would lower the construction costs of broadband deployment for all broadband technologies, and implementing a shot clock for federal agencies would lower administrative costs, helping wireless and wireline providers reach underserved areas.

In general, it is an important and positive step to see draft legislation that would reduce infrastructure barriers because such legislation would avail resources that providers can use to better serve consumers.

We Told You So: Title II Regulation Harms Investment

On August 25, 2015, Hal Singer, an economist at the Progressive Policy Institute, published a piece in Forbes that appears to confirm what Free State Foundation scholars have said over and over again for years – that rigid regulation of broadband Internet services providers (ISPs) almost certainly will discourage investment. From a sample of some of the largest ISPs in the United States, Mr. Singer finds that broadband (wireline and wireless) infrastructure investment fell by 8% in the first half of 2015 compared to the first half of 2014. Investment by wireline providers alone fell by 12%.

According to Mr. Singer, this is only the third time that capital expenditures by major Internet providers have gone down from the previous year. The first two times followed the “dot.com” bubble burst in 2001 and the Great Recession in 2009. Of course, now there are no such exogenous events to explain the investment drop-off. Because GDP increased over the same period and ISP revenues do not appear to be falling, Mr. Singer concludes the FCC’s adoption of public utility-like regulation of Internet providers in the 2015 Open Internet Order is the most plausible explanation for the reduction in capital expenditures.

Mr. Singer included the chart below in a tweet.

Mr. Singer, Free State Foundation scholars, and many others who opposed the imposition of public utility-like common carrier regulation on Internet providers warned that broadband investment would be adversely affected if the agency ignored the warnings. It looks like we may have been correct and, if so, the decrease in capital expenditures below what they otherwise would have been harms the nation’s overall economy, reduces the number of jobs available, and adversely impacts the quality of consumers’ Internet services.

Over the last decade, we at the Free State Foundation have said countless (yes, I really do mean countless!) times that common carrier-like regulation of ISPs would stifle investment. Therefore, I can’t say we are surprised that broadband investment already appears to have declined substantially. It was apparent for several months in advance of the Commission’s meeting that, come what may, FCC Chairman Tom Wheeler and his two Democrat colleagues were determined to apply the public utility model to Internet providers.

Here is just a sampling of the comments Free State Foundation scholars submitted to the Commission over the years in which we too specifically warned that rigid regulation of ISPs likely would discourage broadband investment.

In July 2014, Seth Cooper and I submitted comments in the matter of “Protecting and Promoting the Open Internet.” We said the following in response to the Commission’s May 2014 Notice of Proposed Rulemaking (NPRM):

Today, there is no evidence of marketplace failure or demonstrable consumer harm in the Internet ecosystem, including the Internet service provider market segment. Instead, there is competition among Internet service providers employing various technological platforms. And investment in network facilities is strong, and innovative business models are thriving. If new net neutrality mandates are adopted, there is a substantial risk that this new regulatory action will disrupt, or at least inhibit, the innovation and investment that has characterized the Internet ecosystem for the past decade or so. This, in turn, and most significantly, will harm consumer welfare.

In September 2014, Seth Cooper and I submitted reply comments in the matter of “Protecting and Promoting the Open Internet.” We said: “A Commission-imposed regulatory regime, which in the name of preventing ‘discrimination’ would enforce the effectual subsidization of heavier users by lighter users and thereby deter investment in facilities, would by no means necessarily be consumer-friendly.” In response to commenters asking the Commission to impose Title II regulation, Seth Cooper and I warned: “There is a long history demonstrating that Title II regulation represses investment and innovation and limits consumer choice.”

In January 2010, Seth Cooper and I submitted comments in the matter of “Preserving the Open Internet and Broadband Industry Practices.” We criticized the Commission’s efforts to apply century-old regulations to Internet providers: “If adopted as proposed, this new Internet regulation – which, in effect, would be much like the public utility regulation that applied to last century's voice-only telephone companies and the nineteenth century's railroads -- almost certainly would discourage investment and job creation, stymie innovation, and harm overall consumer welfare.”

In July 2010, Seth Cooper and I filed comments in response to the Commission’s Notice of Inquiry in the matter of “Framework for Broadband Internet Service,” suggesting that reclassifying broadband as a telecommunication service “would be harmful to broadband innovation and investment.”

In October 2010, Seth Cooper and I again filed comments in response to the Commission’s Further Inquiry in the matter of “Preserving the Open Internet and Broadband Industry Practices.” We advocated for a minimalist regulatory approach to “ensure that investment and innovation in new broadband platforms and Internet services continues to grow, subject not to regulatory dictates, but rather to the dictates of the marketplace.”

In February 2008, I submitted comments in the matter of “Broadband Industry Practices,” responding to petitions from Free Press and a number of other organizations asking the Commission to initiate a rulemaking to clarify what constitutes “reasonable network management” for broadband network operators. I wrote that “the uncertainty created by the mere initiation of a rulemaking proceeding that likely would result in overly broad prohibitions will chill necessary new network investment.” I added that “the FCC must not impose common carrier-like regulations that eliminate or reduce private sector investment incentives.”

In other words, during this decade-long debate, FSF scholars have been consistent regarding the potential adverse impact of imposing common carrier-like regulation on Internet providers. (See the Further Readings below, dating back to 2006.) This is why we are not surprised that it appears that broadband ISPs already have reduced their investment. Assuming for the sake of argument that the FCC’s 2015 Internet regulation order remains in place, it is not likely that there necessarily will be continuing straight-line year-over-year declines in capital spending. But it is likely – and this is the important point, even though it is difficult to measure – that there will be less investment than there otherwise would have been.

In conclusion, as Seth Cooper and I stated in our July 2014 FCC comments:

If new net neutrality mandates are adopted, there is a substantial risk that this new regulatory action will disrupt, or at least inhibit, the innovation and investment that has characterized the Internet ecosystem for the past decade or so. This, in turn, and most significantly, will harm consumer welfare.

We don’t really relish saying “we told you so.” But we did.

Further Readings

Randolph J. May, “The Net Neutrality Controversy: A Historical Perspective,” FSF Blog (January 27, 2015).

Michael J. Horney, “Increased Fees Caused by Title II Regulations Will Depress Investment,” FSF Blog (January 6, 2015).

Michael J. Horney, “Title II Would Not Just Harm Consumers, It Would Harm Workers Too,” Perspectives from FSF Scholars, Vol. 9, No. 43 (December 17, 2014).

Randolph J. May, “Thinking the Unthinkable: Imposing the ‘Utility Model’ on Internet Providers,” Perspectives from FSF Scholars, Vol. 9, No. 32 (September 29, 2014).

Randolph J. May, “FSF Scholars React to DC Circuit’s Net Neutrality Decision,” FSF Blog (January 15, 2014).

Gus Hurwitz, “Two Sides of the Internet’s Two-Sidedness: A Consumer Welfare Perspective,” Perspectives from FSF Scholars, Vol. 8, No. 25 (September 30, 2013).

Seth L. Cooper, “FCC’s Pro-Regulatory Broadband Policy Risks Investment and Jobs,” FSF Blog (September 11, 2012).

Randolph J May and Seth L. Cooper, “New FCC Regulations Reduce Investment and Hinder Job Creation,” Perspectives from FSF Scholars, Vol. 6, No. 22 (September 13, 2011).

Randolph J. May, “Overregulating the Internet "Net Neutrality" Would Discourage Investment and Innovation,” Perspectives from FSF Scholars, Vol.5, No. 2 (January 14, 2010).

Randolph J. May, “Riding the Back of the Internet Public Utility Tiger,” FSF Blog (August 10, 2009).

Randolph J. May, “Don’t Let Net Neutrality Go Airborne,” Perspectives from FSF Scholars, Vol. 2, No. 17 (June 14, 2007).

Randolph J. May, “Net Neutrality: Of Chickens and Eggs,” FSF Blog (May 11, 2007).

Randolph J. May, “Illogical Net Neutrality Idea,” Perspectives from FSF Scholars, Vol. 2, No. 10 (February 26, 2007).

Randolph J. May, “Sidestepping the Net Neutrality Boondoggle,” Perspectives from FSF Scholars, Vol. 2, No. 2 (January 9, 2007).

Randolph J. May, “Net Neutrality Unreality,” FSF Blog (August 17, 2006).