In his State of the Union, President Obama wrongly outlined a vision of the future that puts governments, and not consumers, at the center of Internet policy. By embracing government ownership of broadband networks and promoting heavy public utility-style regulation, the president’s call for a direct or virtual government takeover signals a clear break with policies that have aided America in building a modern Internet marked by dynamic expansion and growth.
Today, the US has among the fastest, most widely deployed and competitive, and most affordable Internet networks in the industrialized world. But the president seems to dismiss what got us here in the first place — over a trillion dollars and twenty years of private sector innovation and investment, largely ushered in, in very large part, by a bipartisan commitment to light touch regulation and limited government involvement in broadband.
In limited cases, government run networks may make sense, particularly where challenging economics may make private investment unappealing. But as is too often the case, the performance of government-run networks fails to live up to its promise. While a select few may claim success, many more municipal broadband projects fail leaving local taxpayers holding a bag of large debt, higher taxes and ongoing obligations even after the service shuts down. A recent study from the New York Law School found most government networks are underwater financially. And those that do remain solvent have often been artificially propped up by one-time government cash infusions or extremely favorable start up and financing terms that cannot be replicated or scaled up on a broader basis.
To be clear, if states choose to take considerable financial risks building and operating expensive broadband networks, it is and should be entirely their decision (even though I may disagree). But the president’s call for an imperious federal government to preempt states from assessing the risks that state taxpayers may incur from local government action in undertaking such costly ventures is just wrong. Local governments are subordinate instruments of the states, and it’s the states that are left holding the bag when these often fanciful expeditions go south.
To add injury to insult, the president has also called for public-utility style regulation of Internet providers under old telephone-era rules protecting the open Internet. But the president doesn’t need to go back to a bygone era of telephone monopoly regulations to do this; the courts have made clear that the FCC can do this using its existing, more modern regulatory powers. Congress could also pass a very simple, targeted bill to accomplish the same policy goals without the unnecessary regulatory baggage.
The availability of these alternatives to preserve an open Internet lay bare what is really happening. The extreme step of public utility reclassification is, in essence, a Trojan horse, a way for the government to exert greater control over the Internet and to regulate it in new and unprecedented ways. Public utility rules would bring a new era of pricing regulation, government dictates on matters big and small and hundreds of pages of other inapt rules. Even if the FCC swears against imposing some of the utility rules for now, three unelected government officials retain the power to change all that on a whim once broadband is reclassified as a public utility. And if history is any guide, they will.
Utility rules will bring the worst of government sclerosis and red tape to one of the most dynamic innovative sectors of our economy, requiring permission slips to innovate and potentially forcing the next Apple, Google or Facebook to navigate vast government bureaucracies before launching — try doing that from your dorm room or garage. Utility rules could also unleash billions in new taxes and fees on consumers and do nothing to advance the deployment of even faster networks.
In the long traditions of America, freedom has rightly been defined as protection against the heavy hand of the State. Internet freedom is no different, having flourished as a platform for discourse, for entrepreneurism, and even for revolution against oppression. A central ingredient of its democratizing power has been to keep government at bay, to prevent censorship, to avoid surveillance, to build and create without government permission or interference. The last thing we should do is turn back the clock on broadband rules or lock the Internet away behind some new Iron Curtain of government control.
Michael Powell, former chairman of the Federal Communications Commission, is the head of the National Cable Telecommunications Association.
