The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Net Neutrality Strikes Back

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


During the first week following its release on November 28, more than 42 million people had watched the trailer for “Star Wars VII – The Force Awakens.”  It was a reminder that every time it appears either the Empire or the Republic are defeated, the vanquished side rises with renewed energy.  Fittingly, the trailer appeared two weeks after a concept that seemed to be moribund rose from the dead to threaten the very existence of the Internet when President Obama announced on November 10 his support for broadband service to be reclassified under Title II of the Communications Act of 1934.

Whether he was under pressure from some left-wing pundits pushing for greater government intervention over the Internet or he doesn’t realize the fiscal impact such a move would have on the economy and the American people, particularly the middle and poorer classes, one thing is certain:  President Obama is not the final arbiter of how the Internet should be classified.  Either Congress or the Federal Communications Commission (FCC), an independent agency, must tackle the issue.

The President made his comments four days before the Free State Foundation (FSF) held a seminar entitled, “Thinking the Unthinkable:  Imposing the ‘Utility Model’ on Internet Providers.”  FSF had no idea when the seminar was planned months in advance just how timely the event would be. 

When the Communications Act of 1934 was enacted, voice traveled over monopoly-run copper wire lines crisscrossing the country.  The legislation was written in order to help break up the Bell company monopoly.  Title II set up a restrictive structure over the telephone industry, imposed public utility-style rules and rate regulations, and under Section 214 imposed a “mother-may-I” requirement for all potential innovations that may have led to improvements in wireline services.  Since it is not a telephone service, the Internet does not fall under Title II.  In addition, innovation in voice service has occurred outside of the wire line telephone space, such as Voice over IP, Fiber, Skype, and wireless mobile devices. 

Landline communications over copper wire lines has grown at a snail’s pace in comparison to the rapid growth of the Internet.  As noted by FCC Commissioner Ajit Pai, speaking at the FSF seminar, “There is no mistake about what this bipartisan consensus has produced – and not just for those of us old enough to remember using 56k modems and getting AOL Internet access CDs in the mail.  Our historic light-touch approach has yielded larger investment in broadband infrastructure, faster speeds, and broader deployment.”

Had the Internet been regulated as a public utility under a restrictive Title II regime, service providers would have been subject to rate regulations, and consumers would have been subjected to higher costs due to application of fees that apply to telephones, including the Universal Service Fund.  FCC Commissioner Mike O’Rielly stated that “… under Title II all Internet services by an Internet Service Provider (i.e., telecommunications services) would be required to contribute to the Universal Service Fund.  This means that consumers of these services would face an immediate increase in their Internet bills.  To put such an increase in perspective note that today’s USF Contribution Factor stands at 16.1 percent and is expected to rise to at least 16.3 percent in the first quarter of 2015.”  This rate increase is passed on to consumers in the form of a hidden tax on their communications bills. 

The USF provides funding to four separate programs:  the Schools and Libraries program, also known as E-Rate; the High Cost program, which provides grants to build out telecommunications infrastructure in underserved or unserved areas of the country; the Rural Healthcare program, which provides communications services, including broadband, to eligible health care providers; and the Low-Income Support program, which includes the Lifeline and Link-Up Programs.  In 2010, the FCC began work on reforming the E-Rate program.   Commissioners Pai and Jessica Rosenworcel both made proposals to improve the program. 

On November 17, 2014, the FCC announced that the plan adopted by the commission would increase the cost of the E-Rate program and require a 16 percent increase in the USF fees consumers currently pay.  These fee increases do not require congressional approval.  As noted by Commissioner O’Rielly, “Title II would require Internet access consumers to pay into USF at a level that will not be trivial because the Commission already has plans for that money.”

A government-run Internet would be a disaster.  Companies providing network solutions would have to ask the FCC for permission before they could implement necessary traffic management shifts, slowing the process down even further.  A majority of Americans agree that the government should not be regulating the Internet, as noted in a November 12, 2014 Rasmussen poll, which showed that 61 percent think the Internet should remain as it is, without additional regulation or censorship.  More than three-quarters of the people who go online, 76 percent, rate their service as good or excellent, and only 5 percent are dissatisfied. 

Clearly, there is no public outcry for what would be a massive, disruptive change to the online experience.  Managing Internet traffic is best left to engineers who are able to work freely to develop new technologies and improve service.  Better network management across platforms must be achieved without the interference of government officials, who would delay the innovation cycle with a lengthy approval process.  The government is not nimble enough to react to consumer demands.  Setting up and funding the federal “Internet police” would be a complete waste of taxpayer dollars.

In the early days of public access to the Internet, which was less than 20 years ago, basic 56 Kbps dial-up modems attached to telephone lines were used to connect computers to the Internet.  One would start the initialization and dialing sequence on the computer; go make some breakfast, get a cup of coffee, and read the newspaper.  By the time the user returned to the desktop computer, it might have connected.  Sometimes it would take two or three tries to connect, depending on how many people were trying to dial up at one time.  Imagine today’s generation having that kind of patience to get information in an era of instant connectedness on multiple devices.  That’s the “vision” of the Internet under Title II.

Thankfully, so far the growth of the Internet has not been hampered down by overbearing regulations such as Title II.  Instead, Congress and the FCC agreed that it should only be regulated with a very light touch.  Over the past two decades, the speed of Internet solutions increased rapidly and services expanded dramatically.  Online banking, education, shopping, and social interactions were all aided and improved by the Internet.  The availability of streaming music and videos over the Internet increased individual entertainment options.  Work processes were streamlined through the use of email, and research projects were aided with improved search engines.

FCC Chairman Tom Wheeler initially reacted to the President’s comments with skepticism, as he is seeking a compromise after the agency’s first attempt to regulate the Internet was shot down by the U.S. Court of Appeals.

The FCC should continue to be careful about whether or not the agency should impose a strict, outdated regulatory regime over the Internet simply because it wants to prevent an unseen harm to consumers.  As Yoda said, “Not if anything I have to say about it I have.”

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