On July 7, 2014, Citizens Against Government Waste (CAGW) President Tom Schatz filed public comments on the Federal Communications Commission’s (FCC) May 15, 2014 Notice of Proposed Rulemaking (NPRM) regarding net neutrality.

Since it was first made available to the general public, the Internet has provided great opportunity for economic and personal growth.  According to the International Telecommunications Union, 84.2 percent of individuals in the U.S. use the Internet, and there are more than 2.9 billion Internet users worldwide.  Many of these individuals use the Internet for shopping, education, research, job applications, and work-related activities. 

The NPRM proposes to increase government regulation over the Internet, citing market failures as the reason to impose these new rules.  Yet, the FCC has not demonstrated that any such problems exist, and has twice attempted to impose similar rules over the Internet.  In addition, Congress has already begun a much-needed modernization of the Communications Act of 1934.  CAGW argued that for all of these reasons further work on the NPRM is ill-advised. 

While the filing period for the initial comments on the NPRM has expired, the deadline for reply comments is set for September 10, 2014. 

CAGW’s comments are as follows:

July 7, 2014

The Honorable Thomas Wheeler, Chairman

The Honorable Mignon Clyburn, Commissioner

The Honorable Ajit Pai, Commissioner

The Honorable Jessica Rosenworcel, Commissioner

The Honorable Michael O’Rielly, Commissioner

Federal Communications Commission

525 12th Street, SW

Washington, D.C.  20005

In the Matter of

Protecting and Promoting the Open Internet

GN Docket No. 14-28

Comments of Thomas A. Schatz, President of Citizens Against Government Waste

Presented to the

Federal Communications Commission

Washington, D.C. 20554

Dear Chairman Wheeler, Commissioner Clyburn, Commissioner Pai, Commissioner Rosenworcel, and Commissioner O’Rielly,

On May 15, 2014, the Federal Communications Commission (FCC) approved the Notice of Proposed Rulemaking (NPRM) for GN Docket No. 14-28, in response to the remand order it received from the U.S. District Court of Appeals for the District of Columbia on January 14, 2014.[1]  In that remand, the court offered the opportunity for the FCC to redraft its original Report and Order on Preserving the Open Internet.[2]  On behalf of the more than one million members and supporters of Citizens Against Government Waste (CAGW), I offer the following comments on the NPRM.

CAGW has long been concerned about the FCC taking action beyond the scope of its authority, particularly in its attempt to impose new rules over the Internet.  The FCC has made two prior attempts to increase regulations over the Internet in the past four years, and both have been rejected in whole or in part by the courts.  The current effort by the FCC to impose net neutrality regulations over the Internet is yet another attempt to solve a problem that doesn’t exist.  Proponents of net neutrality want the online world to be forced “open” at the expense of successful Internet providers, but fail to recognize the many tradeoffs to “openness,” such as increased spam, fewer privacy controls, slower service, and, perhaps most importantly, decreased incentives for investment and innovation. 

Net neutrality is generally defined as a system that allows information on the Internet to move freely without regard to content, destination or source.  In 2004, then-FCC Chairman Michael Powell clarified the definition of net neutrality by offering four guiding principles of Internet freedom:  the freedom to access lawful content on the Internet; the freedom to use applications; the freedom to attach personal devices to the network; and, the freedom to obtain service plan information.[3]  The FCC unanimously endorsed these four reasonable principles when it adopted the Internet Policy Statement in 2005.[4]  The principles have provided Internet service providers with direction devoid of the heavy hand of regulation that could have stymied innovation, and have provided a truly open Internet to all without burdensome regulations.  This light regulatory approach to Internet governance have laid the groundwork for technological advancements to thrive and the economy to grow. 

Despite this success, the NPRM seeks to address the specter of potential market failures and consumer welfare concerns.  However, the Federal Trade Commission (FTC) may be the more appropriate agency to address such problems. 

Indeed, FTC Commissioner Joshua Wright stated that he believed the FTC’s antitrust mandate is particularly well-suited to addressing the concerns that have been raised over the years in the debate surrounding net neutrality.[5]  He said that the FCC’s Open Internet order does a disservice to consumers by “employing an overly rigid, one size fits all, categorical ban on broadband providers’ ability to enter into vertical contractual arrangements that are potentially – if not probably – efficiency enhancing.”  He further expounded on the FTC’s experience in other areas that touch on net neutrality, including vertical arrangements similar to those falling under the net neutrality umbrella, and the FTC’s consumer welfare mission.

There is no doubt that the increased broadband access that has occurred since the Internet was opened to the private sector in 1998 would not have been possible under a heavy regulatory scheme.  The Telecommunications Act of 1996 stated that the legislation was intended to “preserve the vibrant and competitive free market that presently exists for the Internet…unfettered by Federal or State regulation.”[6] 

By imposing this light regulatory touch, the federal government has allowed the opportunity for growth and innovation, such as new business models that continue to spring forth across the country.  Internet access allows job seekers to find employers, shoppers to find great deals and information to be shared.  New technologies have been introduced into the classroom, including digital textbooks, interactive learning games, and digital instruction personalized for each student, and online courses are now being offered by hundreds of colleges and universities.[7] 

The current regulatory system has also encouraged capital investments which have given most Internet service providers the ability to reach access speeds at more than 100 percent of their advertised speeds, as noted in the FCC’s June 18, 2014 “Measuring Broadband” report.[8]  According to U.S. Telecom, broadband providers in the United States invested $68 billion in 2012 to increase broadband availability and improve service across the country.[9]  Despite this constant effort to invest and improve service, the FCC is seeking to increase its jurisdiction over the Internet, rather than allowing market forces to work to produce a satisfactory result for both consumers and broadband providers. 

On December 3, 2013, House Committee on Energy and Commerce Chairman Fred Upton (R-Mich.) and Subcommittee on Communications and Technology Chairman Greg Walden (R-Ore.) announced plans to modernize the Communications Act of 1934.[10]  The committee has produced three white papers requesting input from stakeholders on various components of existing communications law, with further white papers expected.  On June 25, 2014, Senate Commerce, Science and Transportation Committee Ranking Member John Thune (R-S.D.) announced that he also plans to work on reforming the Communications Act of 1934.[11] 

The Internet, unfettered by heavy regulatory burdens, including Title II classification, has provided opportunities unimaginable in 1996, when the Communications Act was last updated.  Because Congress has decided to work toward modernizing the Communications Act of 1934 and has already begun seeking comments from stakeholders on how to address the innovative and constantly changing communications ecosystem, CAGW believes that the NPRM for GN Docket 14-28 is unnecessary, ill-advised and beyond the scope of the FCC’s current mandate.

Sincerely,

Thomas A. Schatz

President

[1] Verizon, Appellant v. Federal Communications Commission, Appellee, Independent Telephone & Telecommunications Alliance, et al., Intervenors, Consolidated with 11-1356, On Petition for Review and Notice of Appeal of an Order of the Federal Communications Commission, United States Court of Appeals for the District of Columbia Circuit, decided January 14, 2014, http://www.cadc.uscourts.gov/internet/opinions.nsf/3AF8B4D938CDEEA685257C6000532062/$file/11-1355-1474943.pdf.

[2] Preserving the Open Internet; Broadband Industry Practices, Report and Order, 25 FCC rcd 17905, 17943, Section 66 (2010) [hereinafter “Open Internet Order”], Federal Communications Commission, December 21, 2010, http://www.fcc.gov/openinternet#rules.

[3] Michael K. Powell, Chairman, Federal Communications Commission, Preserving Internet Freedom:  Guiding Principles for the Industry, Silicon Flatirons Symposium on “The Digital Broadband Migration:  Toward a Regulatory Regime for the Internet Age,” University of Colorado School of Law, Boulder, Colorado, February 8, 2004, https://apps.fcc.gov/edocs_public/attachmatch/DOC-243556A1.pdf.  

[4] Appropriate Framework for Broadband Access to the Internet over Wireline Facilities; Review of Regulatory Requirements for Incumbent LEC Broadband Telecommunications Services; Computer III Further Remand Proceedings: Bell Operating Company Provision of Enhanced Services; 1998 Biennial Regulatory Review-Review of Computer III and ONA Safeguards and Requirements; Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities Internet Over Cable Declaratory Ruling; Appropriate Regulatory Treatment for Broadband Access to the Internet Over Cable Facilities, GN Docket No. 00-185, CC Docket Nos. 02-33, 01-33, 98-010, 95-20, CS Docket No. 02-52, Policy Statement, 20 FCC Rcd 14986 (2005)

[5] Joshua D. Wright, “Broadband Policy & Consumer Welfare:  The Case for an Antitrust Approach to Net Neutrality Issues,” Speech at George Mason University School of Law, Arlington, Virginia, Federal Trade Commission, April 19, 2013, https://www.ftc.gov/speeches/wright/130423wright_nn_posting-final.pdf.

[6] 47 U.S.C §230(b)(2) (emphasis added)

[7] Brittany Ballenstedt, “Get A Computer Science Degree for Just $7,000,” NextGov, May 24, 2013, http://www.nextgov.com/cio-briefing/wired-workplace/2013/05/get-computer-science-degree-just-7000/63662/?oref=ng-HPriver.

[8] A Report on Consumer Wireline Broadband Performance in the U.S., Federal Communications Commission, Office of Engineering and Technology and Consumer and Government Affairs Bureau, June 18, 2014, https://www.fcc.gov/reports/measuring-broadband-america-2014.

[9] “Updated Capital Sending Data Show Rising Broadband Investment in Nation’s Information Infrastructure,” U.S. Telecom, The Broadband Association, Research Brief, November 4, 2013, http://www.ustelecom.org/sites/default/files/documents/103113-capex-research-brief-v2.pdf. 

[10] “Upton and Walden Announce Plans to Update the Communications Act,” United States House of Representatives, Energy & Commerce Committee, December 3, 2013, https://energycommerce.house.gov/press-release/upton-and-walden-announce-plans-update-communications-act.

[11] Anne L. Kim, “John Thune Wants Review of Communications Law Next Year,” Roll Call, June 25, 2014, http://blogs.rollcall.com/technocrat/thune-wants-review-of-communications-law-next-year/?dcz=.