On July 11, 2011, President Obama issued Executive Order No. 13579 to improve and reform the regulatory process for government agencies. How this Executive Order will be implemented remains to be seen, as some agencies are forging ahead with costly, unnecessary and burdensome regulations that contravene the intent of the Executive Order.

A prime example of excess is the Federal Communication Commission’s (FCC) ruling on Preserving the Open Internet and Broadband Industry Practices (Report and Order FCC 10-201, adopted on December 21, 2010). This ruling on network neutrality is an unnecessary government intrusion into the free market; an attempt to solve a problem that does not exist.  The broadband industry is a competitive market and has been historically protected against over-regulation in order to facilitate the flow of free thought and innovation. The FCC’s interference will stifle Internet innovation, limit the dissemination of knowledge and ideas, and adversely affect economic growth. 

On June 30, 2011, the FCC provided further direction on FCC 10-201 with the issuance of the “Advisory Guidance for Compliance with Open Internet Transparency Rule” (GN Docket No. 09-191, WC Docket No. 07-52). The advisory guidance seeks to force “disclosure of network management practices and the performance and commercial terms of broadband services to further reduce broadband providers’ incentives and ability to engage in harmful conduct.” This guidance was submitted to the Office of Budget and Management (OMB) for approval on July 7, 2011.

The FCC and OMB will receive public comments until August 8, 2011, after which the final rule will be published and regulation of the Internet by the FCC will commence. This attempt to stymie growth through government regulation will be counter-productive. Citizens Against Government Waste (CAGW) supports an open and competitive Internet, which will allow for continued, unfettered innovation, and filed comments with the FCC (http://www.cagw.org/assets/pdf-letters/fcc-public-comment-net-neutrality... ) and OMB (http://www.cagw.org/assets/pdf-letters/omb-public-comment-net-neutrality...) on July 22, 2011.

The FCC’s case for network neutrality rules is based in part on a provider’s past attempt to combat network congestion by managing peer-to-peer traffic. When the provider began to notice that network demand by heavy users was impeding the ability of other subscribers to use its broadband service, the company’s engineers devised a way to intermittently hold traffic from peer-to-peer applications, so that performance did not suffer for the vast majority of subscribers. In April 2010, the D.C. Circuit Court vacated the FCC’s attempt to sanction the provider, and ultimately, the provider and the peer-to-peer community resolved the issue by convening their engineers to develop alternative solutions that advanced traffic management techniques to everyone’s benefit. This free-market industry innovation to solve real world problems is how conflicts on the Internet should be resolved.

Measures have been offered in both the Senate and the House of Representatives to disapprove the proposed net neutrality rule. S. J. Res. 6 was introduced by Senator Kay Bailey Hutchison (R-Texas) on February 16, 2011, with 39 original co-sponsors. On that same date, House Energy and Commerce Subcommittee on Communications and Technology Chairman Greg Walden (R-Ore.) introduced H. J. Res. 37, which passed the House of Representatives on April 8, 2011, by a vote of 240-179. The Senate has yet to act on this issue. The House bill nullifies the “network neutrality” rules adopted by the FCC on December 21, 2010.

As the August 8, 2011 deadline looms for comment on the advisory guidance, the Senate should act on H. J. Res. 37, and halt the FCC’s misguided efforts to regulate the Internet, which until now thrived in an open environment that rewarded innovation and growth without the long arm of the federal government’s interference. Those who oppose the rule should join CAGW in filing their own comments to OMB.

“When the government guesses wrong, however, and imposes a regulatory regime based on unsubstantiated fears about the future, it can distort the development and deployment of new services by all providers for years to come. In short, what is frequently considered to be “market failure” is really the result of regulatory failure. Until such harmful policies become reversed, consumers lose out.”

Remarks of Commissioner Robert M. McDowell
Federal Communications Commission
“Speech, Civic Engagement and the Open Internet” Workshop
GN Docket No. 09-191; WC Docket No. 07-52
Tuesday, December 15, 2009
Washington, D.C.