FCC’s Net Neutrality Rationale Crumbling in US & EU — Dead Regs Walking?

July 12, 2011

The fundamental rationale undergirding the FCC’s net neutrality regulations in the December Open Internet Order appears to be crumbling before our eyes in both the U.S. and the EU — enough so to raise the question — could they be “dead regs walking?”

In the U.S., a new White House Executive Order calls on independent agencies like the FCC to revisit “regulations already on the books to reduce outdated, unjustified regulations that stifle job creation and make our economy less competitive.”

  • This new Executive Order, which expects that regulations be justified and have more benefits than costs, by implication puts the FCC’s net neutrality regulations in a particularly bad light and position, because the FCC rules were not justified by a real documented market problem and because they were purported to be preventative, they were effectively “all pain and no gain” — the opposite of the order’s expected cost-benefit justification.
  • The harsh reality of the Nation’s lackluster economy and anemic job growth, necessitates the White House political distancing from difficult-to-defend, “unjustified” and “burdensome” regulations — like the FCC’s net neutrality order.

Interestingly, this White House political distancing in general from regulations that impede investment, growth and job creation, specifically could raise the stakes for the upcoming fall vote by the Senate on the Resolution of Disapproval of the FCC’s Open Internet Order (which has already passed the House and is not subject to filibuster in the Senate.)

  • The White House’s political positioning against the vulnerability of economic regulation harming growth and jobs, means:
    • First, it will be harder for the White House to persuade vulnerable Senatorsup for election in 2012 to oppose the Senate Resolution of Disapproval and vote for the FCC’s highly controversial net neutrality rules; and
    • Second, it will raise questions whether or not the President would, in the end, actually veto a bicameral bipartisan resolution to reduce unjustified regulations that a majority of Congress believes hurt the economy and job creation.
  • Simply, the White House’s apparently strong and continued political repositioning against economy/job harming regulations, makes it less likely that the FCC can depend on the Senate or the White House veto to preserve the FCC’s unpopular, unjustified, and unnecessary net neutrality regulations.

In the EU, they are worried that the threat of net neutrality requirements there risk the EU falling behind the world on broadband deployment. Per FT reports:

  • “…the European Commission’s fears that ambitious EU targets to improve broadband speeds will be missed because of inadequate investments by telecom operators. The report is expected to provide thinly veiled backing to operators tapping new wholesale revenues by taking the contentious step of charging online content providers for delivering their bandwidth-hungry video material to consumers in a high-quality condition, according to people familiar with the document. Such charging is strongly opposed by supporters of net neutrality, including Google,…

The takeaway here is that the EU, which is normally much more interventionist and regulatory than the FCC, is showing surprising restraint here relative to the FCC. 

  • The harsh economic reality of the EU’s severe debt problems mean that there is very little political appetite for EU governments to fund new government broadband subsidies that would essentially transfer EU wealth to “bandwidth-hungry” American Internet application companies. 

In sum, consider the accumulating evidence that the rationale and support for FCC’s Open Internet are crumbling. 

  1. The White Houseis increasingly politically distancing itself from supporting regulations that could be seen as harming economic growth and job creation, and now is less likely on the margin to veto a potential full Congressional Resolution of Disapproval of the FCC’s net neutrality regulations.
  2. The EUis rejecting a core tenet of U.S. corporate net neutrality proponents and supporting experimentation of new business models that involve collecting revenues from “bandwidth-hungry” Internet application companies.
  3. The House has voted to disapprove the FCC net neutrality regulations, and also voted to defundFCC implementation of the regulations.
  4. The Senate, is now more likely to vote against the FCC Order in the fall Resolution of Disapproval vote, in part because of the White House’s apparent political calculus that supporting unnecessary job-harming regulations is a political loser in 2012.
  5. The public is clearly not supportive of net neutrality regulations, given that all 95congressional candidates who pledged support of net neutrality regulations lost in the 2010 midterm elections.
  6. And, finally the courts are skeptical of the legality of the FCC’s open Internet order given that the FCC did not contest the DC Court of Appeals’ Comcast vs. FCC decision last year, that effectively ruled that the FCC does not have the statutory authority to economically regulate broadband information services.

 Looks a lot like “dead regs walking.”

 

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