FCC must dump Obama's net neutrality rules for broadband
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Two years ago, the FCC put in place sweeping rules for the internet, overruling businesses, labor unions and economists who warned these proposed “Title II” regulations would crater investment in broadband networks and deployment. Supporters of internet regulation cheered the move to expand government power over what we do and say online, dismissing the threat of an investment collapse out of hand.

But now the results are in and they show the warnings were prescient. Moreover, they strongly support FCC Chairman Ajit Pai’s plan to revisit these flawed rules. The big technology companies that benefit from the market distortions introduced by Title II aren’t too happy about it. A rebooted FCC with its thoughtful new focus on economic rigor and data-driven analysis doesn’t seem likely to be fooled.

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To begin, investment in broadband infrastructure is in fact down by a lot. Since reclassification was first proposed in 2010, the nation has lost between $80 billion to $125 billion in infrastructure investment, a 25 percent decline through 2015. Capital spending in 2016, a year after the 2015 decision, is down again.

 

In the wireless industry, for instance, it was about $6 billion below expectations, a stunning decline of 20 percent. Overall, the drop in investment driven by the fascination with these Title II regulations costs the nation 100,000 telecommunications jobs annually and the pace of broadband quality increases has decelerated.

What evidence exists to rebut these detailed econometric studies? None. Even the data collected by Free Press, a far-left group favoring the most extreme forms of internet regulation, shows investment is down in real dollars. The Internet Association, a trade group representing the beneficiaries of the regulations, could muster only a “no investment effect” and had to fabricate data to even come up with that.

Armed with no real evidence, the supporters of internet regulating have claimed, among other nonsensical things, that broadband providers never told Wall Street that Title II would reduce investment. Free Press set this claim in motion, but last week Sen. Edward MarkeyEdward (Ed) John MarkeyOvernight Regulation: FTC launches probe into Equifax | Dems propose tougher data security rules | NYC aims to slash greenhouse gas emissions | EPA to reconsider Obama coal ash rule Overnight Cybersecurity: Kaspersky to testify before House | US sanctions Iranians over cyberattacks | Equifax reveals flaw that led to hack Dems propose data security bill after Equifax hack MORE (D-Mass.) and Rep. Michael Doyle (D-Pa.), among others, repeated it in public hearings. Two minutes of research and a healthier skepticism of sources would have spared them the embarrassment of being so obviously wrong.

In its 2014 annual report, AT&T bluntly told its investors just prior to reclassification, “this antiquated approach will damage investment and damage the internet itself.” Verizon did the same, stating in its 2014 annual report, that Title II “could depress long-term capital investment in infrastructure, discourage innovation in broadband internet and related services, and cost the economy thousands of middle-class jobs.”

Now desperate, supporters of heavy-handed internet regulation, such as former FCC adviser Gigi Sohn, want the FCC to count the “yeas and nays” in the now more than 13 million comments in the record as part of a data-driven analysis. Although beyond telling us that millions of superficial form comments have been submitted on both sides of this issue, largely canceling each other out, it is unclear what we would learn.

Almost all of these “express comments” contain no useful information or analysis, with 30 percent of them including an identical one-sentence statement, and apparently more than one million of the filings come from Russia and other foreign countries. There are also multiple filings by individuals including over 2,200 allegedly by television comedian John Oliver and 26 by Jesus Christ.

As for meaningful content, only 73 of the filed comments mention “Section 201” of the statute and only 134 mention “forbearance,” two key parts of the regulatory apparatus. These mentions pale in comparison to the 11,552 comments including the “f word” and 8,838 featuring an even more scatological term. Numerous filings threatened violence against FCC leadership.

What is the proper way to handle the count of these filings? As any empiricist knows, the voluntary and uncontrolled nature of these filings means any statistic computed from it is inaccurate, and the most skewed statistic of all is the simple count of yeas and nays. Perhaps in the future, the FCC should require all comments be filed under the letterhead of a licensed lawyer, who might cull them to limit the risk of suspension or disbarment.

The FCC’s 2015 open internet order has long been a posterchild for bad law and worse economics. It has been labeled an “economics-free zone” by the FCC’s own chief economist. The data on the results of its fool hard decision to proceed with Title II despite reams of expert warnings bears this out. Chairman Pai deserves credit for revisiting the issue in an economically serious way and attempting to restore some semblance of order to a renegade regulatory agency.

George S. Ford, Ph.D., is an economist specializing in technology issues at the Phoenix Center for Advanced Legal & Economic Public Policy Studies.


The views expressed by contributors are their own and are not the views of The Hill.