This is the thirteenth installment in our series on the proposed Net Neutrality regulations. If you haven’t followed “Neutrality’s Reality” from the beginning, the introduction is in the Arizona Daily Independent at https://arizonadailyindependent.com/2015/03/07/neutralitys-reality/.
“Accept what little thy Leader affords you, and treat the least iota as wealth.” [I Barack 1:9]
Yesterday, we reviewed the mess the Federal Communications Commission has included in the new Net Neutrality regulations—or, at least what little the Commission is willing to reveal. The Commission also highlighted a few of the parts of Title II of the Communications Act of 1934 that will not apply. Do not be surprised that there is no benefit to you as a consumer from forbearing these provisions:
● Rate regulation.
● Yes, this ensures carriers can escalate prices over time in the same way cable television costs have climbed radically. More nefariously, this decisively and explicitly ensures there will be no last-mile unbundling. Because the Commission refuses to set rate regulations, carriers are free to continue the current practice of charging competitive carriers more for fewer data rate plans to deliver competitive internet connectivity to customers’ houses. In a truly free and open network, a customer could pay a cable or phone company a nominal fee for interconnection to a fiber backbone outside the neighborhood served by a competitive carrier; these regulations do nothing to enable that.
● Once more, while this problem sounds like it could become an argument for more regulation, this need only arises due to the fact that the broadband networks were built on the model of the phone network that was immediately subject to strict and overbearing government regulation. Government broke the phone network, and will break the internet.
● Universal Service Contributions
● The current proceeding neither prevents nor requires participation in the Universal Service Fund, as that “is being considered in a separate, unrelated proceeding that was already underway.” This implies that the administration is well aware of the uphill battle “net neutrality” will face against the Courts and the Congress, and that the Commission had to keep new taxation separate from an action that is likely to fail the test of legality. Expect to begin paying into the Universal Service Fund on your internet bill, no matter what happens to Net Neutrality.
● State and local taxation
● In this proviso, the Commission asserts that states and municipalities cannot collect taxes for internet access, while allowing the federal government to assess such taxes.
● Note that the natural monopolies that fostered the current model of phone and cable networks arose from municipalities sharing the cost to install the now-antiquated networks. Since those investments have all been recouped by now, there should be no need for local taxation, anyway.
● This does not preclude the federal taxes of the Universal Service Fee, or other taxes and access fees.
The Commission considers “Effective Enforcement”:
● This creates a new ombudsman as part of an “Enforcement Bureau”, the ombudsman to become the arbiter when complaints arise against service providers. As this will be the appointee of political appointees, this will be a political position, again subject to the whim of the sitting administration.
In one of the final statements of the release, the Commission proclaims to all how short-sighted its version of neutrality truly is: “All of this can be accomplished while encouraging investment in broadband networks.”
● Regulation, in every instance, creates new costs for compliance. Regulated businesses immediately pass those costs to their customers. Their customers pay the burdensome costs of regulation instead of the easily amortized costs of innovation. In no instance in the history of civilization has added regulation spurred innovation or growth. Again, look to the phone network as a technological cousin to today’s broadband infrastructure, and look at how closed and unchanging the phone network was until some ten years after deregulation.
In reviewing the entire press release, we’ve seen clearly that the Commission is attempting to distract, misdirect, and misguide the public about the poorly-named Net Neutrality regulations. In parallel with these regulations, the Commission is debating “preemption”, which could make the government an ISP, if not the ISP. We will unpack that in the next installment.