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FCC Internet Price Regulation & Micro-management?

If David Hatch's National Journal "exclusive" report is accurate, that the FCC's proposed Open Internet order is being changed to become much more regulatory in: "addressing concerns about wireless carriers, limiting Internet toll lanes, and adding protections for a new online pricing model" -- the FCC would be hurtling itself headlong down the very slippery slope of highly-destructive FCC Internet price regulation and micro-management.

The huge folly of this trajectory is that its hard enough trying to write an enforcement solution to a non-existent problem, it is mind-numbingly difficult to imagine that the FCC can economically price regulate and micro-manage the international Internet ecosystem.

If this is the direction the FCC is headed, it is the ultimate in regulatory hubris. Not only does the FCC have no legitimate justification, rationale, authority, or consensus to micro-manage the Internet with unprecedented price regulation, the FCC has no proven regulatory competence, business expertise, or analysis on how to achieve this equivalent of doing brain surgery in mittens on a roller coaster in the dark.

What is being discussed behind "closed" doors to ostensibly "open" the Internet by trying to referee and economically pre-determine outcomes for thousands of international Internet networks which link a couple hundred million Americans to tens of billions of websites and applications -- is orders of magnitude more complex than what the FCC attempted and failed miserably at in the 1990's in implementing the 1996 Telecom Act.

At a relatively much easier task, the FCC failed spectacularly in trying to micro-manage the CLEC and fiber backbone bubble that ultimately burst into widespread bankruptcies.

  • The FCC failed then because it hubristically imagined it could centrally plan and manage the Nation's communications networks better than their owners and operators.
  • The FCC failed trying to centrally manage an inherently centralized technology of the national public switched telephone network.
  • This Internet task would be orders of magnitude more difficult because it is much more de-centralized, competitive, complex, and international than what they attempted and failed at before.
    • The number of variables that the FCC would have to put into and guess at in an FCC Internet price regulation econometric model is mind-boggling.

In sum, there is zero evidence that the FCC has learned from its past disasters in trying to micro-manage market outcomes by regulatory fiat, or that the FCC has any competence to tackle this sisyphus-ean task.

  • Make no mistake, the outright bans of currently legal economic competitive behavior and innovative business models that the FCC is apparently considering, are among the most severe, distorting and destructive type of price regulation there is.

The Internet is not broken, but FCC Internet price regulation and micro-management would break it.

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