Net neutrality debate is really about the ballooning regulatory state

Over the last decade and a half, the FCC has pushed to increase the scope of “network neutrality” to include areas that were never originally contemplated, such as cybersecurity and privacy. Democrats want to enshrine this regulatory “flexibility” in law, allowing the commission to address new technologies without legislation. Republicans, on the other hand, are reluctant to write the FCC a blank check.

In other words, like so many other contemporary issues, the debate over net neutrality is now a dispute about the proper extent and power of the regulatory state. An overview of how internet regulation has evolved over the last several years demonstrates how the debate has shifted, raising the stakes for Congress and the constitutional doctrine of separation of powers.

Expanding the FCC’s power



To understand the current landscape, it’s helpful to start in 2003, when legal scholar Tim Wu released the paper “Network Neutrality, Broadband Discrimination.” Wu explained the need for regulatory intervention, writing, “Basic economic theory suggests that operators have a long-term interest coincident with the public: both should want a neutral platform that supports the emergence of the very best applications. However the evidence suggests the operators may have paid less attention to their long-term interests than might be ideal.”

[Opinion: Surprisingly, the world didn’t end without net neutrality]

In the coming decades, he argued, regulators will need to arbitrate between broadband providers and “the public’s interest in a competitive innovation environment centered on the Internet.” Creating a set of rights for internet consumers would solve this problem, he contended, kicking off a serious campaign to make his proposal permanent.

The push for net neutrality, therefore, began with a focus on consumer welfare and an assumption that providers and users’ interests were aligned. When the FCC first took up the issue in 2005, its policy statement was a near copy what Wu had advocated. Consumers were entitled “to access the lawful Internet content of their choice,” to “run applications and use services of their choice, subject to the needs of law enforcement,” “to connect their choice of legal devices that do not harm the network,” and to enjoy “competition among network providers, application and service providers, and content providers.”

Yet even before, the debate had begun to shift. In his original paper, Wu accepted that different services on the internet might need to be priced separately. But he later dropped these exceptions, marking a hardening of positions on the issue and opening the door to more expansive regulation.

After the 2005 FCC policy statement was struck down in court, the commission came back with the 2010 report and order, which dramatically altered the debate. What had previously been a policy centered on consumer interests now turned toward restricting internet service providers. Now ISPs had to be transparent, could not block a range of content and applications, and were prohibited from discriminating in transmitting lawful network traffic. The three-page policy statement grew to 194 pages with the 2010 order. Even still, the order wasn’t a complete straitjacket. The FCC prohibited “unreasonable discrimination,” but it was widely assumed that the agency would grant network operators some leeway.

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Again, the FCC stance went to court, and again, the agency lost. So, in 2014, the agency redrafted the rules and opened up the docket for comment. The result of this process, the final 2015 rules, reflected just how far the concept of network neutrality had been pushed in the decade since it was first imagined.

The consumer-centric approach of 2003 had morphed into explicit bright-line limitations on ISPs, buttressed by a record that “overwhelmingly supports adopting rules and demonstrates that three specific practices invariably harm the open Internet.” Where Wu had previously assumed that the incentives of ISPs and consumers would generally align, that presumption was now turned on its head.

The 2015 order went further than anyone expected, reclassifying the internet as a Title II service like the telephone. In 2010, Title II classification was so unthinkable as a policy path that Julius Genachowski, who was then the FCC chairman, dubbed it “the nuclear option.” Even one of the most ardent supporters of Title II reclassification today warned in 2009 that the effort was sure to embolden the FCC.

Indeed, the entire fight in the courts over the previous decade was about how much power the FCC could claim, and each time the commission lost, it came back with a more expansive and detailed proposal. The “unreasonable discrimination” prohibition of 2010 became specific rules against throttling content or pay for prioritization in the reclassification order; what Wu had implicitly allowed for in 2003 was a no-go by 2015. The 2015 rules also extended authority over interconnection agreements, the business contracts between network providers. Wireless broadband, which wasn’t included in the 2010 rules, also got swept up into the 2015 regulations. For good measure, the 2015 rules included a broad “general conduct” standard, a catchall provision that gave the FCC the ability to regulate everything else not included in the order.

The 2015 order not only gave the commission vast new power, it also emboldened the FCC to pursue an expansive agenda. It began regulating privacy and considered cybersecurity regulation, two items never before involved in the network neutrality debate.

The coup was complete.

Rebalancing power between Congress and the FCC



When Ajit Pai took over as FCC chairman in 2017, he helped to repeal the 2015 order, convinced that Congress had never given the agency the authority to push rules. But the damage was already done. Network neutrality, which started out as a simple idea, now included interconnection, privacy, cybersecurity, and countless other concerns. Since the FCC never had clear directions from Congress to do any of this, it claimed an ever expanding legal authority through each new order. Courts generally deferred to the FCC on these lines, so after a decade of legal maneuvering, the commission had seized broad regulatory discretion.

Could the 116th Congress come to a compromise? If the FCC’s authority is the central issue, it looks unlikely. The Save the Internet Act reinstating the Obama-era net neutrality rules just passed by Democrats in the House has little chance of clearing the Republican-controlled Senate, and the White House has already promised to veto the bill even if it did.

Another current proposal by Rep. Cathy McMorris Rodgers, R-Wash., would adopt the 2018 Washington state bill on net neutrality — thus making permanent the bright-line rules regulating ISPs and networks — but without granting the FCC wide deference. Because it doesn’t give wide latitude, some have called that bill dead on arrival. On the other hand, if the agency is given this power, then “network neutrality” becomes a rallying cry for virtually any concern about the internet, and the agency has carte blanche to intervene at will, a power that should only belong to Congress. As the courts already noted, such a move would “virtually free the Commission from its congressional tether.”

If Congress doesn’t pass legislation, internet regulation remains in its muddled state. The FCC currently has extensive power; it simply has decided not to use it. But the FCC under a future administration could easily pursue the powers laid out in 2015. Congress should act to clarify the FCC’s powers, as well as reclaim its own.

Will Rinehart is the director of technology and innovation policy at the American Action Forum.