Friday, February 6, 2015

The Bad Argument Behind the FCC’s Move to Regulate the Internet Like a Utility

The Bad Argument Behind the FCC’s Move to Regulate the Internet Like a Utility

Earlier today, Federal Communications Commission Chairman Tom Wheeler proposed reclassifying broadband Internet service from a Title I “information service” to a Title II “telecommunications service”—essentially declaring that the FCC plans to regulate the Internet as a public utility.

It has been clear for at least a month that Wheeler planned to take some version of this approach. At a tech conference in early January, Wheeler, who had long resisted reclassification, said he had an “aha moment” when he looked at the regulatory treatment of wireless phone networks. Under the Telecommunications Act of 1996, wireless companies were officially regulated under Title II, but were not subject from some of its requirements, like rate regulation. “Under that for the last 20 years, the wireless industry has been monumentally successful,” Wheeler said.

In an op-ed for Wired today announcing the Title II proposal, he reiterated the argument, saying that “over the last 21 years, the wireless industry has invested almost $300 billion under similar rules, proving that modernized Title II regulation can encourage investment and competition.”

The problem with that bit of reasoning, as Jon Healey of the Los Angeles Times pointed out at the time, was that in 2007, wireless data networks—which account for a significant portion of wireless industry investment and innovation—were exempted from Title II.

Wheeler is now pointing specifically to the voice component of the wireless industry as an example of a success. This seems at least a little odd: It’s hard to imagine most people pointing to the voice component of the mobile industry as being particularly innovative or interesting over the last several years. In recent years, the mobile industry has seen voice use flatline and mobile data surge. That’s not likely to reverse; data usage is growing not only because of new connections, but because each connection is using more data. So if anything, the voice component of wireless is on track to become far less relevant.