Critical Gaps in FCC’s Proposed Open Internet Regulations

December 3, 2009 | Filed Under Budget, Business, Capitalism, Computers, Democrats/Leftists, Free Trade, Google, Government, Corruption, Inernet, Liberals, Net Neutrality, Scott Cleland, Society/Culture, Technology |

-By Scott Cleland

Like the FCC’s National Broadband Plan task force identified seven critical gaps in the path to the future of universal broadband, the FCC should resolve six identified “critical gaps” in the FCC’s proposed open Internet regulations before moving forward to regulate the Internet for the first time — by dictating Internet access pricing, terms and conditions or dictating what services which businesses can and cannot offer on the Internet.

Here are six critical gaps in the FCC’s proposed open Internet regulations:

Credibility Gap: The FCC isn’t “preserving,” but changing the Internet by regulating it for the first time.

Are there no real problems for the FCC to address, other than “preserving” the Internet status quo?
How does severely restricting broadband supply or investment incentives increase consumer choice?
How can the FCC regulate its way to opportunity and prosperity?
How can FCC regulatory red tape spur innovation?
With no experience, how can the FCC design, deploy and manage networks better than companies?

Justification Gap: The FCC proposes a solution without presenting any record of a real problem.

Two isolated and quickly-resolved mistakes in five years don’t warrant sweeping preemptive Internet regulations.
The FCC presents no evidence or case of market failure to justify its proposed preemptive and permanent business bans.
There’s zero explanation of why or how the FCC’s proposed regs would be better than the current policy.
The FCC is proposing all cost-no benefit change; big new costs, risks, regulation for no upside, only the status quo.

Legitimacy Gap: The FCC lacks the congressional/constitutional authority to regulate the Internet.

The FCC is over-reaching its narrow ancillary authority by granting itself near limitless virtual jurisdiction.
The FCC’s proposed first-ever, absolute non-discrimination standard has never been authorized by Congress.
The FCC is arbitrarily reversing precedent and recent official FCC assessments of sufficient competition.
The FCC is proposing an unconstitutional ban of companies’ free speech and property-takings without just compensation.

Neutrality Gap: The FCC is putting Google/eBay/Amazon’s interests ahead of consumers’ interests.

The FCC is endorsing price discrimination for consumers, but is opposing price discrimination for companies!
The FCC is supporting de facto structural separation of distribution/content for broadband companies, but not for applications providers.
Surprisingly, users would no longer be entitled to competition among application or content providers!
The FCC regulations would unfairly tilt the competitive playing field towards application providers, so much so that it would foster eventual application monopolization by effectively blocking key competitive entry into cloud computing and other Internet services.

Political Gap: The FCC’s proposal abandons seventeen years of strong bipartisan Internet success.

It reverses Clinton Administration policy to privatize the Internet and keep ecommerce free of regulation.
It overturns the Clinton Administration’s Kennard-FCC precedent to not apply open access regulations to broadband.
It upends multiple 5-0 FCC broadband decisions to not price regulate broadband services.
The FCC’s proposed regulations of the Internet also do not have majority support in either the House or Senate.

Responsibility Gap: The FCC is ignoring obvious risks, costs and unintended consequences.

The FCC is risking Internet outages by prioritizing the goal of no edge limits over the goal of core network reliability.
The FCC is gambling unnecessarily with one of the only healthy and stable sectors of the economy.
The FCC is tampering with a finely-tuned engine of economic growth, job creation and competitiveness.
The FCC is introducing poorly understood systemic risk into an essential, well-functioning ecosystem.

In sum, the FCC should devote similar attention to understanding the “critical gaps” in the proposed open Internet regulations as the FCC has devoted to understanding the “critical gaps in the path to the future of universal broadband.”

The FCC’s National Broadband Plan cannot succeed if the FCC, in another highly-related proceeding, torpedoes:
Bipartisan consensus;
Private broadband market momentum/incentives; and
Private facilites-based broadband competition, investment and deployment.

The single biggest “gap” that the FCC missed in reviewing the future of universal broadband, is the big disconnect between the consensus behind universal broadband and the non-consensus behind the FCC’s controversial and counter-productive proposed open Internet regulations.
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Scott Cleland is one of nation’s foremost techcom analysts and experts at the nexus of: capital markets, public policy and techcom industry change. He is widely-respected in industry, government, media and capital markets as a forward thinker, free market proponent, and leading authority on the future of communications. Precursor LLC is an industry research and consulting firm, specializing in the techcom sector, whose mission is to help companies anticipate change for competitive advantage. Cleland is also Chairman of NetCompetition.org, a wholly-owned subsidiary of Precursor LLC and an e-forum on Net Neutrality funded by a wide range of broadband telecom, cable and wireless companies. He previously founded The Precursor Group Inc., which Institutional Investor magazine ranked as the #1 “Best Independent” research firm in communications for two years in a row. His latest op eds can be seen at www.precursorblog.com.

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