FCC faces temptation to rate-regulate the Internet

Posted: 2015-06-25

By Evan Swarztrauber | Watchdog Arena | June 18, 2015

REGULATION TEMPTATION: Companies are now testing the veracity of the FCC’s promise to not rate-regulate the Internet under the net neutrality rule.

Most people likely didn’t notice a difference in their Internet experience on June 12, when the Federal Communication Commission’s 1930s-era Internet regulations took effect, but the FCC’s net neutrality rules are already having an impact.

At least one company is already asking the FCC to regulate prices on the Internet, which could lead to higher costs for consumers.

Just a few days after the rules took effect, web hosting company Commercial Network Services (CNS) threatened Time Warner Cable (TWC) with a net neutrality complaint unless TWC agreed to carry its web traffic for free.

TWC is confident that the FCC will reject a complaint based on the idea that “every edge provider around the globe is entitled to enter into a settlement-free peering arrangement.” CNS is saying the FCC should impose a price of “zero” for companies that want to interconnect with broadband providers, which would amount to the FCC rate-regulating the Internet.

CNS’s complaint comes despite years of reassurances from the FCC and its allies on the Left that reclassifying the Internet as a public utility would not lead to rate regulation:

• “there will be no rate regulation” — FCC Chairman Wheeler
• “Nobody is advocating rate regulation at this point” — Tim Wu, a Columbia University law professor who coined the term “net neutrality”
• “I believe the FCC should reclassify consumer broadband service under Title II…while at the same time forbearing from rate regulation…” — President Obama
• “a return to Title II does not mean unbundling requirements or rate regulation” —Free Press, a pro-Internet regulation group

Given the lack of support for rate-regulation, even on the Left, one might think that CNS has no case against TWC, and that the FCC will easily dismiss it. But the FCC’s flip flops suggest its actions will become increasingly unpredictable, and regulatory uncertainty is a bad recipe for innovation and investment.

If the FCC tosses out the complaint, it will set a precedent that interconnection pricing is a commercial matter and not an net neutrality issue. However, if the FCC agrees with CNS, it will open the door to Netflix, Tumblr, and any other rent-seeking content provider that wants to push its traffic for free.

The lack of clarity offered by the commission on how it intends to enforce Internet regulations doesn’t bode well for any company that finds itself in the FCC’s ‘Eye of Sauron.’ And now that the FCC is fielding complaints on “net neutrality” violations, who knows what the agency will do next?

This article was written by a contributor of Watchdog Arena, Franklin Center’s network of writers, bloggers, and citizen journalists.

http://watchdog.org/224903/fcc-faces-temptation-rate-regulate-internet/?utm_source=newsletter&utm_medium=email&utm_campaign=wdarena_26

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