Former President Ronald Reagan famously declared in 1986 that “the nine most terrifying words in the English language are, ‘I'm from the government and I'm here to help.’”
Should the U.S. Federal Communications Commission (FCC) import European-style utility regulations on the Internet, unnecessary government intrusion into a thriving economic sector may soon become a reality. Instead of focusing their attention on a singular issue with dubious prospects for success, American lawmakers and regulators would be better served taking a holistic view of technology policy and look at updating the overarching laws that govern this important industry.
The time has come to move on from narrowly addressing debates over policies in the tech arena – “net neutrality,” reclassification, privacy, and security to name some – because they are simply symptoms of the larger problem – an obsolete communications statute.
The most recent update to the Communications Act, the 1996 Telecommunications Act, has served America, and the world, quite well. But the ’96 law reflects the era in which it was enacted and has become archaic and an impediment to innovation.
To realize the next phase of the ongoing technological revolution, updated laws – made light and flexible enough to withstand the inevitable change that will occur over a two decade period – must be enacted to retire outdated classifications envisioned for obsolete networks. In maintaining the restrained-governance approach that has allowed the U.S. digital economy to thrive, an ideal legal framework would recognize and embrace the dynamism that comes from technological innovation.
Under no circumstances should laws be promoted that regulate the Internet as a utility as it is in many European countries, where such regulations require network operators to lease their privately-funded networks at below-cost rates to competitors.
The Internet infrastructure has little if nothing to do with provision of utilities, such as water, and Europeans seem to take metaphors such as ”pipe lines of Internet” literally, which is obviously detrimental to incentives for investments in this area.
I saw clear examples of this kind in my country – Romania – where large companies, capable of building their own Internet-access infrastructure preferred to wait until other companies build their own infrastructure and then shout loudly that these companies should be forced to open-up their network to them.
The current system in U.S. uses facilities-based competition – in which network operators of all types compete with different technologies and entrants build their own networks – makes the most sense for America’s vast landscape. This approach keeps costs low and investment and innovation high.
For instance, in a new study by University of Pennsylvania Professor Christopher Yoo the European “utility-style” and the American “light touch” approaches are put to the test. Yoo found that the U.S. led Europe in national 25 megabits per second (Mbps) coverage 82 percent to 54 percent, and in wireless LTE coverage 86 percent to 27 percent. Investments per household were more than two times greater in the U.S. than in the EU – $562 in the U.S. v $244 per year in Europe – and entry-level broadband prices were lower in the U.S. market than in a European system where LTE remains more of a marketing ploy of the operators than a true LTE network.
At a time when the U.S. government tries to regain credibility in light of NSA surveillance and security breaches, why would it invite more government involvement of the Internet?
The move to reclassify the Internet as telephone companies would be more akin to the objectives of China, Russia and Saudi Arabia and other countries to elevate a United Nations body to oversee rate regulation of the Internet. This move would ultimately undermine the free and open Internet we currently enjoy throughout the world.
Markets are resilient at solving problems and meeting consumer needs. Government intervention in any sector should be invoked only when there is a clearly demonstrated harm to consumers or competition. Over the top, outdated and burdensome regulations should be avoided at all cost.
U.S. leadership in modernizing its communications laws can set an important example for Europe and other regions to follow. Switching to a public utility model of regulating the Internet would set a dangerous precedent for the future of the Internet.
If the U.S. doesn’t get its communications policy right, the nine most terrifying words in the English language might become, “Why did we let the government regulate the Internet?”
Valentin Mircea is a Romanian-based attorney focused on telecommunication competition. He was previously the Vice-President of the Romanian Competition Council.