Congressional Republicans Are Risking the Internet Economy

Rep. Bob Goodlatte, R-Va., at the eighth annual State of the Net tech policy conference of the Congressional Internet Caucus Advisory Committee on Jan. 17, 2012.

Photo by Alex Wong/Getty Images

Congressional Republicans, displeased with the recent re-enactment of net neutrality rules have increasingly turned to a new line of argument. Republicans promised a “major confrontation,” but now the fact is that most Americans, including 85 percent of Republicans, oppose allowing broadband providers to charge websites for higher speeds. That makes criticizing the actual principles of net neutrality a losing game. Instead, in the Washington version of an ad hominem attack, the target is no longer net neutrality itself but the agency that enforces it, the Federal Communications Commission, and its chairman, Tom Wheeler. Wheeler is accused, among other things, of paying attention to the president’s views on the issue—something the current Congress takes as a kind of mortal sin. But more substantively, some Republicans, like Bob Goodlatte of the Judiciary Committee, are pushing to replace the FCC as net neutrality enforcer altogether, putting in its place the Federal Trade Commission wielding the antitrust laws. It may sound merely technical, but it is a reckless idea that puts at risk a regime and policy that has generated both two decades of impressive economic growth, not to mention great cultural flourishing. It also violates the basic and supposedly conservative principle: “If it isn’t broke, don’t fix it.”

To Washington outsiders the difference between the FCC and FTC may represent the epitome of Beltway meaninglessness. But there is an important difference rooted in both history and substance.

Since at least the 1970s depending on how you count, the FCC, originally tasked with oversight of the Bell monopoly, has employed some version of a net neutrality rule (though the phrase, which I’m at least partially responsible for, was not used until the 2000s). By this I mean an FCC rule protecting the idea of the communications networks as an innovation platform by protecting the businesses that operate “on top” of the nation’s communications networks from the underlying firms, usually monopolists or duopolists, that own the pipes. In the 1970s and ’80s, this meant protecting companies like Compuserve or AOL from the Bell Company (and then Bell Companies). In the 2000s it meant protecting companies like Skype from DSL providers, and today it mainly means protecting much of the Internet sector from both cable and telephone carriers. The point is that while the companies may change, the principles do not.

This longstanding neutrality policy has been an incredible success by any measure. Under one or another version of the regime, the Internet economy has created at least a million jobs and contributed greatly to the economic growth of the entire country, even when the rest of the economy was flat. Nonetheless congressional Republicans are willing to put this at risk—as they would, by abruptly placing an antitrust agency in charge of overseeing this innovation platform.

For there are important substantive differences between the generalist antitrust law and net neutrality rules. Antitrust law is episodic and focused on prices; its enforcement nowadays mainly targets price-fixing schemes and mergers. Yes, it can do more (the Microsoft case being an example), but such instances are rare and extremely time- and resource-intensive. The net neutrality regime, in contrast, is fundamentally concerned with the protection of an innovation platform by maintaining low barriers to entry for entrepreneurs. That just isn’t something that the antitrust law is particularly attuned to.

Net neutrality also supports a rich and very diverse cultural output, something that the antitrust law has trouble valuing. There is a difference between a television and a toaster, and the FCC is able to take into account important noneconomic values that the people who actually use the Internet care about. The human value of connecting with friends and family is not always captured well in antitrust’s economic equations.

In short, leaving the Internet’s fate as an entrepreneurial platform to antitrust enforcement strikes me as taking a serious economic and cultural risk. This is not in any way to malign the FTC, which is a very fine place—it has an impressive staff of lawyers and economists and also is housed in a more attractive building than the FCC. In full disclosure, I worked there myself and have a great affection for the place. I just don’t think, as a generalist agency, it has the tools for this particular job.

I also have more than a little suspicion that the real reason congressional Republicans want to move net neutrality enforcement is a deeper opposition to the principles of Internet openness that they’d prefer not to make public. For it is not as if either the current Republican Party or the telephone companies have been enthusiastic about strong antitrust enforcement, making the sudden enthusiasm for the Sherman Act somewhat surprising. The real point of the operation may not really be to relocate the net neutrality regime, so much as to bury it.