Late last year, President Obama called on the Federal Communications Commission to enact far-reaching regulations that would grant the federal government unprecedented control over the internet. The concept of “net neutrality” is based on Internet Service Providers (ISPs) treating all internet traffic “equally.” However, Obama has advocated for far more than is needed to achieve this concept by calling on the FCC to issue rules that reclassify broadband as a public utility under Title II of the Communications Act.
Reclassifying broadband as a utility not only threatens the internet as we know it, but will kill jobs, stifle investment and increase costs for American consumers. Moreover, the move could open the door to other forms of heavy-handed internet regulations and taxes. Given these serious economic implications, the FCC should put a hold on its late February vote on these rules and allow Congress to come up with a legislative solution.
Over the years the internet has grown rapidly largely due to the hands-off regulatory approach the government has taken. Yet instead of allowing the internet to remain in an atmosphere that has encouraged widespread growth, President Obama and FCC Chairman Tom Wheelers want to regulate the internet like telegraphs and telephones from the 1930’s. Not only are such archaic regulations inappropriate for our digital era, they will increase broadband costs for hardworking Americans.
By reclassifying broadband as a utility, the Obama administration will levy taxes on all broadband consumers and smartphone users via a Universal Service Fund fee. USF fees are already collected from traditional and cellular phones. Adding broadband to the same Title II category would slap consumers with a 16.1 percent tax increase on their internet bills–an estimated $24 billion for Uncle Sam. This adds up to almost $100 a year in additional costs for wireline broadband consumers and around $137 per smartphone for wireless customers –a deep financial burn that will certainly be felt by American families with more than one smartphone on their plan.
While reclassification undoubtedly spells bad news for consumers, the implications for industry workers could be even more dire. Title II reclassification would stifle investment –an $11.8 billion decrease –and directly impact jobs. According to an American Action Forum study, the drop in investment could kill as many as 174,000 broadband related jobs by 2019.
Unelected bureaucrats at the FCC shouldn’t be making decisions that have such far-reaching consequences –consequences that would not only severely damage the internet, but also raise taxes and increase costs on hardworking Americans. That makes little sense. Fortunately, Sen. John Thune (R-S.D.) and Rep. Fred Upton (R-Mich.) have released draft legislation that takes a step in the right direction in addressing the issue of net neutrality, Title II reclassification and reining in excessive FCC authority. One of the most important aspects of the draft bill prohibits broadband from being reclassified as a public utility –a move that saves jobs and Americans from more costly internet bills.
The draft legislation also makes a number of compromises that have been previously embraced by policymakers on both sides of the political divide. It includes bans on prioritizing certain traffic as well as discriminatory practices such as blocking and throttling. In fact, prior to being struck down in court in 2013, many of these measures were a part of the 2010 Open Internet order championed by Obama and some of his allies.
While there are greater details that need to be worked out, the draft legislation represents a good start to addressing the issue of net neutrality. More importantly, it demonstrates that Congress is a much better place to have an open, bipartisan conversation on internet regulation. The FCC should do what is right for Americans: put the net neutrality vote scheduled at the end of February on hold and let the representatives on the people decide the future of the internet.
Kuper Jones is a policy analyst with Americans for Prosperity, a conservative political advocacy organization.