Shackling the Internet

The issue of “net neutrality” is just one aspect of a much bigger, more ominous, story: the FCC takeover of the Internet. From now on, the Internet will be treated the way the telephone industry was in the ’60s and ’70s, before deregulation removed the suffocating grip of government. If you remember the antiquated days of Ma Bell, that’s what the Internet companies can look forward to.

The new regulations, based on the 1934 Communications Act, empower the FCC to prohibit whatever it regards as having “harmful effects” through the Internet.

In a Wall St. Journal article, “Liberals Mugged by ObamaNet,” L. Gordon Crovitz offers an indication of what might have resulted had the government been in control of the Internet from the start:

“What if at the beginning of the Web, Washington had opted for Obamanet instead of the open Internet? Yellow Pages publishers could have invoked ‘harm’ and ‘unjust and unreasonable’ competition from online telephone directories. This could have strangled Alta Vista and Excite, the early leaders in search, and relegated Google to a Stanford student project. Newspapers could have lobbied against Craigslist for depriving them of classified advertising. Encyclopedia Britannica could have lobbied against Wikipedia.

“Competitors could have objected to the ‘fast lane’ that Amazon got from Sprint at the launch of the Kindle to ensure speedy e-book downloads. The FCC could have blocked Apple from integrating Internet access into the iPhone. Activists could have objected to AOL bundling access to The Wall Street Journal in its early dial-up service.”

As to the future, Crovitz writes:

“Among the first targets of the FCC’s ‘unjust and unreasonable’ test are mobile-phone contracts that offer unlimited video or music. Netflix, the biggest lobbyist for utility regulation, could be regulated for how it uses encryption to deliver its content.”

According to one of the dissenting FCC commissioners, Ajit Pai: “If you were an entrepreneur trying to make a splash in a marketplace that’s already competitive, how are you going to differentiate yourself if you have to build into your equation whether or not regulatory permission is going to be forthcoming from the FCC? According to this, permissionless innovation is a thing of the past.”

“Permissioned innovation”—a scary prospect.♦♦

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