Title II in Regulatory and Economic Context: Why the FCC’s Recent “Net Neutrality” Moves Will Harm, Not Help, America’s Internet Future

In an ideal world, the FCC, taking a cue from the FTC, would only impose regulations on broadband providers when doing so prevents clear consumer harms. The FCC would consequently allow consumer welfare-enhancing innovation and competition in the broadband marketplace to flourish, reserving regulation for only those specific instances wherein market intervention would prevent actual harm.

Yet, by issuing the 2015 Open Internet Order, the FCC charted a starkly different course. In accordance with President Obama’s request, the FCC classified the Internet as a telecommunications service, exposing it to a barrage of antiquated regulations originally designed to police monopoly industries of yore. Under the authority of this newfound classification, the FCC prohibited blocking, throttling, and paid prioritization of content traveling over broadband networks; enacted a vague new general conduct standard; and announced sweeping new privacy regulations, turning the traditional pro-consumer opt-out privacy model on its ear.

Will the FCC improve the American broadband market by imposing these regulations? The available evidence tells us no. The FCC will raise broadband prices through new USF contributions and burdensome privacy regulations. It will prevent broadband providers from offering low-cost and high-priority plans by prohibiting content blocking, throttling, and prioritization. It will imperil innovative competition like zero rating and suppress network investment through regulatory uncertainty. It will treat the competitive broadband industry like a collection of regional monopolists, ignoring evidence of growing residential broadband choice and mobile parity. Finally, it will establish a system of regulatory asymmetry, wherein a myopic focus on large national broadband providers’ theoretical gatekeeping abilities will leave smaller broadband providers prey to the documented abuses of increasingly powerful edge providers.

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