Reject the Internet "Public Option"
Randolph J. May is President of the Free State Foundation, a free market-oriented think tank located in Rockville, Maryland. He is the editor of the new book, New Directions in Communications Policy.
The "public option" for health care - which the American public came to see as symptomatic of government overreach -- certainly helped sink the most grandiose visions of ObamaCare. It's possible that proposals for a "public option" of sorts for new Internet regulation could sink the Federal Communications Commission's efforts to adopt new broadband policies.
To be sure, the two public options, one for health care and one for Internet regulation, are dissimilar. After all, they arise in two very different contexts. But they have this in common: both are grounded in an almost unshakeable faith that government should play a central role in regulating certain services provided by the private sector.
With respect to communications policy, this misplaced faith in the superiority of government control over marketplace competition causes some to advance proposals that will be viewed by many as radical overreaching. And, as with health care reform, the very act of overreaching may well sidetrack adoption of more moderate proposals.
Here's what I mean by the Internet public option - and why it should be rejected.
Recently, organizations like Public Knowledge and Free Press have begun to mount a fierce campaign to have the FCC reverse a decision first made in 2002, which it has since reaffirmed several times, not to regulate Internet providers as common carriers under Title II of the Communications Act. The FCC determined that Title II regulation was inconsistent with its view that "broadband services should exist in a minimal regulatory environment that promotes investment and innovation in a competitive market."
Although the burdensome requirements that accompany Title II regulation are manifold, two key elements are at its core. The FCC is required to regulate the rates of common carriers to ensure they are "reasonable" and to enforce a non-discrimination prohibition. These core elements are the hallmark of traditional public utility regulation; hence what I call the public option.
This form of regulation was first adopted at the federal level in the Interstate Commerce Act in 1887, which created the Interstate Commerce Commission to regulate the railroads. In 1910, the ICC was given authority to regulate newly-emerging telephone companies as common carriers, and this authority was transferred to the FCC when it was created in 1934.
By the 1980s, the railroads were largely deregulated and the ICC was abolished in 1995. And towards the end of the last century, with the emergence of competitive choices, the FCC began to relax even the regulation of POTS, or plain old telephone service, provided by formerly monopolistic telephone companies. So it was no surprise when the FCC decided to reject public utility-style regulation for the then new broadband Internet service providers.
What is surprising is that Public Knowledge and others are now advocating a return to such a regime. These "Title Two-ers" claim that common carrier regulation of Internet providers is necessary to enforce their vision of "net neutrality." They want strict mandates that would prohibit the providers from discriminating in any way among content or applications carried on their networks, or even from charging different prices to network users in order to reflect different costs imposed by such users.
During his campaign, President Obama supported the concept of net neutrality, so it is perhaps understandable that he continues to urge the FCC, with a newly-installed Democratic chairman, to adopt some version of the idea. But it could be a big mistake for President Obama to advocate for a net neutrality regime that looks like the traditional public utility-style regulation advocated by the "Title Two-ers."
In his February 1 You Tube interview, President Obama unfortunately seemed to do just that. In reiterating his support for net neutrality, he said regulation was needed so that the Internet providers would not able "to charge more fees and extract more money from wealthy customers." Perhaps this populist-sounding rhetoric may sell, but I have serious doubts. Most Americans understand that someone has to pay for use of the broadband networks that Internet providers have spent over $200 billion building out and upgrading.
The question of pricing of Internet services should not really be about which customers are wealthy or not. It should be about economic efficiency that benefits all customers. As FCC Commissioner Robert McDowell said recently, those who argue against pricing freedom - such as President Obama perhaps - should be careful what they wish for. As he put it, under a Title II non-discrimination construct," if every consumer is to be treated the same regardless of usage, then all prices must rise to compensate for the costs imposed by heavy users."
Most Americans appreciate the remarkable progress that has occurred since the FCC's 2002 decision not to impose public utility regulation on Internet providers. Over 95% of American households now have access to broadband and 63% presently subscribe. The vast majority of households have a choice of two or more providers. Sure, there is more progress to be made. But the Commission's prediction in 2002 that a minimal regulatory environment would stimulate investment and innovation in broadband networks has proven true.
In the face of such progress, I don't think most consumers wish to retrogress to public utility-type regulation for broadband providers. They know, instinctively, that the same kind of regulation imposed on railroads in the 19th century and on Ma Bell last century is not suitable for 21st century high-speed Internet networks.
While there does not appear to be any present need to adopt new regulations to preserve the openness of the Internet, there are some reasonable actions that could be taken to assuage the fears of net neutrality advocates. For example, the FCC, or the Federal Trade Commission, could adopt transparency rules requiring ISPs to disclose in consumer-friendly language their service terms and practices so consumers are fully informed concerning their choices.
But by pressing the "public option" - proposing that Internet providers be subject to public utility-type regulation - the most strident net neutrality proponents are seriously overreaching. I suspect that if they continue to do so, these Title Two-ers will reduce the chances of achieving any regulation of Internet providers.
From my perspective this would not be a bad result, given the lack of any evidence of a market failure or existing consumer abuses. But less doctrinaire net neutrality advocates may have a different view.
By Randolph May
Special to CBSNews.com
Copyright 2010 CBS. All rights reserved. The "public option" for health care - which the American public came to see as symptomatic of government overreach -- certainly helped sink the most grandiose visions of ObamaCare. It's possible that proposals for a "public option" of sorts for new Internet regulation could sink the Federal Communications Commission's efforts to adopt new broadband policies.
To be sure, the two public options, one for health care and one for Internet regulation, are dissimilar. After all, they arise in two very different contexts. But they have this in common: both are grounded in an almost unshakeable faith that government should play a central role in regulating certain services provided by the private sector.
With respect to communications policy, this misplaced faith in the superiority of government control over marketplace competition causes some to advance proposals that will be viewed by many as radical overreaching. And, as with health care reform, the very act of overreaching may well sidetrack adoption of more moderate proposals.
Here's what I mean by the Internet public option - and why it should be rejected.
Recently, organizations like Public Knowledge and Free Press have begun to mount a fierce campaign to have the FCC reverse a decision first made in 2002, which it has since reaffirmed several times, not to regulate Internet providers as common carriers under Title II of the Communications Act. The FCC determined that Title II regulation was inconsistent with its view that "broadband services should exist in a minimal regulatory environment that promotes investment and innovation in a competitive market."
Although the burdensome requirements that accompany Title II regulation are manifold, two key elements are at its core. The FCC is required to regulate the rates of common carriers to ensure they are "reasonable" and to enforce a non-discrimination prohibition. These core elements are the hallmark of traditional public utility regulation; hence what I call the public option.
This form of regulation was first adopted at the federal level in the Interstate Commerce Act in 1887, which created the Interstate Commerce Commission to regulate the railroads. In 1910, the ICC was given authority to regulate newly-emerging telephone companies as common carriers, and this authority was transferred to the FCC when it was created in 1934.
By the 1980s, the railroads were largely deregulated and the ICC was abolished in 1995. And towards the end of the last century, with the emergence of competitive choices, the FCC began to relax even the regulation of POTS, or plain old telephone service, provided by formerly monopolistic telephone companies. So it was no surprise when the FCC decided to reject public utility-style regulation for the then new broadband Internet service providers.
What is surprising is that Public Knowledge and others are now advocating a return to such a regime. These "Title Two-ers" claim that common carrier regulation of Internet providers is necessary to enforce their vision of "net neutrality." They want strict mandates that would prohibit the providers from discriminating in any way among content or applications carried on their networks, or even from charging different prices to network users in order to reflect different costs imposed by such users.
During his campaign, President Obama supported the concept of net neutrality, so it is perhaps understandable that he continues to urge the FCC, with a newly-installed Democratic chairman, to adopt some version of the idea. But it could be a big mistake for President Obama to advocate for a net neutrality regime that looks like the traditional public utility-style regulation advocated by the "Title Two-ers."
In his February 1 You Tube interview, President Obama unfortunately seemed to do just that. In reiterating his support for net neutrality, he said regulation was needed so that the Internet providers would not able "to charge more fees and extract more money from wealthy customers." Perhaps this populist-sounding rhetoric may sell, but I have serious doubts. Most Americans understand that someone has to pay for use of the broadband networks that Internet providers have spent over $200 billion building out and upgrading.
The question of pricing of Internet services should not really be about which customers are wealthy or not. It should be about economic efficiency that benefits all customers. As FCC Commissioner Robert McDowell said recently, those who argue against pricing freedom - such as President Obama perhaps - should be careful what they wish for. As he put it, under a Title II non-discrimination construct," if every consumer is to be treated the same regardless of usage, then all prices must rise to compensate for the costs imposed by heavy users."
Most Americans appreciate the remarkable progress that has occurred since the FCC's 2002 decision not to impose public utility regulation on Internet providers. Over 95% of American households now have access to broadband and 63% presently subscribe. The vast majority of households have a choice of two or more providers. Sure, there is more progress to be made. But the Commission's prediction in 2002 that a minimal regulatory environment would stimulate investment and innovation in broadband networks has proven true.
In the face of such progress, I don't think most consumers wish to retrogress to public utility-type regulation for broadband providers. They know, instinctively, that the same kind of regulation imposed on railroads in the 19th century and on Ma Bell last century is not suitable for 21st century high-speed Internet networks.
While there does not appear to be any present need to adopt new regulations to preserve the openness of the Internet, there are some reasonable actions that could be taken to assuage the fears of net neutrality advocates. For example, the FCC, or the Federal Trade Commission, could adopt transparency rules requiring ISPs to disclose in consumer-friendly language their service terms and practices so consumers are fully informed concerning their choices.
But by pressing the "public option" - proposing that Internet providers be subject to public utility-type regulation - the most strident net neutrality proponents are seriously overreaching. I suspect that if they continue to do so, these Title Two-ers will reduce the chances of achieving any regulation of Internet providers.
From my perspective this would not be a bad result, given the lack of any evidence of a market failure or existing consumer abuses. But less doctrinaire net neutrality advocates may have a different view.
By Randolph May
Special to CBSNews.com
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How is Obama trying to destroy the country? He is way to the right of center and needs us to force him to be liberal and progressive. It is the only way we are going to defeat the REAL ENEMY, the rich, greedy big corporations like the gangster running the major banks.
http://www.articlesbase.com/health-articles/advanced-acai-review-does-advanced-acai-really-work-1778693.html
I actually think the neo cons and their worshippers the tea baggers are proponents for socialism and welfare. They just want it for the rich and for themselves. They don't even realize they will never have it for themselves, it is just a myth created by the privileged class.
You ask, TO MORTAR-29, the question,
"Mor Tar, How many times does the experiment need to be done before you accept the results. It breeds poverty for the masses every time."
Understand that this is precisely the goal of the right, to try to establish themselves as a "privileged class", even though history has shown time and time again the failure of such a system.
They enjoy the existence of masses of poverty-stricken people, as it gives them a reason to feel "superior", but they consistently forget that they too will likely, by dint of bad fortune, fall among the poverty stricken, or through popular anger, fall by the hands of the poverty stricken in revolution.
They haven't evolved to the point of being able to learn from history, so they invent their own false versions.
This is perhaps why it is called HIStory, instead of THEstory.
It seems the "free market" neos again choose to selectively forget a few facts.
1. We the people own the bandwidth, and only lease it to the ISPs. It is in fact ours to do with as we wish. If we choose, we can (and should) adjust the lease price to what the market will bear, instead of giving it as almost welfare to the ISPs.
2. It is also our right, (the right to free association) and perfectly legal, to form a publicly owned corporation run by a department of our government, if we, as the shareholders, so choose.
3. If we also choose that such an entity be profit neutral, it is also our choice.
4. If the for profit private concerns cannot compete with the public concern, then the "free market' should weed them out. They should offer services the public sector cannot.
5. If, as some neo posted earlier, a kkk group sets up a website that is not as popular as others, no biggie, they pay, per byte down-or-up-loaded, the same as those that use more bandwidth, in short, they pay for what they use. this is not "being subsidized by the larger concerns".
6. Ultimately there is no such thing as a "free market" because shortly after being established, groups of businesses begin colluding, price-fixing, and otherwise corrupting it. A public option would make it very difficult for the corrupt private sector to fix prices, as there will always be a cheaper alternative.
7. For the poster who says "can chose not to pay a business for its services. I can chose to go elsewhere..." a trip to any gas station in your area will quickly show how much choice you really have, as will your bank interest rate, telephone bill, or your health insurance. Because of the aforementioned collusion, any differences are minimal, if they exist at all.
All the neos' arguments so far in this thread have no merit, just like the author's, because they are not backed up either by law, nor by empirical or anecdotal evidence, only (as usual) consisting of their own misinformed, or misinforming opinion.
But I do note an increasing tendency by the author, and others of right-wing ilk, to use the term "Americans" when they actually only mean "White neocon-derthal wealthy Americans", which is a trend which may have been exposed by Palin during her ill-fated (and deservedly so) campaign.
Wow. Kind of like "freedom gulags." You see, just because you attach the word "freedom" doesnt make it so!
Especially if there is republican ideology attached to it.
I do believe there should be government regulation, in the fact that it is there to make sure that contracts are honored and that monopolies are not created.
But, the Federal government should not be involved in most of it (save for interstate and international issues). All intrastate issues belong to the States.
Again, I am not anti-regulation. I am anti-unConstitutional functions and anti-government run enterprises.
Mor Tar, I have read some of your post regarding the US Constitution. You have no clue as to how the government is supposed to work as the founding Fathers Intended. You are quick to wrap and hide behind the Constitution to justify your ideolgy no doubt hoping no one challenges you on the matter.
This is technology that is meant for private networks and has no business being applied to public internet space. This is just another corporate tax!
And since big corporations obviously will not volunteer to use their own money to pay the fair share, the government HAS to be involved. You betcha!
And that is no different for any company, large or small!
Mor Tar Let there be no doubt I would shut the door behind you. You want access to the good marketplace you have to play by it's rules. I would not allow for economic undermining as corproations do now. They have bleed the wealth from this Great Nation. My policy would be if you want to sell it here it has to be made here or be taxed to fair market value for competing products.