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Tuesday, August 31, 2010

Google / Verizon Proposal May Be Important Compromise, But Regulatory Trajectory Concerns Many
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Recently, the Washington Post opined that the best way for the FCC to "regulate the Internet" was through a moderate approach, one which places limited authority in the Commission to address behavior that violates long-standing Net Neutrality practices.

The paper notes that Net Neutrality has been "a rule tacitly understood by Internet users and providers alike" for more than a decade. It then mildly rebukes the FCC's proposal to reclassify broadband providers as common carriers - "a move [which] would be a serious step backwards," in their view.

Within this context, the Post sees important compromise in the Google / Verizon legislative proposal, "especially its designation of the FCC as an adjudicatory body such as the Federal Trade Commission rather than one with intrusive regulatory authority."

We have long been concerned about the FCC's "intrusive regulatory authority." One might have surmised that post-Comcast, the Agency would have gotten the proverbial "4-11" on this: If the FCC wants to regulate the Internet, it needs to get that authority from Congress; until then, nothing doing. But it did not. Instead, it has threatened to do indirectly what it could not do directly. The result is the same - i.e., regulation of the Internet. But the means are more nefarious - i.e., a Commission un-tethered to the rule of law.

The Google / Verizon proposal addresses this, if imperfectly. The two companies should be commended for their efforts to "solve" the supposed Net Neutrality "crisis." As their proposal strongly suggests, it is right for Congress to play a more prominent role in this debate and remind the FCC of its merely supporting part in the creation of U.S. communications policy.

Though Google and Verizon once sat at opposite sides of the table, they are now partners. Because of this, they recognize that should the FCC's reclassification efforts go forward, the Commission's new power would present a serious obstacle to their growth. Moreover, not only would it harm them, it would harm their customers and the Internet ecosystem as well.

While one might quibble with some of the specific details - and we do - the instinct to keep arbitrary and capricious rulemaking out of the process and to protect core lines of business is entirely rational (and perhaps legally bound).

The main concern for "free-marketers" is the legislative tactic itself.

For us it says, "Hey, aspects of the broadband market are broken and demand protecting by law, through some form of regulation." But, from our vantage point, none is needed. The Internet works. How, you may ask? Well, the advance of transmission technology and technological tools; marketplace guidance / economic signals; consumer education / transparency tools; industry best practices; and present authority to address competitive malfeasance - these all bake-in Net Neutrality principles to the benefit of the ecosystem.

We agree that Congress should be involved in this important matter. But instead of it granting new authority to the FCC "to regulate the Internet," Congress should be working to remove 19th-Century regulations that hold the broadband Internet back from innovating for Americans. Thus, if there's an overarching sticking point to the Google / Verizon proposal, it is its call for Congress to add power to the FCC's hand, something that we know is neither warranted nor desirable.

posted by Mike Wendy @ 9:04 AM | Capitol Hill , Communications , Innovation , Internet , Net Neutrality , Regulation , The FCC

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