The Senate is slated to take up a resolution of disapproval next week that would prevent the Federal Communications Commission from regulating the Internet. With the economy still dominating the national political agenda, Senate Republicans are pointing to the measure’s expected impact on job growth.
Net Neutrality regulations, explained Sen. Kay Bailey Hutchison (R-TX) at Heritage’s Bloggers Briefing, would set up the FCC as the Internet’s “gatekeeper”: many innovations in the way the Internet is accessed and used would have to be approved by the 5-member panel to ensure they would not “discriminate” against certain users.
But it is precisely the lack of such government gatekeepers, Hutchison noted, that has spurred the Internet’s tremendous success – including as an engine of economic growth. “There is no need for us to mess around with that kind of success,” she added. “It is a success, and it doesn’t need fixing.”
Hutchison couched her resolution as an economic measure: regulation will hold back job growth for America’s high-tech industries. “It’s definitely a jobs proposal,” Hutchison said of her resolution, “and it’s an international competition issue.”
A range of studies have suggested that Net Neutrality regulation could have a devastating impact on the tech sector. Heritage’s James Gattuso detailed some of the adverse economic effects likely to emerge from the FCC’s Internet regulatory scheme:
- By hindering management of Internet traffic flow, scarce Internet capacity would be used less efficiently.
- Neutrality regulation would hurt competition. If all providers were forced to act alike, network owners’ ability to distinguish their services from one another-and smaller networks’ ability to challenge established rivals-would be reduced.
- Imposing a new, separate set of rules on the Internet would invite endless uncertainty and litigation. Inevitably, regulators would be drawn into years-long, lobbyist-driven policy quagmires as to whether this or that action is allowed or banned and what prices can be charged. This would be a bonanza for lobbyists and lawyers but would hurt innovation, investment, and Internet users.
A 2010 study by Jared Faulhaber of UPenn’s Wharton school of business and David Farber, a computer science professor at Carnegie Mellon University, echoed those findings. Their study concluded that Net Neutrality regulations “are not only unnecessary; they would impose significant costs on broadband customers” and are “likely to permanently harm” the technology industry by stifling innovation and restricting new ventures through bureaucratic red tape.
Another 2010 report on the regulations was more explicit about the damage they might do: Net Neutrality could cost the country 500,000 jobs and $80 billion in economic activity.
“Today, according to the FCC, leading mobile carriers invest $20 billion or more each year in new infrastructure, representing 14% of total revenues as recently as 2009,” technology consultant Larry Downes wrote in September. Like the Internet’s record generally, that is a record of economic success with which Hutchison and other opponents of Internet regulation would rather not tinker.