The FCC's Silver Lining

Net neutrality rules have been struck down, giving the FCC an opportunity to change the game.

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The U.S. Court of Appeals for the District of Columbia delivered its decision yesterday in a case brought by Verizon against the Federal Communications Commission. In its ruling, the court vacated anti-discrimination and anti-blocking rules enforcing so-called "net neutrality," or the principle that all Internet traffic should be treated equally.

There is no doubt that certain parties wanted to see a victory for the FCC. But for FCC Chairman Tom Wheeler, it was even better for the commission to lose. After more than a decade, the net neutrality debate is at a stalemate. Rather than fight the same battle, Wheeler would like to change the game, and now the FCC can get a fresh start. 

The FCC has had a difficult time defending net neutrality. Not only has the circuit court struck it down twice, Congress has consistently gone against making a rule to enshrine it. It is simply not a major issue for most Americans. Even former FCC Chairman Julius Genachowski has called net neutrality "counterproductive," and the FCC's own Open Internet Advisory Committee observed that the rules are unclear and subject to misinterpretation. Fortunately, Wheeler will not have to take the damaged goods.

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The chairman's blog post written in response to yesterday's ruling provides some insight into his thinking. He mentions that he wants to avoid regulatory errors, the problems that arise from taking regulatory action before it is warranted. This indicates he is moving away from the ex-ante approach, where regulations are put in place in anticipation of bad behavior, and towards one of ex-post regulation, which demands proof of harm before taking action. As there are no longer net neutrality rules on the books, now is a valuable opportunity to see what actually happens in the marketplace and whether operators behave in a discriminatory fashion. 

Make no mistake. The Internet was open before. It is open today. And it will be open tomorrow. The net neutrality rules were not holding back a flood of bad behavior. Operators do not have the incentives to behave in a discriminatory way. The open Internet is in their interest. 

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However, Wheeler also states that he will defend his jurisdiction, and has left the door open to taking action if necessary. This means he will find a way within the constraints to change the game. The chairman declared:

The FCC also is not going to abandon its responsibility to oversee that broadband networks operate in the public interest. It is not going to ignore the historic reality that when a new network transitions to become an economic force that economic incentives begin to affect the public interest. This means that we will not disregard the possibility that exercises of economic power or of ideological preference by dominant network firms will diminish the value of the Internet to some or all segments of our society.

Finally, one should note that even if Wheeler does nothing at all, there are still laws and regulations in place to ensure that discriminatory behavior on the part of Internet service providers does not occur. There are ample antitrust laws on the books and armies of competition lawyers ready to prosecute. There is also the Federal Trade Commission, with a bureau of more than 1,000 economists and lawyers, who can measure these things. They don't need net neutrality rules to do their job.

Roslyn Layton is a visiting fellow at the American Enterprise Institute's Center for Internet, Communications, and Technology Policy and an Internet economist at Aalborg University in Copenhagen, Denmark, where she studies communications policy and the Internet.  She is a contributor to

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