Throughout the “Net Neutrality” debate over whether the federal government should begin regulating Internet service under 1930s Depression-era laws intended for copper wire telephone service, we and others have warned that Obama Administration efforts to impose such regulation would dangerously stifle private investment and innovation in the telecommunications sector.
In his weekly “Information Age” column today, L. Gordon Crovitz highlights how quickly our somber prediction has proven true. In “Obamanet Is Hurting Broadband,” Crovitz summarizes how “The predictable effect of more regulation has arrived: Investment is plummeting”:
New data show the Obama Administration’s decision to regulate the Internet as a utility has already caused a steep drop in Internet Investment… [I]n the first half of 2015, as the new regulations were being crafted in Washington, major ISPs reduced capital expenditure by an average of 12%, while the overall industry average dropped 8%. Capital spending was down 29% at AT&T and Charter Communications, 10% at Cablevision, and 4% at Verizon. (Comcast increased capital spending, but on a new home-entertainment operating system, not broadband.) Until now, spending had fallen year-to-year only twice in the history of broadband: in 2001 after the dot-com bust, and in 2009 after the recession.” [emphasis added]
Since the 1996 Telecommunications Act, the Internet has thrived and played a central role in maintaining America’s status as the most prosperous, most entrepreneurial and most innovative nation in human history. That didn’t happen by accident, nor was it due to coincidence. Rather, it occurred precisely because the federal government during both the Clinton and Bush administrations refrained from suffocating it with destructive and politically-motivated overregulation. But Obama apparently thought he had a better idea. Unfortunately, we’re already witnessing the regrettable result.
Meanwhile, Gallup just released its annual survey of public approval of various sectors of American life. Standing at or near the top once again are the computer industry, the Internet industry and the telephone industry, all with high net positives. And at the bottom, once again, is the federal government, with an atrocious -29% net negative.
All of this suggests that we would likely be better off if the computer/Internet/telecom industries regulated the federal government, rather than vice-versa.