Imposing Net Neutrality via Title II regulation threatens to transform Internet service from permissionless innovation to 'Mother may I?' stagnation.

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In recent days, the terms “Net Neutrality” and “Title II” have interspersed our national news cycle. 

Most of the discussion, however, has occurred at the level of tech policy experts and political leaders inside the Beltway, rather than among the general public.  As a result, even such undeniably learned opinion leaders as Yale Law graduate Michael Medved confess perplexity on the matter. 

So what do they mean in everyday terms, and why should anyone beyond tech policy constellations care? 

At their most foundational level, both terms relate to an ominous issue in question:  Should the federal government suddenly and dramatically increase its level of regulation of Internet service, reclassifying it as a public utility in the manner of antiquated landline telephone service? 

That question would justifiably strike most Americans as facially preposterous. 

After all, the Internet evolution over the past two decades from landline telephone technology has been the most transformative development of our generation.  During that period, the Internet and accordant telecommunications technology have flourished precisely because of the current light-touch regulatory atmosphere. 

Yet now some want to regulate it under old rules applicable to “plain-old telephone service,” or “POTS?” 

Believe it or not, the answer to that question is “yes.”  Activists habitually unwilling to just leave other people or technologies alone have continually sought to impose greater federal government control.  And right now through the Obama Administration’s Federal Communications Commission (FCC), they are attempting to at long last transform that vision into reality.  They even created a cacophony at a recent FCC hearing by literally banging metal pots to symbolize their demand to reclassify the Internet under POTS rules. 

And that’s where “Net Neutrality” and “Title II” come in. 

“Net Neutrality” in its most sterile definition refers to the principle that all Internet content should be treated identically.  While that may sound agreeable in the abstract, in reality it could jeopardize continued Internet innovation because ever-increasing network traffic demands create a capacity crunch.  In order to address that dilemma, networks must remain free to experiment and differentiate where necessary to maintain quality service for consumers.  For government bureaucrats to command otherwise is akin to telling moving companies that they cannot differentiate between a studio apartment and a nine-bedroom mansion. 

Currently, Google’s YouTube and Netflix alone account for an astounding 47% of peak download traffic in North America, creating strains on network capacity.  Accordingly, it’s no wonder that they are among the loudest corporate proponents of Net Neutrality. 

And that’s also why Net Neutrality amounts to outright crony capitalism.  As economist Jeffrey Eisenach correctly observed, it inherently favors one industry at the expense of consumers and the industry that built and maintains the networks over which Internet content traverses: 

“[N]et neutrality rules have both the purpose and effect of subsidizing internet ‘edge’ companies at the expense of both consumers and internet ISPs.  Not surprisingly, ‘edge’ companies pushed hard for the rules, both at the FCC and on the larger political playing field, while ISPs resisted, and continue to do so.  Indeed, the express purpose of the net neutrality regulations is to force ISPs and consumers to subsidize ‘edge’ firms by allowing them the free use of the ISPs’ networks, thereby increasing ‘edge’ companies’ profits…  In short, the net neutrality rules set out to distort competition in order to benefit one group of companies and disadvantage another – the very definition of crony capitalism.” 

But here’s the problem for Net Neutrality activists.  Federal courts have twice rejected the FCC’s efforts to impose Net Neutrality, and in resounding fashion. 

And that’s where the term “Title II” comes into the picture. 

In order to impose Net Neutrality in a way that it believes will avoid additional court rejections, the FCC is considering reclassifying Internet service as a Title II telephone monopoly service under the Communications Act.  To date, Internet service has been classified instead as an “information service,” which allowed it to flourish as it has. 

But leave it to left-wing extremists and federal bureaucrats to demand a “fix” to something that isn’t by any reasonable definition “broken.”  The result, as is the case whenever government irrationally intervenes (see, e.g., ObamaCare, public schools, the post office), would be suffocating bureaucratic regulation, deteriorating service, higher costs and less efficiency.  Imposing Net Neutrality via Title II regulation threatens to transform Internet service from permissionless innovation to “Mother may I?” stagnation. 

Ronald Reagan famously observed that, “Government’s view of the economy could be summed up in a few short phrases:  If it moves, tax it.  If it keeps moving, regulate it.  And if it stops moving, subsidize it.”  He obviously wasn’t referring specifically to Net Neutrality or Title II reclassification advocates at the time, but nothing better captures their mindset.  Americans would be wise to stand up to their pernicious scheme.