The artist and author Julia Cameron once wrote, “Nothing dies harder than a bad idea.” When Federal Communications Commission Chairman Tom Wheeler testifies in Congress next week, one of those stubborn bad ideas he will be asked about is the call by some online critics to reclassify broadband Internet access as a Title II “telecommunications service” instead of an “information service” as it is today. This bad idea would effectively treat broadband providers and a wide range of Internet firms as public-utility style “common carriers,” along the lines of railroads and canal boats of centuries past. Applying a 19th century regulatory solution to a 21st century problem simply does not make sense.
The issue arises once again after the federal courts recently struck down the FCC’s 2010 Open Internet rules. The FCC is considering how to respond and many, including concerned consumers, believe Title II classification is the answer. Let me be clear, reclassification is a bad idea that deserves to die — now — because it would open a Pandora’s box of unintended consequences that would hurt consumers, stifle investment and upend the basic operations of the Internet itself.
Ironically, reclassification would not actually solve the primary concern of the activists pushing it — the fear that some Internet users (like big content companies such as Netflix) will pay for extra fast service. This concern is wrongheaded; but even if it was sound, reclassification is not the solution since
Title II would not prevent such deals, because it only bars “unjust and unreasonable” differences in customer service. Title II carriers may offer different pricing (including volume and term discounts), service quality and guarantees so long as they are “generally available to similarly situated customers.” Carriers are specifically permitted to take the cost of serving different customers into account when negotiating contracts.
Reclassification would subject edge companies, those who provide Internet based apps and services, to other regulations — a terrible outcome for consumers. Other firms, such as sellers of connected devices like e-readers, social networks offering messaging, search engines and Internet backbone companies could all be reclassified a telecommunications services and be regulated.
To top it all off, these new regulatory obligations on every telecommunications provider would include a very costly new burden to pay by the bit for all the traffic that moves. Because Internet traffic is inherently asymmetric (consumers download movies more than they upload movies), the traditional “bill-and-keep” regime used for voice services (the real Title II telecommunications services providers) where everyone simply charges their own end customers would not work. The result would be a complex new web of fees and charges for everyone carrying data along the web, upending the billing structures that have worked so well the last twenty years and increasing the costs on virtually everyone up and down the data chain.