In the months leading up to the end of net neutrality in June, you may have heard dire predictions that the move would “destroy everything that makes the internet great” and constitutes “a body blow to innovation and free expression.”
Despite those grim prognostications and other falsehoods meant to mislead and inflame the public, the decision by the Federal Communications Commission to repeal Obama-era net neutrality rules is making the internet better and more consumer friendly, from helping smaller broadband providers grow to creating more flexibility for internet innovation to thrive.
The FCC’s decision was merely a return to the decades-old, bipartisan regulatory approach that had catalyzed the internet’s enormous growth and innovation. Today, the basic principles of net neutrality are still intact, including some additional enforcement rules. What has changed is how the FCC proposed to regulate.
Keep in mind how this started. Despite many studies showing that consumers would be worse off under command-and-control internet regulations, the Obama administration and former FCC imposed restrictive regulations in early 2015, reclassifying the internet as a common carrier (think “public utility”) instead of an information service.
This decision was an unwarranted government intrusion into the market to control the internet and its providers with heavy, archaic rules. As early as 2009, when the Obama administration made initial moves toward tighter internet restrictions, the American Consumer Institute warned that onerous net neutrality regulations would hurt consumers, not protect them.
FCC Chairman Ajit Pai, who led the effort to dismantle the net neutrality rules, has consistently argued that they dampened broadband investment and slowed innovation. Their repeal, he predicted, would reinvigorate private investment in the broadband sector.
New figures from a report released last month bolster Pai’s case. After years of decline, broadband providers are increasing their investments in capital, which means better, faster internet for consumers.
According to U.S. Telecom’s analysis, capital expenditures made by broadband providers in the United States fell from $73.6 billion in 2014 to $73 billion in 2015. In 2016, after new net neutrality rules were introduced, investments slumped to $70.6 billion. However, preliminary data show that U.S. broadband companies invested somewhere between $72 billion and $74 billion in network infrastructure in 2017, showing an increase of at least $1.4 billion from the year before.
While the overall growth in the economy is certainly a factor driving these trends, the imminent repeal of onerous net neutrality regulations played a key role.
U.S. Telecom points out that “it is no coincidence that the (slowdown in broadband investment) coincided with the previous FCC — in its final two years — abruptly shifting course down a sharply more regulatory path.”
The revival in investment in 2017 is a product of the FCC’s return to a sound regulatory approach centered on protecting consumers and leveling the playing field between service providers to encourage market competition.
Despite these changes at the federal level, some states such as Oregon, Vermont and Washington have passed their own, state-level “net neutrality” laws. The California legislature is currently considering a bill more far-reaching than any other, going farther than even the Title II legislation passed by FCC Chairman Tom Wheeler. While these laws will almost certainly be challenged in court, the uncertainty they pose could chill the investment gains we’ve seen over the last two years.
Importantly, increased investments in broadband technology will help bring affordable high-speed internet to millions of rural Americans and spur new innovations that will benefit us all.
As the internet continues to develop rapidly and game-changing technologies — like 5G wireless networks and Internet of Things (IoT) capabilities — are brought within reach of the average consumer, the importance of a stable, fair and nimble federal regulatory framework will only grow.
The FCC’s repeal of public utility-style regulations was a critical step toward building a better internet for everyone.
