California Should Embrace Internet Freedom to Ensure Future Innovation, Prosperity

California Should Embrace Internet Freedom to Ensure Future Innovation, Prosperity

Last month the D.C. Court of Appeals settled, for now, the question of how much freedom consumers will be guaranteed to make their internet experience the one they want. The Court upheld the current Federal Communication Commission’s Restoring Internet Freedom Order, which repealed the prior administration’s heavy-handed, 1930s-style regulation of the internet, and accepted the Commission’s rejection of claims of broad authority to regulate broadband services.

The decision is a win for those who want an “open internet.” The previous imposition of heavy-handed regulations had moved the country away from that freedom by suddenly creating government-formed utilities, that is government-sanctioned monopolies, out of broadband service providers.

But the Court did something else as well: it rejected the FCC’s assertion that state laws in conflict with the FCC rules were immediately preempted. Rather, the court noted that state laws that are in conflict with those rules will have to be litigated on a case by case basis. Most likely the resulting a wave of litigation over state laws will begin in California once the state begins enforcing its so-called net neutrality law.

In 2018, California passed its own state-based internet regulations.  Given that the FCC was already underway with the court challenge to the Internet Freedom Order, the state held off on enforcing its restrictions. Four other states have passed similar laws or resolutions, and thirty other states had considered some lesser form of regulation. Instead of providing for an open internet, these laws would do the opposite – throttling innovation by placing the internet providers in the state in a public utility style regulatory vice grip. As each state pursued its own regulations, pro-regulatory states would create a patchwork of disfunction and balkanization with broadband providers forced to follow different and conflicting rules.

Such legal pursuits will now be for naught as the legal end result is almost a foregone conclusion — the California state law will almost certainly be rejected by the court. That result will be the right one for consumers, allowing the “light touch” regulatory approach that the current FCC has re-established. The benefits are undeniable. The light touch approach has increased the average internet speeds in the U.S. by 57 percent, while broadband investment has flourished and millions more Americans have been connected to broadband for the first time. This success is not a surprise.

When enacting the 1996 Telecommunications Act, Congressional leaders, the courts, U.S. Presidents and FCC Chairmen outlined a bipartisan regulatory model powered by a free market. For two decades great success resulted. From 1996 until 2015, the internet was routinely bringing new, exciting innovations forward that not only appealed to “netizens” and the online ecosystem, but also continued to attract those who were not yet taking part. Investments, from capital expenditures to research and development to hiring to creation and innovation, were all taking place at an astonishing rate. 

For that success to truly continue, Congress will need to step in again. 

Rules that place the internet in a regulatory morass are destructive, but the uncertainty of what rules will apply are equally harmful whether changing federal or piecemeal state rules. That uncertainty scares off capital investment and the jobs that come with it. Congress is the only entity that can instill the certainty. The permanence of supportive public policy for all consumers, clearly defined authority of the FCC and the breadth of enforcement it has to enforce the principles of a free internet must be made clear. 

The FCC must be directed to modernize its thinking and not apply 80-year-old constructs of regulation to today’s complex world. That is lazy and unworthy in an industry defined by innovation, and in a country that used to take pride in leading and finding new frontiers. As originally conceived in the 1990s, we must seek “to preserve the vibrant and competitive free market that presently exists for the Internet . . . unfettered by Federal or State regulation.” Consumer freedom and choice must flourish.

The quest by the pro-regulatory crowd to usher in an intellectual experiment of government micromanagement, forcing a less effective and more consumer restrictive system, must end.  California has the opportunity to lead in that success by not leading the charge against the FCC.

Bartlett Cleland is senior fellow in tech and innovation at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.