Democrats appear ready to make “net neutrality” an election issue in 2018. They plan to introduce a Congressional Review Act (CRA) resolution to force Congress to take an up-or-down vote on the Federal Communications Commission’s (FCC) decision replacing the Democrats’ approach to internet governance.
Some see this as a “clear-cut political win-win for Dems.” In their view, an up-or-down vote means only one of two things: either (1) Democrats preserve their preferred approach to net neutrality or (2) Republicans side with “telecom companies against the [alleged] will of the American people.” This strategy invokes Noam Chomsky’s theory that “the smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum….”
Chomsky’s theory spotlights the means of defeating it: Republicans should refuse to accept the alleged dichotomy of action presented by a CRA vote. To paraphrase former President Reagan, the Democrats are counting on Republicans to be passive. It is up to Republicans to ensure the Democrats are counting wrong. To do that, Republicans should reclaim the moral high ground in the internet regulation debate by breaking the Obama FCC’s strict—and nonsensical—limits on the prevailing definition of “net neutrality.”
A free market approach to net neutrality would embrace broader principles of internet governance based on traditional consumer protections—including privacy—that apply equally to all similarly-situated internet companies. An approach to internet regulation grounded in traditional consumer protection and constitutional limits would transcend today’s artificially restricted version of the debate by giving voters a third option for net neutrality, while remaining true to conservative and free market principles.
Justice Requires Universally Applicable Principles
The first and most important of those principles is that legislation governing the internet must adopt “uniform rules equally applicable to all.” According to free market economist F.A. Hayek, who inspired the economic policies of former President Reagan and British prime minister Margaret Thatcher, this is an essential requirement for all economic legislation. In his seminal work, Law, Legislation, and Liberty, government interference with the market is “by definition an isolated act of coercion, undertaken for the purpose of achieving a particular result, and without committing oneself to do the same in all instances were some circumstances defined by a rule are the same.”
Hayek demonstrated that government coercion of one group (i.e., ISPs) in circumstances where a similarly situated group (i.e., Silicon Valley) would not be similarly regulated is “always an unjust act” that will “always disrupt” the market. He believed the legislature should be “required to prove its conviction” that economic regulation is necessary by “committing itself to the universal application of the rules” it adopts. “The crucial point is that votes on rules applicable to all, and votes on measures which directly affect only some, have a wholly different character.”
This point, more than any other, is why the Obama-era net neutrality rules are fundamentally flawed. The Obama-era FCC ruled that its net neutrality regulations were necessary because ISPs stand as “gatekeepers” between edge providers and consumers, which gives ISPs the ability to block content, target their competitors, or extract “tolls” from content providers. Yet it ignored the fact that the same is true of many so-called edge platforms, including mobile operating systems (e.g., Android), and there is no dispute that edge providers do all of those things everyday. The Obama-era net neutrality order the CRA effort wants to reinstate, however, effectively blessed this behavior for big tech companies in Silicon Valley.
Hayek’s work on free market principles also provides guidance on other key internet governance issues like universal service, municipal broadband, and online privacy.
Universal Service and Municipal Broadband
It’s now clear that the Obama FCC’s initial justification for its approach to net neutrality—that it would increase broadband deployment—was wishful thinking. Millions of Americans in rural and underserved communities still lack access to high-speed broadband, and no evidence exists that Obama’s net neutrality rules improved this state of affairs. Broadband networks are expensive to build and maintain, and these costs often make it uneconomic to deploy advanced networks in sparsely populated areas with or without net neutrality.
The free market answer to this broadband deployment problem is more aggressive use of universal service policies, not government owned and operated communications networks. Hayek found it “unquestionable that in an advanced society government ought to use its power of raising funds by taxation to provide a number of services [including communications services] which for various reasons cannot be provided, or cannot be provided adequately, by the market.” The fact that some services must be financed by government “by no means implies that such services should also be administered by government.” Consumers will experience greater benefits if the operation of such services is left to market forces.
This is especially true with respect to communications networks, where the implications extend beyond market efficiency: “[W]e certainly would not wish government to acquire a dominating position in the distribution of news; and the conferment in some countries of a monopoly of wireless broadcasting to governments is probably one of the most hazardous political decisions made in modern times.”
The danger is illustrated by an analysis of media ownership in 97 countries around the world that was produced by scholars at the World Bank and Harvard University. The study concluded that “countries with greater state ownership of the media have less free press, fewer political rights for citizens, inferior governance, less developed capital markets, and inferior health outcomes,” and that “there is no empirical evidence of any ‘benefits’ of state ownership.”
Hayek believed that privacy, which the modern era “has raised in acute form and with respect to which government has so far clearly failed to provide appropriate rules or enforce them,” is “an important requirement of liberty” that markets are ill-equipped to address. In a November 2017 article, Georgetown professor Julie E. Cohen describes the market’s failure to address consumer privacy as even more acute with respect to today’s search and social media platforms: “Networked environments configured to optimize data harvesting and surplus extraction operate—and are systematically designed to operate—in ways that preclude even the most perceptive and reasonable consumer from evaluating the goods or services on offer.” The failure of market mechanisms to empower consumers and the legal system’s failure to impose meaningful limits on the privacy practices of online intermediaries leaves Congress as the last hope for addressing the dangers of surveillance capitalism.
Republicans have quite rightly been conservative in their approach to internet regulation and shown great respect for the principle that economic intervention is unnecessary in the absence of market failure. Respect for this principle, however, should not blind conservatives to the enormous danger that discriminatory net neutrality rules pose to the market order or to market failures that actually do occur. Legislation adopting universally applicable net neutrality principles with a uniform enforcement mechanism, private ownership of communications networks with sufficient government financial support in rural and underserved areas, and clear and consistent online privacy protections would all be consistent with free market principles and traditional consumer protection measures.