FCC Chairman Tom Wheeler justified Obamanet by saying the Internet is “simply too important to be left without rules and without a referee.” He got it backward: Light-handed regulation made today’s Internet possible.
What if at the beginning of the Web, Washington had opted for Obamanet instead of the open Internet? Yellow Pages publishers could have invoked “harm” and “unjust and unreasonable” competition from online telephone directories. This could have strangled Alta Vista and Excite, the early leaders in search, and relegated Google to a Stanford student project. Newspapers could have lobbied against Craigslist for depriving them of classified advertising. Encyclopedia Britannica could have lobbied against Wikipedia.
Competitors could have objected to the “fast lane” that Amazon got from Sprint at the launch of the Kindle to ensure speedy e-book downloads. The FCC could have blocked Apple from integrating Internet access into the iPhone. Activists could have objected toAOL bundling access to The Wall Street Journal in its early dial-up service.
Among the first targets of the FCC’s “unjust and unreasonable” test are mobile-phone contracts that offer unlimited video or music. Netflix , the biggest lobbyist for utility regulation, could be regulated for how it uses encryption to deliver its content.
Until Congress or the courts block Obamanet, expect less innovation. During a TechFreedom conference last week, dissenting FCC commissioner Ajit Pai asked: “If you were an entrepreneur trying to make a splash in a marketplace that’s already competitive, how are you going to differentiate yourself if you have to build into your equation whether or not regulatory permission is going to be forthcoming from the FCC? According to this, permissionless innovation is a thing of the past.”
This is yet another example of an effect I have observed before -- why is it that the media is willing to raise concerns about an expansion of government power only after that expansion has passed. We saw it before on ethanol and the stimulus bill, and now I think we are going to start to see it on net neutering. A cynic might say that the media wants these expansions of power to occur, but also want to be able to point to their own prescience when these expansions inevitably cause problems.