Chaos, Creativity, Innovation and the Urge to Regulate

Robert M. McDowell, a member of the Federal Communications Commission, writes in The Washington Post today on net neutrality, “Hands off the Internet.”

Last fall, over dissenting votes from Commissioner Meredith Attwell Baker and me, the FCC proposed rules to regulate high-speed Internet. Before embarking on any regulatory journey, it is critical for the government to ask and answer: What exactly is broken that only the government can fix?

Curiously, the commission proposed rules even though studies by the FCC and the Federal Trade Commission found no evidence of market failure. And when the Justice and Commerce departments filed comments with the FCC in January, neither provided evidence of concentrations and abuses of market power in the broadband arena. To the contrary, the Justice Department sounded optimistic about the competitiveness of the broadband market. It even warned against imposing new regulations “to avoid stifling the infrastructure investments needed to expand broadband access.”

Nonetheless, the FCC may still consider imposing early-20th-century vintage “common carrier” regulations on 21st-century broadband technologies. One result of the new rules could be to make it harder for the operators of broadband “pipes” to build “smart” networks, which offer connectivity and other services or products.

More curiously, the commission proposed the equivalent of new rules even though the commission had no statutory authority to regulate the Internet, or apply “principles” to guide development of the Internet, i.e., regulate the Internet. That’s another reason the U.S. Court of Appeals for the D.C. Circuit’s ruling striking down the FCC’s scheme is beneficial: It’s a reminder to executive branch agencies that are created to perform administrative and regulatory functions. They DO NOT make policy. That’s the responsibility of Congress, the elected legislative branch of government.

The Post’s business columnist, Steven Perlstein, attacks the D.C. Circuit for upholding this separation of powers because it restrains the reach of federal regulators. “Regulatory failure? Blame the D.C. Circuit,” is  a good column if you believe in liberating the regulatory state to do what it was created to do: Serve Steven Perlstein’s view of the world.

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