Court says FCC Cannot impose net neutrality rules

In a landmark ruling sure to be appealed to the Supreme Court by the Obama administration, a federal appeals court has ruled that the FCC has no legal authority to impose net neutrality rules on Internet Service Providers (ISPs.) Net neutrality proponents immediately responded that ISPs should be brought under FCC jurisdiction similar to that which governs the business of landline telephony providers.

My own opinion is that in a free and open market such regulation is not needed.  Web-based businesses wishing to differentiate their services, such as Google and Amazon, will continue to work with ISPs and Content Delivery Networks to assure that the services they offer provide an acceptable user experience to their customers.  End users, anxious to have the best speed or to use the peer-to-peer applications that triggered the initial Comcast action that raised the ire of the FCC, will have to pay for the privilege.

My opposition to government regulation as a way to force business to comply with an arguably desirable social good, in this case, non-discrimination of different traffic types, is rooted in the law of unintended consequences.  The social good in this case is often portrayed in a First Amendment light of free speech. But under no reasonable permutation of that principle can services which are only available for a fee be considered a fundamental right.

Further, history provides innumerable examples of the perverse effects of excessive regulation: economic distortions (think of the “Universal Service Fund”, for example), power concentrated in the hands or offices of a few who become easy targets for lobbyists (exhibit A, the FCC itself, captive to the carriers) and service stagnation caused by removing the reward of innovation (broadcast TV.)

As with the laudable restraint from imposing taxes on the nascent Internet and World Wide Web, a lengthier period of development and stabilization should be granted to allow these businesses and industries to mature before distorting them with well-intended but short-sighted regulation.

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