As the Federal Communications Commission approached a vote on the Restoring Internet Freedom Order at its December open meeting, the Left got frantic, claiming it would bring about the end of the internet as we know it and even the end of democracy.
Reality check: The Title II regulations that are now being eliminated were imposed just two years ago. Before the imposition of Title II regulations, the internet was largely kept free of government regulation. What is being restored is precisely the open internet everyone says they want.
Those frantic calls from the Left look as foolish as Y2K mania.
The Obama FCC majority, taking orders from the White House, ignored decades of successfully keeping government away from overregulating the internet. The Obama FCC actually used a law designed to regulate public monopolies like taxi medallions and power plants to end the open internet consensus that goes back to the 1990s.
With the Restoring Internet Freedom vote, the FCC reclassified internet service providers as a Title I information service, not a Title II public utility. This will allow ISPs to try new business models – which they will have to be incredibly transparent about – that could better connect customers to the online services they want.
Now ISPs will have to answer to customers in the market and not to the whims of government bureaucrats. Opponents of restoring internet freedom are calling this a vote to create internet gatekeepers. Nonsense. By removing government regulation, it is less likely these sorts of gatekeepers will be able to exist. Business can create cartels in an industry only when the government enters with rules that limit the entry of new competitors and restricts consumer choice.
The average corporation exists for less than 20 years. As tech innovation creates new and better ways of doing business, companies become obsolete much faster.
This innovation is great for consumers, and is why our online networks have progressed so far in the 10 years since the invention of the smartphone. Changing course from this light touch framework to a utility-style regulatory system was not wise, but it was cheered at the time by existing internet companies for many of the same reasons some workers cheer occupational licensing and unions: They cut down on their competition.
Regulatory compliance – administrative oversight, employee training, etc. – hikes the cost of running the business. Excessive administrative costs divert resources away from the purpose of these businesses: to provide services to paying customers. This makes it tougher for these companies to stay afloat, especially new entrants to the market, because new entrants have higher initial fixed costs from the extra administrative hoops that their established competitors do not have to jump through.
Higher fixed costs mean fewer companies can even afford to dive into the market, which means continually diminishing competition for firms already in the market. Then, if the company is fortunate enough to survive, they have less capital with which to take creative risks.
Most new business ventures are not successful. Eliminating new companies by lobbying government to artificially raise the cost of doing business through regulation is a cheaper and safer business plan for established firms than actually continuing to take risks in the market, but the stagnation excessive regulation creates undermines the long-term health of the market in the process.
Less competition is not what brought the internet to its current state, and in order for future advancements to be just as life-changing as those in the past, continued deregulation will be needed. Despite the gnashing of teeth on the Left, there are still suitable government oversight regulations in place to stop anti-competitive business practices. But rather than preemptively throttling the growth the industry, the FCC and Federal Trade Commission are instead policing specific harms that arise in the market.
Fearmongering about anti-competitive behavior by ISPs after this vote is wrong because the greater fear should be for anti-competitive behavior that is government-backed. Government legitimizing one business model and regulating other models out of existence is the actual way the dystopian horror stories being peddled by the Left come to be.
The freedom of businesses to be dynamic in order to better meet consumer needs in the market makes old companies’ business models obsolete. That’s why when it comes to gatekeepers, your real fear should be of government power creating monopolies that can only exist backed by government power.
Grover Norquist (@GroverNorquist) is a contributor to the Washington Examiner's Beltway Confidential blog. He is the president of Americans for Tax Reform.
If you would like to write an op-ed for the Washington Examiner, please read our guidelines on submissions here.