As President Barack Obama aptly stated, “Elections have consequences.” President Trump’s ascendancy is reverberating throughout the federal government, perhaps no more so than at the Federal Communications Commission.
Newly-appointed Chairman Ajit Pai has taken a significant step to foster innovation and growth in one of the most-dynamic sectors in the economy. He is reversing Obama-appointed Chairman Wheeler’s creation of a sweeping new regulatory regime for all things tech. Wednesday, Pai announced the rollback of the Open Internet Order at an event hosted by FreedomWorks and the Small Business and Entrepreneurship Council.
The stark contrast in visions between the Obama administration and the Trump administration stems from fundamentally different worldviews. Broadly speaking, there are only two ways to allocate scarce resources: either top-down and centrally planned, or bottom-up and market driven.
Obama’s FCC was clearly in the former camp, and Wheeler targeted his efforts on expanding the FCC’s reach over the rapidly-evolving digital world. From new regulations for set-top boxes to new rules on privacy, Wheeler pursued policies that positioned the FCC as the power broker that would shape the future of technology. And his crowning glory was the Obama administration’s successful push to regulate the Internet.
Under this administration, Pai has opted to promote innovation and economic growth instead of expansive regulation. The new FCC has already shown their preference for light-touch regulation, with a move to revisit Wheeler’s costly and inconsistent privacy rules and to modernize archaic rules on business data services.
Just as important, the FCC must promote efficiency, and the FCC has created a new Office of Economics and Data that will be a first line of defense against inefficient or unnecessary regulation. A renewed interest in economics will keep the FCC focused on maximizing consumer welfare, the underlying principle of economic analysis.
Wheeler’s Internet power grab was anything but light-handed. After the FCC’s Internet regulations were consistently rejected by the courts on the grounds that the FCC lacked the authority to do so, the commission reclassified the Internet as a common carrier, something that it does have the authority to regulate. The concept of a common carrier is an old concept and was used to regulate the emerging telephone system at the turn of the last century. Reclassifying the Internet as a common carrier is a heavy-handed approach to regulating the economy that is the epitome of progressive thinking.
Wheeler’s Open Internet Order signaled a fundamental transformation of Internet policy. Rather than a world of permissionless innovation that allows entrepreneurs to freely create the Internet of the future, the Internet suddenly became a world of “mother may I,” with the FCC quietly assuming veto power over practices it did not endorse. The only protection from excessive new intervention was the chairman’s promise to forbear from too much regulation.
Pai’s approach to the Internet is far from radical; it is the view on Internet regulation that prevailed for decades. Going all the way back to the Clinton administration, which oversaw the transition to a commercial Internet, the FCC has always taken a light-handed approach to regulating the Internet. Indeed, in 1997, Clinton’s own Internet governance document stated: “For electronic commerce to flourish, the private sector must continue to lead. Innovation, expanded services, broader participation, and lower prices will arise in a market-driven arena, not in an environment that operates as a regulated industry.”
Wednesday’s announcement by the FCC is good news for consumers, the economy, and innovation. While the commission often addresses issues that seem arcane and complex, they are important for the economy. Overall, the FCC’s regulatory reach covers one-sixth of the nation’s economy. Moreover, it is the most vibrant sector of the economy, and in many ways it has transformed how we live our lives.
The Internet has been a powerful force for change, and the future requires a robust and expanding Internet, not one shackled by burdensome federal regulations. Today’s Internet has gone well beyond the relatively simple exchange of emails and text messages to live-streaming audio and video. As more people connect to the Internet with more intensive data demands, the Internet must continue to evolve. And the emerging Internet of Things will only make the demands on the networks more challenging.
Unleashing the Internet from excessive regulations will attract the entrepreneurs and investors necessary to build the next generation Internet. So yes, elections do have consequences, and Pai’s new thinking at the FCC is a welcome sight for consumers.
Adam Brandon (@adam_brandon) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is president and CEO of FreedomWorks.
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