Hudson Institute Discussion of Network Neutrality

Net Neutrality.  We're all tired of hearing about it, but this case is very important for putting a stop to regulatory agency over reach.  On Wednesday, July 10, 2013, the Hudson Institute held a briefing on “Network Neutrality Rules”.  The panelists were Robert McDowell, Hudson Institute Visiting Fellow and former FCC commissioner, Maureen Ohlhausen, Commissioner of Federal Trade Commission, and Craig Silliman, Senior Vice President of Verizon.

                The main discussion centered around litigation Verizon filed against FCC regarding open internet rules.  When asked to explain the litigation, Craig Silliman stated, “This case is not about whether the internet will continue to be open.  It will be, there’s been a commitment open internet for a long time predating the FCC order on this.  This is about where the FCC’s jurisdiction ends and the FTC’s jurisdiction begins, frankly in terms of regulation over the internet ecosystem.  If you look at what the FCC did here, there’s a fairly expansive view of its jurisdiction under ancillary jurisdiction theory that allows it to regulate parts of the internet ecosystem that concerns us and that I think should concern many players in the internet ecosystem.”

When asked for his opinion on the FCC’s open internet order, Robert McDowell started by saying, “I voted against this order for a number of reasons.  One, there is no market failure to justify the FCC stepping into this space.  There was no market analysis done by the FCC or any other government agency to justify the government stepping into this space.  It was a very long dissent with 145 footnotes or so, so I am not going to go into every corner of that dissent.”

When asked if he agreed with the claim some people have made that the open internet order has resulted in a lack of investment. Craig Silliman stated, “No, certainly not.  There are a number of things that factor into any sort of investment environment.  The one thing that clearly can depress investment is regulatory uncertainty.”

The open internet order has a different effect on wireline vs. wireless services.  When asked to “drill down a little bit” on that, Robert McDowell stated, “The order in a way carved out wireless, but also kept the FCC’s hooks on it.  The order goes so far as to say that they are not regulating wifi in coffee shops, for instance, but they could.  So if there’re forbearing from that, in their view, of course they could, because there is no fence around the FCC jurisdiction.  There is a tip of the hat understanding that wireless is different that wireline, it is shared bandwidth, so you may not realize it but you are sharing bandwidth with your neighbor.  What is dangerous here is that the door is open to the regulation of wireless.  The concern that I have it that the Commission has been slowly laying a logical foundation for the regulation of the wireless marketplace; whether it’s through open internet or other ways as well.”

Silliman said that “one of the concerns that we have about this whole debate we talked about is the open internet order, is uncertainty, because we don’t know the bounds of FCC jurisdiction.  That makes it very hard to plan for the future and knowing where the FCC may go with that sort of hoarding of regulatory authority.  One thing we need to think about in the aftermath of a court decision, whatever that decision may be, is that we bring in a level-headed and cool minded discussion.”  “If there is a potential problem, does the market solve it?  If the market does not solve it, is there a set of laws already in place that will solve it and only if you get past that point and the answer is no, then you look at some unique need for new legislation or regulation.”

In terms of possible results of the Verizon/FCC court case, Maureen Ohlhausen stated that “If the FCC wins, I think any agency really needs to pay attention to what it can do and what it should do.  Agencies should look for opportunities for market self-regulation, examine the actual problem and determine if it actually needs to be addressed.”