- - Thursday, December 3, 2015

ANALYSIS/OPINION:

Unless the courts or Congress rein it in, the Federal Communications Commission (FCC) might soon transform itself into the Internet Regulation Commission. On December 4, the FCC will go before the U.S. Court of Appeals for the D.C. Circuit to defend its controversial regulations on Internet service providers. Under these so-called “net neutrality” rules, providers cannot block or degrade particular websites, applications, or services except in very limited circumstances.

In effect, the FCC’s latest net neutrality rules treat Internet service providers like old-school telephone companies, with lots of regulation and little room to innovate. Saddling Internet providers with 1930s-era mandates is clearly the wrong approach, but the FCC’s net neutrality regime is just the tip of a regulatory iceberg.

The FCC faces an uphill battle in the D.C. Circuit, which spurned the agency’s last two attempts to impose net neutrality rules, in 2010 and 2014. In both cases, the court found that Congress had not delegated the agency such authority, and under the Constitution, federal agencies may regulate only to the extent that Congress has empowered them to do so.

This time, the FCC has offered a new set of creative legal theories to justify its rules. Worse, now the agency claims it can do whatever it wants to force Internet to invest more in their networks. The court should reject the FCC’s unconstitutional bid to expand its powers — again.

To understand the FCC’s latest power grab, think back to 1996 — the year America Online introduced its unlimited dial-up service. That’s the last time Congress rewrote federal telecom laws, albeit making barely any mention of the Internet. One new provision, Section 706, instructed the FCC and the states to use their powers to encourage the expansion of speedy Internet access and promote infrastructure investment. This provision sounds simple enough, but as current FCC leadership sees it, the law is an invitation for potentially boundless regulation.

As noted, the D.C. Circuit struck down the FCC’s last two net neutrality attempts, finding in both cases that Congress never gave the agency the authority to impose those rules. But when the FCC lost for the second time, in 2014, the court tossed the agency a bone: a two-judge majority wrote that Section 706 is an independent grant of authority to the agency.

That may sound like a technicality, but its real-world implications are massive. For instance, imagine if the FCC decided the Internet would work better if mobile app stores couldn’t decline to offer any apps as long as they were legal. By the FCC’s reasoning, forcing firms like Apple to loosen their app store standards will give more app choices to users, who will then spend more time on their smartphones. In turn, that increased wireless usage might spur carriers like Verizon and AT&T to invest more in upgrading their networks. And just like that, the FCC could enter the business of regulating smartphones.

Concerns about how the FCC might use its powers under Section 706 are not merely hypothetical. Earlier this year, three unelected FCC bureaucrats essentially voted to nullify certain state laws, overriding the elected state legislatures that enacted them. Specifically, the agency invoked Section 706 to dictate to states how they may oversee local government-run broadband networks. Unsurprisingly, states have challenged the FCC’s decision (the suit is now before the U.S. Court of Appeals for the Sixth Circuit).

Congress has never given the FCC the authority to decide for itself how the Internet should be regulated. In fact, Congress wisely adopted a national policy to promote the continued development of broadband Internet access services with a minimum of government regulation and interference.

Unfortunately, the D.C. Circuit seemed to accept the agency’s misreading of federal law in 2014. In the present case, therefore, the court should clarify that its earlier opinion was incorrect. Otherwise, the Supreme Court must step in and enforce the limits placed on the FCC by Congress. Reining in this agency is essential if tomorrow’s Internet is to be free, innovative, and dynamic.

Ryan Radia is associate director of technology studies at the Competitive Enterprise Institute, which filed an amicus brief on the FCC’s current net neutrality proposal with the D.C. Circuit.

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