Policy Memo: Reinstating Net Neutrality Regulations

The following is a policy memo that was written for course PPOL 510: Public Policy Process. The memo includes recommendations to the FCC and the Trump administration regarding reinstating net neutrality regulations.



To: Brendan Carr, Commissioner of the FCC
From: Andy Green, Chief of Staff for Commissioner Carr
Date: October 29, 2019
Subject: Recommendation to Support Reinstatement of Net Neutrality Regulations


Recommendation:

I recommend you take a position in support of reinstating net neutrality regulations. Chairman Pai and the FCC were right to take action aimed at stimulating innovation and investment, but it has become clear that the repeal of net neutrality regulations will actually do more harm than good when it comes to promoting innovation and economic growth. Additionally, the repeal of net neutrality regulations creates a number of important political concerns for the administration, including having a disproportionate effect on rural communities, threatening freedom of speech, and potentially allowing bias against conservative viewpoints. Finally, the repeal of net neutrality regulations has weakened the FCC by ceding ground to the FTC on enforcement responsibility, and by consuming resources that could otherwise be used for supporting initiatives such as the rollout of next-generation infrastructure. By reinstating net neutrality regulations, the FCC can support innovation and economic growth, solve a number of vexing political issues, and allow the commission to tackle the pressing issues facing a rapidly evolving communications sector.

Background:

Next month you will be meeting with Chairman Pai to discuss how to proceed with net neutrality regulations. This issue has retained the attention of Chairman Pai and key administration officials for a number of reasons. First, there is overwhelming bipartisan public support for net neutrality regulations, with support for retaining the 2015 rules ranging from 52 to 83 percent depending on the poll.1 Additionally, during the public commenting period that took place in the midst of the repeal effort, there were so many comments submitted by the public that it crashed the FCC website on multiple occasions.2

In addition to the broad popular support for net neutrality regulations, this issue has retained the attention of Chairman Pai due to the volume of pending legal and legislative actions undertaken by the states. Shortly after the vote, a coalition of 22 states filed lawsuits seeking to block the repeal of net neutrality regulations.3 Additionally, many of those same states have introduced legislation that would reinstate these regulations, with Washington state being the first to succeed in passing such a law.4 Just this month, the D.C. Circuit Court of appeals upheld the FCC’s decision to repeal, but ruled that the FCC overstepped by barring states from adopting regulations of their own.5 This ruling is likely to result in more states passing legislation to reinstate regulations on net neutrality.

Key Arguments in Favor of Reinstating Net Neutrality Regulations:

  1. Net Neutrality Regulations Promote Innovation and Growth
  • Effect on Small Businesses. The repeal of net neutrality regulations presents a clear threat to small businesses. Without these regulations in place, ISPs will likely implement “fast-lane pricing”, whereby they charge companies higher prices for allowing consumers to have faster access to the company’s site. Small businesses will not be able to pay as much as large corporations, and thus they will be at a significant competitive disadvantage.
  • Effect on Innovation and Growth. Not only will this affect mom-and-pop businesses, but it will also be highly detrimental to innovative companies that have been the primary engine of growth in the modern economy. Without net neutrality regulations, it’s very possible that companies like Google, Facebook, and Netflix would have never grown to be the economic powerhouses they are today.6 The repeal of net neutrality regulations threatens to prevent the next wave of innovative companies from creating millions of jobs and fueling economic growth.
  • Effect on Investment Among ISPs. One of the main rationales for repealing net neutrality regulations was that they created a burden on ISPs that discouraged further investment in broadband technology. However, there are a few reasons why repealing these regulations might not be the best solution to encourage investment among ISPs. First, there isn’t strong evidence that net neutrality rules were actually hurting investment in the first place. In fact, an analysis of SEC filings couldn’t find a single case in which an ISP told its investors that net neutrality regulations hampered their investments.7 Second, ISPs have indicated that the emergence of a patchwork of different regulations across the country would be especially detrimental to investment.8 With the recent circuit court decision discussed above, it’s very likely this will become a reality. By reinstating net neutrality regulations, the FCC can prevent the development of a patchwork of different rules that would place an undue burden on ISPs as they evaluate future investments.
  1. Political Concerns Associated with the Repeal of Net Neutrality
  • Disproportionate Effect on Rural Communities. The repeal of net neutrality regulations is likely to have a disproportionately large effect on rural communities. These communities are more likely to have only one ISP that services their area. As a result, if ISPs decide to block access, alter the speed of access, or charge more for access to certain sites in the absence of net neutrality regulations, rural communities will have no choice but to accept this reduced standard of service.
  • Freedom of Speech and Bias Against Conservative Viewpoints. The repeal of net neutrality regulations allows ISPs to prevent users from accessing certain sites. As demonstrated by the discussion around social media sites suppressing conservative viewpoints, allowing private companies to regulate content without any oversight opens the door for potential discrimination against conservative groups.
  1. Repealing Net Neutrality Regulations Weakened the FCC
  • Ceding Ground on Enforcement Responsibility. The repeal of net neutrality regulations shifted the focus from “pre-emptive regulation” to “targeted enforcement based on actual market failure or anti-competitive conduct”.9 As a result, much of the oversight responsibility for the conduct of ISPs has shifted to the FTC, thus reducing the scope and clout of the FCC.
  • Net Neutrality Lawsuits are a Drain on FCC Resources. Fighting the vast array of lawsuits from state attorneys general and various other organizations requires deploying significant FCC resources. By reinstating net neutrality regulations, the FCC could redeploy those resources to pursue other important initiatives such as supporting the rollout of next-generation infrastructure.


Footnotes:

  1. Fullerton Lemons, J. (2018). The Fight Over Net Neutrality. CQ Researcher.

  2. Ibid.

  3. Ibid.

  4. Ibid.

  5. Romm, T. (2019, October 1). Appeals Court Ruling Upholds FCC’s Canceling of Net Neutrality Rules. The Washington Post. Retrieved from: https://www.washingtonpost.com/technology/2019/10/01/appeals-court-upholds-trump-administrations-cancelling-net-neutrality-rules/

  6. Fullerton Lemons, J. (2018). The Fight Over Net Neutrality. CQ Researcher.

  7. Ibid.

  8. Ibid.

  9. Ibid.

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Andy Green
MS in Data Science for Public Policy Candidate ‘21