The results have been bad for consumers. The first negative consumer impact is less
infrastructure investment. The top complaint consumers have about the Internet is not and has never been that their ISP is doing things like blocking content; it’s that they don’t have enough access and competition. Ironically, Title II has made that concern even worse by reducing investment in building and maintaining high-speed networks. In the two years of the Title II era, broadband network investment declined by $3.6 billion—or more than 5%. Notably, this is the first time that such investment has declined outside of a recession in the Internet era.
When there’s less investment, that means fewer next-generation networks are built. That means fewer jobs for Americans building those networks. And that means more Americans are left on the wrong side on the digital divide.
The impact has been particularly serious for smaller Internet service providers. They don’t have the time, money, or lawyers to navigate a thicket of complex rules. I have personally visited some of them, from Spencer Municipal Utilities in Spencer, Iowa to Wave Wireless in Parsons, Kansas. So it’s no surprise that the Wireless Internet Service Providers Association, which represents small fixed wireless companies that typically operate in rural America, surveyed its members and found that over 80% “incurred additional expense in complying with the Title II rules, had delayed or reduced network expansion, had delayed or reduced services and had allocated budget to comply with the rules.”
Other small companies, too, have told the FCC that these regulations have forced them to cancel, delay, or curtail fiber network upgrades. And nearly two dozen small providers submitted a letter saying the FCC’s heavy-handed rules “affect our ability to find financing.”
That’s what makes Title II regulations so misplaced. However well intentioned, they’re hurting the very small providers and new entrants that are best positioned to bring additional competition into the marketplace. As I warned before the FCC went down this road in 2015, a regulatory structure designed for a monopoly will inevitably move the market in the direction of a monopoly.
Turning away from investment, the second negative consumer impact from the FCC’s heavy-handed regulations has been less innovation. We shifted from a wildly successful framework of permission-less innovation to a mother-may-I approach that has had a chilling effect. One major company, for instance, reported that it put on hold a project to build out its out-of-home Wi-Fi network due to uncertainty about the FCC’s regulatory stance.
A coalition of 19 municipal Internet service providers —that is, city-owned nonprofits— have told the FCC that they “often delay or hold off from rolling out a new feature or service because [they] cannot afford to deal with a potential complaint and enforcement action.” Ask yourself: How is this good for consumers?
Much of the problem stems from the vague Internet conduct standard that the Commission adopted in 2015—a standard that I’m proposing to repeal. Under this standard, the FCC didn’t say specifically what conduct was prohibited. Instead, it gave itself a roving mandate to second-guess new service offerings, new features, and new business models. Understandably, businesses asked for clarity on how this standard would be applied. My predecessor’s answer, and I quote: “We don’t know, we’ll have to see where things go.” That’s the very definition of regulatory uncertainty.
