Internet regulation and the NM Technology Corridor

In February, the Federal Communications Commission adopted utility-style regulation of the Internet. Unless so-called “net neutrality” rules are abandoned, a bastion of innovation and enterprise will be treated as if it were a monopoly service offered by a vintage telephone company.

The FCC’s decision classified the Internet as a telecommunications service under Title II of the Communications Act, thus subjecting the online world to a dense set of federal regulations adopted in 1934 — and updated only once since then. If the agency’s action is allowed to stand, it will put an end to the policy of light regulation of America’s most powerful communications tool, perhaps the most successful bipartisan policy ever created in Congress.

Light regulation never meant anarchy. There were, and continue to be, appropriate laws to prevent abuse of the market and protect consumers from anti-competitive behavior.

As the Heritage Foundation’s James L. Gattuso and Michael Sargent noted, “The FCC did not even attempt to directly regulate Internet access services until 2007,” and its action was struck down in federal court a few years later. Logical, non-intrusive regulation set off a virtuous cycle of investment followed by innovation followed by more investment. Allowing the Internet to flourish created the digital revolution, and continues to drive it today. From 1996 to 2013, U.S. Internet providers invested $1.3 trillion in infrastructure. Pulling the plug on light regulation would short-circuit the hugely productive cycle of investment-innovation-investment. It would jeopardize a creative and competitive marketplace and leave consumers paying more for diminished service.

Here in New Mexico, the end of light regulation would hit businesses along the New Mexico Technology Corridor, what Forbes calls “a concentration of high-tech private companies and government institutions along the Rio Grande.” Centered in Albuquerque, the corridor is making New Mexico a regional technology hub. It appeals to major corporate names and creative start-ups. All of them are major consumers or producers of Internet technology.

Unnecessary regulation would slow the flow of that technology to a crawl. Besides disrupting our tech corridor, this would be a setback to New Mexico’s hopes of bringing even basic Internet access to rural communities and tribal lands to the north. The best option for making these areas part of the digital revolution is a vibrant private market in which those companies have strong incentives to invest in new infrastructure.

If federal policy treats Internet service providers such as Comcast and CenturyLink as if they were traditional phone companies, they lose the incentive to invest in new carrying capacity for additional Internet traffic. If government allows the ISPs to charge heavy users like Netflix — which by itself accounts for 35 percent of all Internet traffic — we all get better, faster service.

Ironically, the Obama Administration embraced technology in unprecedented ways to get elected and engage with citizens. Unfortunately, the president, who enjoyed tech-savvy campaigns and support from tech-obsessed Millennials, has sowed the seeds for the destruction of the Internet as we know it.

It may not be realistic for the White House and the FCC to walk back all of “net neutrality,” absent a ruling in the courts. But at the very least Title II of the Communications Act should be on the chopping block. Its rules, the industry group Broadband for America believes, “go far beyond protecting the open Internet, launching a costly and destructive era of government micromanagement that will discourage private investment in new networks and slow down the breakneck innovation that is the soul of the Internet today.”

Federal regulation of the Internet won’t help the Land of Enchantment’s consumers, and it’s a major threat to our technology sector.

D. Dowd Muska (dmuska@riograndefoundation.org) is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.