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Price controls are inevitable under new net neutrality ruling

As the recent furor over the net neutrality debate dies down, a new issue arises in the controversy. While it may be the time for liberals to gloat at the FCC ruling and conservatives to lick their wounds, a question central to the opposition’s argument is asked in a provocative article appearing in the National Journal .

In this space I have cautioned readers (and colleagues) about their blind devotion to the Obama administration’s stance regarding the dubious plan to “keep the Internet free” by regulating it like a utility, and pointed out the inherent danger to liberty and access whenever the government gets involved.

This article highlights the fact that the FCC, as a result of their recent decision, has a new way to oversee how much companies can charge for Internet service. This development confirms the fear of net neutrality opponents in favor of free competition unfettered by the government’s greedy regulators, that the door is now open to intrusive government meddling in Internet providers business. The groundwork for cumbersome, obnoxious price controls and rate regulation is at hand.

“The plain language of the order definitely opens the door to rate regulation,” said an industry lobbyist Brian Diet. He points out that price controls are the hidden agenda, a weapon if you will, which has been masked behind the” reasonable net neutrality protections that have widespread support.”

FCC Chairman Tom Wheeler vows, “no rate regulation” adding that his agency won’t set Internet prices or impose ”utility- style” requirements that would “pose a meaningful threat to network investment.” But it says here that once the government acquires a fiscal power, be it to tax or regulate, you can bet your bottom dollar that somewhere down the road, at some time, it will put its sticky fingers in the pie.

The controversy stems from the fact that the new rules classify the Internet as a “telecommunications service” under Title II of the Communications Act, under which the commission has regulated, and some say detrimentally inhibited, landline phones for 80 years. It should be pointed out that this section was created during a time when major monopolies controlled the marketplace and stifled competition and it included extensive provisions for price controls which may have been necessary then. But this is not the climate in which industry operates today. The Internet is innovating, improving and thriving without government intrusion and “net neutrality” is a carefully camouflaged and choreographed attempt by the government to further intrude on private industry and ultimately on personal privacy.

This is evidenced by the provisions that require all of a provider’s charges, practices and classifications” be “just and reasonable”. Who will decide on what is just and reasonable and move to make adjustments? In fact, that section is critical to the overall net neutrality rules. The FCC is using the “just and reasonable” standard as the legal basis for its ban on Internet providers blocking or manipulating Internet traffic.

As a result, many stock analysts have downgraded the major cable stocks because of the inherent fear of lost revenues due to price controls. One such analyst, Craig Moffet said it would “be naive to believe” that the government, once in a position to do so, would not impose price regulation at some time in the future. Readers – interpret price regulation as being tantamount to you paying more for the Internet in the future, thanks to the government.

There is a chorus of people who argue that there will not be price controls, but instead more competition. But for the critics of the net neutrality decision, price controls are not a hypothetical fear – they exist explicitly in the new regulations. “To me, it’s just a distortion of the English language to say that’s not rate regulation,” said Randy May, president of the Free State Foundation, which opposes the rules. “This order not only opens the door to rate regulation-it applies it from the get-go,” added Jonathan Spalter, a lobbyist for cellular companies including Verizon and AT&T,

As the saying goes – if it walks like rate regulation, quacks like rate regulation, it must be rate regulation. So the FCC can’t make this duck anything other than what it is.

In other words, as I commented in other articles, it is a massive power grab masked by an administration that has all too often when it comes to privacy, pulled the wool over the public’s eyes. And as I’ve stated before, regulation will ultimately result in higher prices and stifled competition- so hold onto your wallets.

Editor’s note: The issue of net neutrality is an increasingly bitter and highly divisive one, and as Stan alludes to in this article, the BestVPN staff support the new FFC rules (except that we think they could have gone further and opened up ‘last mile’ access to competition.)


Stan Ward Stan Ward has enjoyed writing for 50 years. Writing has been a comfortable companion to a successful business and teaching career for him. Find him on Google+.

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One response to “Price controls are inevitable under new net neutrality ruling

  1. Yep, once the guv’mnt gets its stinkin’ hands on the levers, it’s going to stop all those well-behaved and reasonably-priced internet companies from using their hard-won monopoly power for the good of us all (or at least, all of us who are shareholders and never use the internet).

    Great point, Stan.

    As for that hilarious quote “As the saying goes – if it walks like rate regulation, quacks like rate regulation, it must be rate regulation. So the FCC can’t make this duck anything other than what it is”, you don’t even need to tell us the guy’s a lobbyist – he makes that clear from turning water into vinegar. In other words, he’s totally missing the smoking gun he so desperately needs to be able to support his utterly baseless claim.

    I am always bemused when libertarian ‘ideals’ suck in Average Joe – when the only people they actually benefit are those who can afford to buy Joe if their ‘policies’ win popular support. You may not have a great government, Stan (and you clearly don’t like the current president – presumably he just isn’t enough like George W, who spent your money like water while lying constantly about his ‘achievements’), but maybe you should consider whether being a wage slave in a fake democracy is better or worse than being a serf to one of the hundred or so individuals who would have the power to own you if libertarianism won the ideological battle in the US. Fancy the Koch brothers being your new – and surely benevolent – overlords? Because that’s where libertarianism ultimately ends; not with ‘equality for all’, but with the few ruling the many with iron fist.

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