Old Laws Threaten The Evolution Of The New Economy

By Mike Montgomery

Seven months after the Federal Communications Commission (FCC) ruled that net neutrality’s big brother — Title II- should be the law of the land, the regulation is exactly where people thought it would be: mired in uncertainty and stuck with a myriad of court challenges.

What is surprising is how squeamish some tech companies and net neutrality supporters got when they started to realize the far-flung negative impacts of applying Title II, an eighty-year-old statute, to 21st Century markets and technologies.

Make no mistake about it: the “Open Internet” rules have a laudable goal in mind: to preserve the foundational principles of an open Internet. To that end, a closed Internet is in no one’s interest — not individual users, not businesses or companies. But placing the dynamic technologies of our modern economy under a telephone law instituted in 1934 will smother the flames of future innovation.

This is not hyperbole. In its recent brief defending its application of old rules on to the Internet, the FCC declared on the second page its intention to “safeguard” the “status quo.” Championing the status quo isn’t thinking big; rather, it will chill innovation in favor of stagnation. The Internet’s history is one of obliterating the status quo of everything it has touched. It is chilling that the agency that has anointed itself the guardian of the Internet sees its primary role as maintaining the status quo.

While permissionless innovation is a goal within the innovation community, the FCC’s new “general conduct” rule gives the FCC authority to restrict any new technology it feels may harm consumers. This sounds pro-consumer, but engineers and consumers, not lawyers considering the issuance of permission slips, should likely decide how to run the Internet.

The general conduct rule puts the FCC in the position of forecasting whether a new business model or innovation will negatively impact competition, whether the innovation in question applies only to certain applications and not others, and whether they comply with industry best standards and practices. And by doing so, this isn’t just putting the FCC in the forecasting business, it’s actually giving the agency the power to determine what new companies or ideas survive and which never see the light of day. Just think what this would have meant for consumers, for the economy and for the marketplace if that rule had applied to rideshare companies a few years ago when they disrupted the taxi industry, or Apple when it upended the way music is consumed.

Even the Electronic Frontier Foundation — a big proponent of an open Internet — worries that the general conduct rule could be abused by future Commissions to “target legitimate practices that offer significant benefits to the public but could also be construed to cause some harm to a specific provider or consumer.”

What kind of a world would we be living in today if that rule was in effect for the last couple decades? Would the iPhone’s “visual voicemail” feature have been blacklisted because AT&T only made it available on Apple devices? What about zero-rating programs like T-Mobile’s that lets its customers stream certain music services without counting against their data caps? An FCC suspicious of corporate interests could have argued in both of those cases that the practice harmed certain players.

But at least the big corporations could afford the lawyers required to defend their new services. What hope is there for the small business entrepreneur or the Silicon Valley startup? Startups often lack the necessary resources to hire lawyers and lobbyists to argue that their invention should pass government muster. Vonage founder Jeff Pulver has repeatedly stated that he wouldn’t have gotten into the Voice-over-IP game if he had had to jump through all these hoops. Imagine it — no free calling over the Internet; people paying 25 cents a minute for long distance just as they have done for years. In other words, the status quo: the FCC would be proud.

The FCC wants regulate like its 1934. That’s not good for American innovation.

Mike Montgomery is executive director of CALinnovates, a technology advocacy coalition.

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.