December 22 2010

The String-Pullers in Internet Regulation

John Fund describes yesterday's FCC vote to impose net neutrality rules as a well-planned coup, staged by left-liberal foundations that are intent on increasing the government's control over the media. What may sound like a whacko conspiracy theory is actually backed up by some pretty strong evidence, shedding much light on the confusing disconnect between the FCC's push to regulate net neutrality in the absence of convincing evidence that net discrimination is in fact a problem that needs solving.

... President Obama, long an ardent backer of net neutrality, is ignoring both Congress and adverse court rulings, especially by a federal appeals court in April that the agency doesn't have the power to enforce net neutrality. He is seeking to impose his will on the Internet through the executive branch. FCC Chairman Julius Genachowski, a former law school friend of Mr. Obama, has worked closely with the White House on the issue. Official visitor logs show he's had at least 11 personal meetings with the president.

[...]

[Liberal groups] began shifting their attention to "media reform"-a movement to impose government controls on Internet companies somewhat related to the long-defunct "Fairness Doctrine" that used to regulate TV and radio companies.

[...]
The FCC's "National Broadband Plan," released last spring, included only five citations of respected think tanks such as the International Technology and Innovation Foundation or the Brookings Institution. But the report cited research from liberal groups such as Free Press, Public Knowledge, Pew and the New America Foundation more than 50 times.

So the "media reform" movement paid for research that backed its views, paid activists to promote the research, saw its allies installed in the FCC and other key agencies, and paid for the FCC research that evaluated the research they had already paid for. Now they have their policy. That's quite a coup.


Fund's piece in the Wall Street Journal highlights the tendency of government regulation to heed to the demands of well-organized, well-funded special interest groups without much concern for the public well-being. While many proponents of net neutrality lament that the new FCC rule is not doing enough to prevent net discrimination, if the rule takes effect uncontested by Congress or the courts this coming year, the FCC regulatory reach over other aspects of the internet is likely only going to grow in the near and far future.

Should the FCC be allowed to maintain its claimed authority over regulation of the internet, this will attract more rent-seeking activities and misdirected investments. Powerful players in the media realm will have an even stronger incentive to further increase their efforts to direct FCC regulatory activity in ways that advance their organized interests. Consumers are the biggest losers in the whole process.

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