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Can We Prevent Another Net Neutrality Groundhog Day?

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The near-instantaneous response by supporters and opponents of Chairman Pai’s proposal to roll back the Open Internet Order highlights two points. First, despite the hyperventilating and hand-wringing, this proposal surprised nobody. Everybody who follows the issue knew the moment Donald Trump won the presidential election that this day would come. Second, the arguments on both sides have all been made. Many times. For example, Oxford University professor Bob Hahn and I argued in 2006 why we believed net neutrality rules were likely to be harmful.1 Not surprisingly, I support the Chairman’s proposal.

Yet, while I believe the Chairman’s actions are correct, the FCC as an agency has a commitment problem. The fault does not rest with Chairman Pai, past-Chairman Wheeler, or any other commissioner. The difficulty of making credible long-term regulatory commitments exists across agencies and around the globe, has been studied extensively, and has no easy solution. New administrations will always have different sets of beliefs and agendas. One mechanism intended to help overcome the commitment problem is the presence of independent, expert agencies. In principle, an agency’s independence from short-term political pressures allows it to make decisions in a more technocratic nature. The more controversial the issue, however, the more difficult it will be for the agency to maintain its independence.

Net neutrality seems to have become so controversial and so politicized that it is practically impossible for any Commission to credibly claim that its approach will survive beyond its own tenure.

Net neutrality has become a partisan cause célèbre. And because the debate isn’t going away, it is easy to imagine a future Commission changing course again. In other words, given the endless debate over the past decade, let alone the past century, it is hard to believe that the final Order that comes out of the current proceeding will yield a stable equilibrium, either.

Since independence apparently can’t help the FCC to credibly commit to any particular policy, we must look to other mechanisms. Broadly speaking, the way to do that is to make it more difficult for the FCC to change how it regulates broadband and the Internet in general. Of course, that does not help much in practice. Each side of the debate would readily agree to tie the Commission’s hands anytime the status quo favors their own side.

A more realistic version of tying the Commission’s hands would be to require certain analyses, such as a cost-benefit analysis, as part of any major rulemaking. The Office of Economics and Data that Chairman Pai is pursuing would go a long way towards increasing the Commission’s ability to make credible commitments. In the meantime, the NPRM’s plan to include a cost-benefit analysis (CBA) should bolster the argument in favor of the CBA’s results.

In order for a CBA to help fix in place a rule, the office producing it must be committed to rigorous analysis, required to weigh in on major proposals, and, crucially, itself be independent from pressure from the Chair or other commissioners to reach favored outcomes. The last item on that list—independence from the Chairman’s office—is likely to be the most important and most difficult to achieve. If the office becomes a tool for a chairman to use to promote particular outcomes then its work will not be rigorous and its conclusions not meaningful. In short, an independent economics office would make it more difficult for Commissions to change rules based on political preference and ideology rather than on analysis.

Net neutrality’s morphing into a populist issue also points us to an approach for more credibly committing to a long-term policy. In principle, public pressure as measured by the number of comments should not matter for an expert agency. Public input, in the sense of providing substantive information and convincing arguments, should. Expert agencies are not supposed to make decisions based on anyone’s votes other than the commissioners’.

We do, however, have institutions that are designed to make decisions based on how well they reflect the will of the people as measured by votes. Congress should, of course, make legislation based on evidence, but it also makes legislation that constituents want. If public opinion matters for deciding net neutrality then it should be handled by an institution intended to reflect societal preferences and set up to encourage compromises. Even in today’s toxic political climate, Congress is probably a better place to reach an outcome that is, though perhaps grudgingly, accepted by both sides.

I believe net neutrality and common carrier regulation are bad for innovation and economic growth, and therefore support Chairman Pai’s proposal. But he can’t promise that a future commission won’t undo this proposal. No chair ever can on any issue, but the especially intractable nature of net neutrality makes it more likely to stay with us in a way other issues do not. With net neutrality in particular, the FCC must find ways to strengthen its credibility. One is a truly independent economics office required to weigh in on major proposals. The second is for Congress to step in and provide better guidance for the FCC to follow.

The net neutrality issue has been with us for over a century in different guises and is unlikely to be resolved fully, possibly ever. But consumers and industry need the FCC to be able to commit to at least a general approach for regulating the Internet. The way to do it is by creating more analytical hurdles for the FCC to overcome in order to make changes and for Congress to set some principles for the FCC to follow.

1. I think the piece holds up quite nicely. We even tagged telemedicine as a potential benefit of broadband that “seems to be forever just around the corner.”