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Press Release

    FCC Proposal to Regulate the Internet Would Harm Consumers, Stifle Innovation

    05/07/2010

     

    Federal Communications Commission Chairman Julius Genachowski’s suggested “third way” of internet oversight tries to find a middle ground where there is none.  Rather than a path between the free market and regulation, this approach opens the door to federal regulation of the internet to address problems that have yet to emerge. 

    “The announcement raises significant questions about the future development of the internet and the continued deployment of broadband networks,” said Wayne Brough, chief economist at FreedomWorks.  “In essence, it is a call to expand FCC authority over internet regulation.  Just as efforts to establish regulations for ‘net neutrality’ are a solution in search of a problem, the call for new internet oversight is an agency in search of a reason to exist.”

    In the absence of any demonstrated market failure, the expansion of regulatory oversight is not warranted, and the FCC has failed to identify a problem that needs to be addressed.  Competition has been increasing, and the development of wireless networks provides a significant new competitive pressure in the marketplace.  New mandates could limit this growth and reduce consumer welfare.

    “This is a throwback to the regulatory regime that stifled innovation in telephony for years,” said Brough.  “It is important to remember that economists found the deregulation in communications generated tremendous value to consumers, with estimates of the burden of telecommunications regulations reaching $100 billion annually.  Markets, not regulation, are what transformed communications into the dynamic force it is today, and it is troubling to see the FCC calling for a the creation of a new regulatory regime.”