While President Obama uses words like “keep the internet free,” his plan to give the FCC authority to regulate the internet as a public utility would subject internet service to regulation, content control, and (as is the case with everything the government touches) high taxes.
The relationship between the Internet and government has become a useful barometer of personal and economic freedom. Oppressive governments use the Internet to oppress political enemies, censor ideas, and spy on citizens. The United Nations and other international organizations see the Internet as an untapped opportunity for tax revenues and regulations to support political favorites.
Of course Congress can and does pass symbolic laws to protect the Internet, such as the recent extension of the Internet Tax Freedom Act that prohibits new state and local taxes on broadband access. Congress is eager to block state and local tax collection on the Internet on the reasonable theory that taxes will harm the Internet, one of the few engines of growth in our otherwise recession-prone economy.
Yet Congress is oblivious to Federal Communications Commission efforts to undermine the spirit if not the letter of ITFA by extending substantial new federal fees on broadband access. These fees could be as harmful, if not more so, than any that state and local governments might imagine. Yet many in Congress, unaware of the fees that might be applied to the Internet, applaud the FCC.
Under its “Open Internet” or “network neutrality” proceeding, the FCC would regulate the Internet and broadband service providers with rules similar to those that courts have not once but twice ruled unlawful. By statute, the FCC regulates telecommunications services, not Internet services. Rather than wait for Congress to give it authority to regulate Internet services, the FCC asserts that power for itself by some imaginative interpretation of the Communications Act.
One set of proposals considered by the FCC would classify Internet services, or at least Internet access services, as “interstate telecommunications services” bringing the regulation of those services exclusively to the FCC.
The FCC imposes fees of 16.1% on interstate telecommunications services that will generate more than $8 billion in federal universal service funds in 2014. Additional FCC fees on interstate telecommunications services raise $1 billion for federal telecommunications relay services. Although Congress mandates the general nature of the federal universal service fund and telecommunications relay services, it is the FCC alone that sets the budget size of the funds and develops the fee structure to raise receipts for the funds.
Even with all of its power, the FCC does not have the money to fund all of the new programs it seeks. For example, just in the past year, the FCC announced an ambitious multi-billion program to connect schools and libraries with Wi-Fi. Other advocates seek expansion of the low-income program. But where can the FCC find funds for new social programs not required by statute?
The FCC’s network neutrality proceeding may easily provide the answer. By classifying broadband access services as “interstate telecommunications services,” those services would suddenly become required to pay FCC fees. At the current 16.1% fee structure, it would be perhaps the largest, one-time tax increase on the Internet. The FCC would have many billions of dollars of expanded revenue base to fund new programs without, according to the FCC, any need for congressional authorization.
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Just in case you were wondering, the process that is laid out here is exactly what Obama proposed in his video address last weekend. He called on the FCC to classify the internet as a “public utility,” and by definition, we should expect the same 16.1% tax as any other “interstate telecommunications services.”
This is not a Democrat or Republican issue. Keeping the internet free is much bigger than partisan politics. Politicians on both sides of the aisle have sought to regulate the internet because of what a powerful tool it is.
Fighting to keep the internet free from government regulation is a liberty issue. It’s about the freedoms of speech, press, and privacy all rolled into one. We have seen time and time again how those freedoms get chipped away by governments, and we must stand against any efforts to regulate against them on the internet.