On February 26, the Federal Communications Commission ("FCC") voted 3-2 along party lines to approve the Commission's new "Open Internet" order. FCC Chairman Wheeler argues that this order "will preserve and protect the Internet as a platform for innovation, expression and economic growth." He claims that the order will not raise Internet service costs, slow broadband speeds, reduce investment, limit consumer choice, or let the government regulate rates.
Chairman Wheeler also asserts that the Commission's dramatic, last-minute departure from the FCC's proposed rule was made independently, without undue White House influence, and was consistent with the Administrative Procedure Act.
Today's hearing will challenge each and every one of these assertions.
The order will undoubtedly raise Internet service costs. The text specifically permits the FCC to impose additional fees, raises the rate carriers must pay to deploy broadband, and opens the door to higher state and local taxes. The result is an estimated $11 billion in new taxes and fees.
This estimate, moreover, does not include regulatory compliance costs. An army of lawyers and accountants will be required to comply with the 300-plus page order and the dizzying array of additional regulations, proceedings and opinions that it contemplates.
The order will also slow broadband speeds. Europe already imposes utility-style regulation on its broadband providers. As a result, Europe trails America in virtually every measurable category relating to Internet speed and deployment.
Indeed, Europe is thrilled that the FCC is leveling the competitive playing field. The Secretary General of the European Policy's Party recently remarked that the FCC was about to impose the type of "regulation which has led Europe to fall behind the US in levels of investment."
The FCC's order will reduce consumer choice. A group of 142 wireless Internet service providers, 24 of the country's smallest ISPs, and the Small Business & Entrepreneurship Council all urged the FCC not to impose Title II regulation because it would "hinder[] our ability to further deploy broadband," "erode investment and innovation," and "badly strain our limited resources."
These are the types of companies that serve small and rural communities, like many in my district, and the FCC's regulations threaten their very livelihood. Forcing companies out of business rarely results in more consumer choice.
The FCC's order will discourage investment. Nothing chills investment faster than regulatory uncertainty, and this order is the very definition of it. It allows the FCC to regulate virtually any activity it deems to have violated its vaguely worded seven-factor "Internet conduct" standard. Chairman Wheeler describes this new authority as "sit[ting] there as a referee and be[ing] able to throw the flag."
What he doesn't tell you is that he won't be the only one who can "throw the flag." Hordes of trial lawyers will now have the ability to file a suit in any federal court in the country claiming violations of the new, vague conduct standard.
Additionally, there is uncertainty regarding the validity of the FCC's order itself, which has already been challenged in court. Last time the FCC acted in this area, it took over three years for the courts to largely invalidate the FCC's net neutrality rule.
Chairman Wheeler told other congressional committees that the order does not allow the FCC to regulate rates. Chairman Wheeler further argues that his Commission will set precedent that will make it more difficult for future Commissions to regulate rates.
Yet, it is this very Commission that has overturned decades of precedent to categorize Internet service under Title II. Obviously, precedent does not carry much weight at the FCC.
Furthermore, it increasingly appears that the FCC changed its proposed order under political influence, rather than independently. In the words of Commissioner Pai, "why is the FCC changing course?
President Obama told us to do so."
Finally, the public did not receive adequate notice of the final rule as required by the Administrative Procedure Act. Nearly every facet of the final rule is distinguishable from the proposed rule, and many aspects of the final rule did not receive even a single mention in the proposed rule.
The Internet that existed before this FCC order was dynamic, competitive, open, and free. By raising costs, imposing a heavy regulatory burden, introducing regulatory uncertainty, and instituting government meddling into nearly every aspect of the Internet, the FCC will seriously undermine the competitive nature of the Internet. Barriers to entry will rise, smaller rivals will be forced to exit, and consolidation likely will ensue.
Given these fundamental changes to the Internet, one would expect widespread, documented abuses. Yet within its 300-plus page order, the FCC does not point to a single example of actual anticompetitive conduct occurring on the Internet.
Four million Americans wrote the FCC asking it to protect and promote an open Internet. The FCC turned a deaf ear and delivered the most heavy-handed regulatory regime imaginable. The FCC has "destroyed the city in order to save it."
I look forward to hearing today's testimony on how the FCC order will impact the future of competition on the Internet, and I yield back the balance of my time.