Now that the Court of Appeals has ruled on the Open Internet (Net Neutrality) Order upholding the Commission’s authority to act under Section 706, I want to provide a further insight into my oft-repeated statement that I am pro-open Internet. This perspective will guide my actions and recommendations going forward.
The government, in the form of the FCC, is not going to take over the Internet. It is not going to dictate the architecture of the Internet. It is not going to do anything that gratuitously interferes with the organic evolution of the Internet in response to developments in technology, business models, and consumer behavior.
But the FCC also is not going to abandon its responsibility to oversee that broadband networks operate in the public interest. It is not going to ignore the historic reality that when a new network transitions to become an economic force that economic incentives begin to affect the public interest. This means that we will not disregard the possibility that exercises of economic power or of ideological preference by dominant network firms will diminish the value of the Internet to some or all segments of our society.
There is nothing about the foregoing that should cause serious anxiety, either to those watching out for the interests of internet users, or of those building and operating the facilities that make up the Internet. The key message is that the FCC has the authority – and has the responsibility – to regulate the activities of broadband networks. We will have ample opportunity to debate ways and means, to consider specifics in specific cases as they arise. But, there is no justification, and no serious basis, for doubt about the fundamentals.
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The FCC’s legal ability—its jurisdiction—to oversee developments on the broadband networks on which the Internet depends is critically important. The Court’s decision addressed but one aspect of this authority. In the broad context, however, there is not any serious question about such authority.
Congress gave the FCC plenary authority over interstate and foreign wire and radio communications eighty years ago. The Commission has been exercising that authority with respect to a wide variety of electronic transmission activities ever since.
In a sense, broadband systems, whether fixed or mobile, whether fiber, coax, copper, or radio, are the most significant electronic transmission systems in our history. That is because they facilitated and now sustain convergence of a great many of the previously separate communications activities on which we rely—telephony, video, public safety, data, and so forth. Or to put it more broadly, they facilitated and now sustain the Internet as we have come to know it.
The absolute necessity that there be government oversight of broadband networks stems from two facts. The networks support essential—in fact, increasingly essential—services for our society (and for everyone in the world, for that matter). And, there are not and are not likely to be many such networks. As with many of the communications networks of the past, broadband networks involve very high fixed costs and very large minimum efficient scale. So, to say it a little more abruptly, broadband networks are essential and they are likely in their relative scarcity, especially at the local level, to enable exercises of market power.
The Open Internet principles first espoused by the Commission under Chairman Powell’s leadership and reiterated by the Commission under the leadership of both Chairman Martin and Chairman Genachowski, are not controversial in themselves. Many of the leading network operators, in fact, have pledged to abide by them even if they have been reticent to recognize the FCC’s authority to enforce them. But the principles are very significant in offering assurance that the Internet will remain open and free, something on which the welfare of our society has come to depend for a remarkably broad range of economic, social, cultural, political, and other activities.
Recognizing this reality, as well as that we are participating in a work in progress in which decisions made today will have effects in the decades ahead, the Net Neutrality debate has generated as much emotion as substantive significance. Those concerns stem from two sources. First, that network operators will take measures, mostly for economic reasons but perhaps also for ideological reasons, that will cut off or diminish the value of the Internet. Second, that the FCC will intrude on the activities of network operators in ways that will damage them economically with injury to them and to their ability to offer more and improved service to the public.
We need not now determine the likelihood of these outcomes. Even if it is a matter of low probability, it nevertheless is a matter of high consequence.
My intention is to employ any necessary means among the wide variety of them given to the FCC by the Congress to sustain our jurisdiction. That the jurisdiction exists is not debatable. What path we take to assure it will be a function of circumstance, but whether we secure it should not be a source of doubt.
How jurisdiction is exercised is an important matter. My strong preference is to do it in a common law fashion, taking account of and learning from the particular facts that have given rise to concern. The preference is based on a desire to avoid both Type I (false positives) and Type II (false negatives) errors. It is important not to prohibit or inhibit conduct that is efficiency producing and competition enhancing. It also is important not to permit conduct that reduces efficiency, competition, and utility, including the values that go beyond the material.
The principles provide sufficient guidance to set expectations for both producers and consumers. If something appears to go wrong in a material, not a trivial, way, the FCC will be available to use the totality of its authority for adjudication and enforcement. It will look to the Open Internet Order principles and it will examine the facts in light of the principles.
As I said in a recent speech in Silicon Valley,
I am not advocating intervention unless there is an unmistakable warrant for it. I am not interested in protecting competitors from competition, nor am I interested in presiding over a festival of rent seeking. But I am committed to maintaining our networks as conduits for commerce large and small, as factors of production for innovative services and products, and for channels of all of the forms of speech protected by the First Amendment.