[AUTHENTICITY CERTIFIED: Text version below transcribed directly from audio]
The Internet is the greatest free-market innovation in history. It has changed the way we live, the way we play, the way we work, the way we learn, the way we speak.
During my time at the FCC, I’ve met with entrepreneurs in South Dakota who have started businesses. I've met with doctors in Ohio who helped care for patients. I've met with teachers in Alaska who have educated their students. I've met with farmers in Missouri who increased their crop yields. And I've met with many more who have succeeded all because of the Internet.
And the Internet has enriched my own life immeasurably. In the past few days alone, I have set up a FaceTime call with my parents and kids. I've downloaded interesting podcasts about blockchain technology. I've ordered a burrito. I've managed my playoff-bound fantasy football team. And, as many of you might have seen, I've tweeted.
What is responsible for the phenomenal development of the Internet? Well, it certainly wasn’t heavy-handed government regulation. Quite to the contrary: At the dawn of the commercial Internet, President Clinton and a Republican Congress agreed that it would be the policy of the United States to (and I quote) "preserve the vibrant and competitive free market that presently exists for the Internet...unfettered by Federal [or] State regulation.”1
This bipartisan policy worked. Encouraged by light-touch regulation, America's private sector invested over 1.5 trillion dollars to build out fixed and mobile networks throughout the United States. 28.8k modems gave way to gigabit fiber. Innovators and entrepreneurs grew startups into global giants. And America’s Internet economy became the envy of the entire world.
And this light-touch approach was good for consumers, too. In a free market full of permissionless innovation, online services blossomed. Within a generation, we have gone from email as the killer app to high-definition video streaming. Entrepreneurs and innovators guided the Internet far better than the clumsy hand of government ever could have.
But then, in early 2015, the FCC, under political pressure, jettisoned this successful, bipartisan approach to the Internet. On express orders from the previous White House, the FCC scrapped the tried-and-true, light touch regulation of the Internet and replaced it with heavy-handed micromanagement. It decided to subject the Internet to utility-style regulation designed in the 1930s to govern Ma Bell.
This decision was a mistake. For one thing, there was no problem to solve. The Internet wasn’t broken in 2015. We were not living in some digital dystopia. To the contrary, the Internet is on thing -- perhaps the only thing -- in American society that we can all agree has been a stunning success.
Not only was there no problem, this “solution” hasn’t worked. The main complaint consumers have about the Internet is not and has never been that their Internet service provider is blocking access to content. It’s that they don’t have access at all, or not enough competition. These regulations have ironically taken us in the opposite direction from these consumer preferences. Under Title II, investment in high-speed networks has declined by billions of dollars. Notably, this is the first time that such investment has declined outside of a recession in the Internet era. When there is less investment, that means fewer next-generation's networks are built. That means less access and less competition. That means fewer jobs for Americans building those networks. And that means more Americans are stranded on the wrong side of the digital divide.
Now, the impact has been particularly serious for smaller Internet service providers. They don’t have the time, the money, or the lawyers to navigate a thicket of complex rules. Now, they don't get a lot of press, certainly not here in Washington.
But I have personally visited some of them, from Spencer Municipal Utilities in Spencer, Iowa to Wave Wireless in Parsons, Kansas. I have personally spoken with many more, from Amplex Internet in Ohio to AirLink Services in Oklahoma. And so it is no surprise that the Wireless Internet Service Providers Association, which represents very small, fixed wireless companies that typically operate in rural and low-income urban areas, surveyed its members and found that over 80% (quote):
...incurred additional expense in complying with the Title II rules, had delayed or reduced network expansion, had delayed or reduced services and had allocated budget to comply with the rules.
Other small companies, too, have told the FCC that these regulations have forced them to cancel, delay, or curtail fiber network upgrades. And nearly two dozen small providers submitted a letter saying that the FCC’s heavy-handed rules “affect our ability to find financing.” Now remember, these are not the big guys. These are small companies, the kinds of companies that are critical to providing a more competitive marketplace.
Now, these rules have also impeded innovation. One major company, for instance, reported that it put on hold a project to build out its out-of-home Wi-Fi network due to uncertainty about the FCC’s regulatory stance. And a coalition of 19 municipal Internet service providers -- that is, city-government-owned nonprofits -- have told the FCC that they (and I quote)
...often delay or hold off from rolling out a new feature or service because [they] cannot afford to deal with a potential complaint and enforcement action.
None of this is good for consumers. We need to empower all Americans with digital opportunity, not deny them the benefits of greater access and competition.
And consider too that these are just the effects that these rules have had on the Internet of today. Think about how they will affect the Internet we need ten, twenty years from now. The digital world bears no resemblance to a water pipe or an electric line or a sewer. Use of those pipes will be roughly constant over time, and very few would say that there’s been dramatic innovation in these areas.
By contrast, online traffic is exploding, and we consume exponentially more traffic -- and data over time. With the dawn of the Internet of Things, with the development of high bit-rate applications like virtual reality, with new activities that we can't fully grasp yet -- like high-volume bitcoin mining -- we are imposing ever more demands on the network. And over time, that means our networks themselves will need to scale, too.
On advice of security, we need to take a brief recess.
[Recess ends. Remarks replicated from previous paragraph not transcribed.]
But they don’t have to. If our rules deter the massive infrastructure investment that we need, eventually we’ll pay the price in terms of less innovation. Consider these words from Ben Thompson, a highly-respected technology analyst, from a post on his blog Stratechery supporting my proposal. It's an extended quote, but with your indulgence -- it's important:
The question that must be grappled with...is whether or not the Internet is ‘done.’ By that I mean that today’s bandwidth is all we [will] [[ever]] need, which means we can risk chilling investment through prophylactic regulation and the elimination of price signals that may spur infrastructure build-out....
If we are “done”, then the potential harm of a Title II reclassification is much lower; sure, ISPs will have to do more paperwork, but honestly, they’re just a bunch of mean monopolists anyways, right? Best to get laws in place to preserve what we have.
But what if we aren’t done? What if virtual reality with dual 8k displays actually becomes something meaningful? What if those imagined remote medicine applications are actually developed? What if the Internet of Things moves beyond this messy experimentation phase and into real-time value generation, not just in the home but in all kinds of unimagined commercial applications? I certainly hope we will have the bandwidth to support all of that!2